NEW YORK (Reuters) -Macy’s forecast annual sales below market expectation on weak demand for its apparel and shoes and said it would close 150 stores through 2026 in a new turnaround plan, sending its shares down about 2% before the bell on Tuesday.
The department store chain did not provide details on the location of stores or whether there will be more layoffs. It also plans to monetize $600 million-$750 million of assets over the next three years.
“It (store closures) was probably inevitable. It is still not good news, though, because it represents Macy’s inability to make those stores more productive,” said David Swartz, senior analyst at Morningstar.
The move comes as sluggish sales has landed the upscale retailer in the crosshairs of activist shareholders and attracted potential bidders.
Macy’s is facing a proxy battle from Arkhouse Management after the investment firm nominated nine director candidates last week.
The new plan is in addition to Macy’s decision in January to close five stores and cut 2,350 jobs, or 3.5% of its overall workforce. The retailer had stores in 718 locations as of fourth quarter end, down from 723 locations three months ago.
It also said it would open 15 Bloomingdale’s locations and at least 30 new Bluemercury stores over the next three years to accelerate growth for its better-performing luxury brands.
Its holiday quarter comparable sales declined 4.2% on an owned-plus-licensed basis, better than analysts’ estimates of 5.8% drop, as steep discounts drew shoppers.
However, net credit card revenue fell 26% to $195 million, in a sign that economic pressure, particularly among its low- and middle-income customers, led to higher bad debts.
Macy’s took a $1 billion charge in the fourth quarter related to the restructuring. Excluding items, it earned $2.45 per share, above LSEG estimates of $1.96.
It expects fiscal 2024 net sales between $22.2 billion to $22.9 billion, compared to analysts’ average estimate of $22.95 billion.
It forecast adjusted earnings per share between $2.45 and $2.85, the midpoint of which is below expectations of $2.76.
(Reporting by Katherine Masters in New York and Savyata Mishra in Bengaluru; Editing by Arun Koyyur)
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