Macy’s shares rise on slower sales decline, plan to shut stores

MACY'S INC. said it is closing approximately 100 stores around the country; locations have not been disclosed. / BLOOMBERG NEWS FILE/VICTOR J. BLUE
MACY'S INC. said it is closing approximately 100 stores around the country; locations have not been disclosed. / BLOOMBERG NEWS FILE/VICTOR J. BLUE

NEW YORK – Macy’s Inc. surged in early trading after making progress in slowing its sales declines and announcing a plan to close 14 percent of its stores to revive profit growth.

The largest U.S. department-store company will shut about 100 full-line stores out of its portfolio of 728 locations to focus on better-performing locations. The locations of the 100 stores to be closed will be announced at a later date, once the company makes final decisions.
Macy’s has stores at Providence Place and the Warwick Mall in Rhode Island, and stores in Emerald Square in North Attleborough, Dartmouth Mall in Dartmouth, Swansea Mall in Swansea and Silver City in Taunton.

Second-quarter profit and revenue topped analysts’ estimates as new sales events drew shoppers.

CEO Terry Lundgren is looking to secure his legacy before handing the reins over to his successor, President Jeff Gennette, in 2017. Even before Thursday’s announcement, Lundgren had been slashing costs, closing stores and adding off-price options to appeal to customers. Still, the chain is grappling with sluggish mall traffic and a strong U.S. dollar that has deterred foreign tourists from spending at U.S. stores.

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The shares rose 15 percent to $38.99 at 8:46 a.m. before the start of regular trading in New York. The stock had slipped 2.8 percent this year through Wednesday.

Profit was 54 cents a share, excluding some items, in the quarter ended July 30, the Cincinnati-based company said in a statement on Thursday. Analysts projected 45 cents, on average. While revenue fell 3.9 percent to $5.87 billion, that beat analysts’ $5.76 billion projection.

Sales events

Lundgren said in the statement that Macy’s first-ever “Black Friday in July” promotional event drove sales and that normal weather patterns helped the retailer’s apparel business. He also credited investments in store staffing and visual presentation as well as enhanced fine jewelry departments and a more intense focus on athletic apparel.

Macy’s cautioned that its store-closing plan will hurt top-line revenue, but said it will ultimately help the company increase sales at its existing locations. The retailer booked a charge of $249 million for the store-closing plan last quarter.

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