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MACY’S is facing 150 store closures soon enough as their sales are plummeting, as reported in their Q2 report.
However, the CEO of the department store giant has revealed a last-minute plan to save their declining sales.
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On Wednesday, Macy’s reported another quarterly decline as the department store revealed sales have grown weaker as they research consumer shopping behaviors.
Earlier this year, the company was considering closing 150 stores.
The chain said they’ll keep the locations open for now – but the brand is inching toward the closures as sales continue to drop.
During the company conference call, Macy’s bosses said the retailer expects to close 55 stores this year, which is slowly moving up from the previous estimate of about 50 locations shuttering.
Macy’s CEO Tony Spring revealed that he plans to create a reason for customers to shop at the store in hopes of bringing sales up.
“I said to our team, our challenge is not just to have the lowest price,” Spring said, according to Retail Dive.
“Our challenge is to create a compelling reason for the customer to buy at Macy’s, Bloomingdale’s, or Bluemercury.”
PICKY SPENDERS
Spring also said that customers aren’t spending as much across all Macy’s brands.
“We see that there is definitely a softness, a carefulness, a delay in the conversion of purchasing,” he told CNBC.
“And people on the things that they want, the things that are priced sharply, on the newness, they’re responding, but even the affluent consumer is not spending like they were a year ago.”
He said that people are spending less because “there’s a lot of noise out there.”
“You have to believe that everybody is being a little more cautious as they kind of watch what’s going on in the macro environment and are just being more judicious in the purchases they make,” he told analysts on Wednesday.
ON THE BRIGHT SIDE
Macy’s press release shared that the store’s merchandise inventory was up 6%.
Additionally, the COO and CFO Adrian Mitchell revealed that Macy’s plans “to end the third quarter and ultimately the fall season, without any meaningful inventory liabilities.”
Why are JCPenney stores closing?
JCPenney has hit the headlines after it emerged that the chain will close a number of stores within the coming months.
The once-booming department store chain has faced declining sales and has struggled to reel in new customers.
The emergence of online shopping hit brick-and-mortar stores and shopping malls.
When the Covid-19 pandemic occurred, retailers, including JCPenney were dealt another blow which proved fatal for many.
The retailer’s financial struggles came to a head in May 2020 when it filed for bankruptcy protection with around $4 million in debt.
The subsequent restructuring saw a slew of closures as the retailer embarked on a new strategy for sustainable growth.
175 stores shuttered nationwide between 2020 and 2021.
However, even after being bought out, the company is continuing to struggle with sales especially as consumers tighten their belts due to the high cost of living and inflation.
JCPenney’s latest Q4 net sales dropped to $2.3 billion, a 5.9% year-over-year decline while net income fell by 8.9% to $41 million.
While the department store has focused on discounts, they further plan to emphasize the value of their products and take a step back from sale prices.
“Aged inventories are under control, and we are pleased with the level of newness,” Mitchell said.
“We’re also seeing healthy inventory flows, and have ongoing mitigation strategies in place to offset elevated ocean transit times and constrained container capacity.”
Despite Mitchell’s positivity, Macy’s decline looked worse in comparison to Target’s shining second-quarter results, which revealed that the company has reversed its sales slump as the COO emphasized the store’s dedication to “affordability.”
TARGET’S SUCCESS
Target agreed that shoppers are becoming more choosy about where they spend – but unlike Macy’s, the discriminatory buying is working out well for Target.
Target CEO Brian Cornell said that the store’s new strategy is to thank for the recent success.
“In an environment where consumers continue to make meaningful trade-offs, our results demonstrate the power that comes from the right combination of newness, seasonal relevance, and compelling value,” Cornell said during an earnings call.
Shoppers’ pickiness isn’t the only reason for Macy’s decline as the store was recently slammed for gouging customers.
Some credit card holders recently decided to close their accounts after receiving a notice in the mail that their annual percentage rate would jump to 34.49%, meaning a 6% increase.
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