More Closures for Macy's Despite a Merry Holiday for Some

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Santa Claus and Mrs. Claus ride on sleigh at the 89th Annual Macy's Thanksgiving Day Parade on Columbus Circle, November 26, 2015.
Santa Claus and Mrs. Claus ride on sleigh at the 89th Annual Macy's Thanksgiving Day Parade on Columbus Circle, November 26, 2015. Credit: iStock.

The tide may be turning for retailers after robust holiday sales, but more store closures are on the way as chains struggle to find the right balance between e-commerce and brick-and-mortar. On Thursday, Macy's announced it will shutter 19 more stores as leases come due, in addition to the 100 closures it announced in 2016.

The $25.8 billion chain said stores in Novato, California; Gainesville and Miami, Florida; Terre Haute, Indiana; Fort Gratiot Township, Michigan; Cincinnati, Ohio and Burlington, Vermont will cease operation. Clearance sales for those stores closing in early 2018 will begin Jan. 8 and last for up to 12 weeks.

Yet Macy's reported positive holiday sales, citing a 1 percent increase in comparable sales for the November and December period over last year.

"The holiday sales growth at Macy's is a welcome change from the red numbers it usually posts," wrote Neil Saunders, managing director of GlobalData Retail in a research note, noting that shrinking Macy's store fleet is a step in the right direction.

Macy's was not the only brand that had a merry holiday, thanks in part to a seasonally cold winter that drove more apparel demand. JC Penney on Thursday reported a 3.4 percent increase in comparable sales for the nine weeks ended Dec. 30 over the year-earlier period. Chief Executive Marvin Ellison called out ecommerce as a huge driver of the growth, noting that the division logged double-digit increases.

Of course, these chains are still playing catch up in a retail world increasingly dominated by Amazon. Neiman Marcus is expected to replace Karen Katz, CEO since 2010, with a new leader, according to a Wall Street Journal report.

One analyst said innovation from the likes of Macy's and JC Penney is critical to their survival.

"The apparel category needs reinvention and new kinds of partnerships are essential with vendors and brands in order to drive differentiation versus both Amazon and low-cost alternatives," wrote Oliver Chen, retail analyst at Cowen and Co., in a research note.

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