Macy's said Tuesday that it will close 125 stores over the next three years, nearly one fifth of its total locations, in another blow to American department stores.
Macy's will look to exit some struggling malls, where foot traffic has slowed. It will also cut roughly 2,000 jobs, or 10% of its corporate staff, and shut down its offices in Cincinnati and San Francisco. Macy's expects to save $1.5 billion by the end of 2022 from the cost-cutting measures.
'We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams,' CEO Jeff Gennette said in a statement.
The 125 stores Macy's will close currently account for around $1.4 billion of the retailer's annual sales.
Macy's planned closings follow years of struggles at US department stores, which have been bruised by the rise of Amazon and the expansion of low-price clothing chains like TJMaxx.
'Macy's, like its major department store competitors, is working to accelerate change after a weak 2019,' said Christina Boni, analyst at Moody's.
Macy's is trying to avoid Sears' fate and outlined a new plan Tuesday to 'set the foundation for sustainable, profitable growth.'
The company will expand its loyalty program, develop four private-label brands, revamp its supply chain and expand Macy's Backstage, its lower-priced arm.
It will also test a new store concept, which it's calling 'Market by Macy's,' that is smaller than typical Macy's stores and are located away from malls. These stores will serve local food and drink and have a curated merchandise selection. The first one will open in Dallas on Friday.
It is unclear how many Macy's hourly workers will lose their jobs from the store closures. Retailers cut more than 75,000 jobs last year and nearly 100,000 in 2018 because of bankruptcies and store closures, according to outplacement firm Challenger, Gray & Christmas.