Macys Inc. said Thursday that it will close about 100 of its stores next year about 15 percent as the struggling retailer grapples with rapid changes in peoples buying habits.
The Cincinnati-based company said the locations of the closed stores would be announced at a later date.
Most of the closures will occur early next year and involve an unspecified number of job cuts, Macys said.
Macys currently operates 675 full-line stores nationwide; including locations such as Macys Home stores, it has 728. The ones that will be shut down are full-line stores, and they generate roughly $1 billion in annual sales, or 4 percent of Macys total sales.
Nearly all of the stores to be closed are cash flow positive today, but their volume and profitability in most cases have been declining steadily in recent years, Macys President Jeff Gennette said in a statement.
Macys said shutting the stores would enable it to bolster its online presence and elevate our total customer experience across all methods of shopping.
The move follows the chains decision to shut 40 stores earlier this year. Macys said the upcoming store closings would not affect its Bloomingdales division.
Also on Thursday, Macys announced a sharp drop in its second-quarter profit on a 4 percent drop in sales.
Macys said its same-store sales last quarter that is, sales at stores open at least one year, which is a key gauge of retailing fell 2 percent from the same quarter last year.
Macys and other major apparel-heavy retailers such as Kohls Corp. and Nordstrom Inc. are under intense pressure because foot traffic at shopping malls is dropping as people increasingly shop online and spend less on apparel.
I felt like we were going to reach a tipping point that would force a vicious, fundamental reset in the physical retail world and thats what were seeing, said Richard Church, managing director for retail at the research firm Discern Group Inc.
Noting the drop in mall traffic, the shift to online buying and declining apparel spending, Church said all of these forces are converging to accelerate this process.
In addition, malls that lose a Macys might find it tough to replace the store as an anchor tenant, and that could hurt sales for other retailers in such malls, Church said.
In its second quarter, which ended July 30, Macys said its profit plunged to $11 million, or 3 cents a share. Thats down from $217 million, or 64 cents a share, in the year-earlier quarter.
Excluding the impact of earlier store closings and other items, Macys per-share earnings were 54 cents, down from 94 cents in the same quarter a year earlier.
But Macys stock surged in response to its store-closure announcement. The stock jumped 17.1 percent to close at $39.81.