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Macy's to shut 100 stores, invest in online
[NEW YORK] Macy's Inc said it would close about 100 stores and boost investment in its online operations as it seeks to turn around its business after six quarters of falling sales.
Shares of the company, which also reported a smaller-than-expected drop in quarterly sales at established stores, were up 11 per cent at US$37.79 in premarket trading on Thursday.
Total sales fell nearly 4 per cent to US$5.87 billion in the second quarter after falling 7.4 per cent in the first quarter.
Department stores have been struggling with stiff competition from online and off-price retailers. They are also under pressure due to a shift in spending patterns, with shoppers increasingly preferring to spend on big-ticket items such as electronics and cars than on clothes.
Macy's said the annual net sales volume of the locations it plans to close was expected to be about US$1 billion.
The company also said it was in talks to sell its Men's Store on Union Square in San Francisco for redevelopment.
Macy's, under pressure from activist investor Starboard Value LP, is working on partnerships to monetize its huge real estate portfolio, which includes landmark properties such as its Herald Square and Union Square stores in New York.
Sales in stores open at least a year, including sales in departments licensed to third parties, fell 2 per cent in the latest quarter. Analysts polled by research firm Consensus Metrix had expected a 4.6 per cent drop.
Net income attributable to the company's shareholders fell to US$11 million, or 3 cents per share, in the second quarter ended July 30, from US$217 million, or 64 cents per share, a year earlier.
The latest quarter included charges of US$255 million, or 51 cents per share, mainly related to the upcoming store closures.
Excluding the charges, the company earned 54 cents per share.
Analysts' on average had expected earnings of 45 cents per share and revenue of US$5.75 billion, according to Thomson Reuters I/B/E/S.