Macy's is closing another 100 stores

By Matt Egan

NEW YORK (CNNMoney) -- Another 100 struggling Macy's stores are disappearing.

Macy's announced plans on Thursday to close about 15% of its department stores, the latest effort to adapt to shifting consumer preferences for shopping online at Amazon and elsewhere.

Macy's did not disclose which stores it will close, but said most of them will be shut down in early 2017.

The move comes as Macy's revealed a 96% plunge in profits, even though its sales fell less than feared. Wall Street applauded the dramatic store closures, sending the stock surging 16%, on track for its best day since 2008.

Macy's said its new strategy is to concentrate its financial firepower and talent on its best-performing locations. The department store plans to invest in strong stores by highlighting new vendors, increasing the size and quality of its staff and investing in new technology.

"We operate in a fast-changing world, and our company is moving forward decisively to build further on Macy's heritage," Macy's CEO Terry Lundgren said in a statement.

Nearly all of the stores Macy's is pulling the plug on are those that have had a steady decline in sales and profitability. Macy's said employees at stores slated for closure may be offered positions in nearby stores "where possible," Macy's said. Those laid off will be offered severance benefits.

"Macy's is committed to treating associates affected by store closings with respect and openness," the company said.

The Macy's move is the latest in a wave of store closures amid the rise and success of Amazon and other e-commerce options.

For instance, Walmart announced plans in January to shut down 269 stores this year, impacting 16,000 workers. While the largest U.S. retailer is dialing back its physical presence, it's ramping up on e-commerce. Just this week, Walmart inked a $3.3 billion deal to acquire Amazon rival

Sports Authority, once the nation's largest sporting goods retailer, is shutting all 450 of its stores after failing to find a buyer for them as part of its bankruptcy filing. Other traditional retailers such as Target, JC Penney, Kmart, Sears and Kohl's have also pulled the plug in stores in recent months.

It's a grim picture for retail store workers -- there have been 47,000 retail layoffs announced so far this year alone, according to Challenger, Gray & Christmas data.

The Macy's move is the latest blow to malls, many of which rely on the iconic department store to serve as an "anchor" tenant. Many of those malls risk losing a major source of revenue and a loss of traffic that is likely to hurt other stores. Struggles for other department stores make filling the hole left by Macy's even more challenging.

Neil Saunders, CEO of research firm Conlumino, said the Macy's move was "sensible," but largely the result of a "self-inflicted defeat."

"Macy's has simply not bothered with a large rump of stores for many years: they have lacked investment, been devoid of management attention, and now look distressed and dispirited," Saunders wrote in a report.

The key will be whether Macy's is truly committed to rejuvenating its remaining stores in a way that gives consumers a reason to shop in person rather than online.

TM & © 2016 Cable News Network, Inc., a Time Warner Company. All rights reserved.

Share this article:
Are you sure you want to delete this comment?
Are you sure you want to delete this comment?