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Macy’s (M) practically owns the holiday season. The department store that is famous for its luxury goods is also the source of nostalgia for many consumers who enjoy watching its traditional Thanksgiving Day and Christmas Day parades.
In cities like New York, San Francisco and Chicago, pilgrimages to view Macy's extravagant holiday window displays have also been a tradition for many people for decades. However, as the holiday season draws closer to Christmas, Macy’s revealed that it recently faced an unexpected dip in its sales.
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In the company’s third-quarter earnings report for 2024, Macy's revealed that its total net sales decreased by 2.4% year over year.
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While Macy’s, which owns Bloomingdale's and Bluemercury, saw sales increase in women’s apparel, fragrances, and certain luxury products, it saw weakness in consumer spending on men's non-active apparel, handbags, and home sales.
Macy’s flags a major source of the problem
During an earnings call on Dec. 12, Macy’s Chief Financial Officer Adrian Mitchell claimed that sales were negatively impacted by recent “unseasonably warmer weather.”
“Cold weather is really coming online sequentially a bit later than what we had expected,” said Mitchell.
According to the National Weather Service, winter 2024-25 is expected to see “warmer than average temperatures and near to below normal rainfall” in the southern and eastern parts of the U.S.
Mitchell also said that the company is noticing that its customers are becoming “very value-oriented” as it spotted higher sales of clearance items and positive responses to discounts.
“In this holiday season, we're navigating a competitive discretionary environment,” said Mitchell.
Macy’s makes a drastic decision after sales dip
As Macy's faces a decrease in sales, it has opted to rethink its store footprint. The retailer plans to close about 65 stores by the end of January 2025, up from the previously estimated 50 store closures at the beginning of the year.
During the earnings call, Mitchell stated that these closures will only affect “underperforming stores.”
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“These are places where the economics are not as favorable,” said Mitchell. “These are places where customers have shifted away from those centers to shop. And these are stores that are just incredibly difficult to run.”
The store closures are a part of Macy’s new “Bold New Chapter” strategy, which was announced in February 2024. The strategy aims to strengthen Macy’s nameplate, accelerate luxury growth and simplify and modernize end-to-end operations.