Macy's Inc. intends to close approximately 125 stores in lower-tier malls over the next three years as part of its plan to reinvigorate sales and achieve sustainable, profitable growth. The figure includes the 30 locations reported for closure earlier this year.
Macy's said the 125 closing stores account for approximately $1.4 billion in annual sales. Macy's did not disclose which stores it plans to close in this latest round.
Five retail real estate investment trusts reported Macy's as one of their top tenants in recent earnings filings or investment presentations.
Pennsylvania REIT leased space to Macy's at 15 of its properties as of Sept. 30, 2019, aggregating to 1.6% of its annualized gross rent.
CBL Properties followed, with 0.66% of its total annualized revenue generated from leases with Macy's as of Dec. 31, 2019. The 31 Macy's stores at CBL-owned properties total about 4.5 million square feet; however, Macy's owns 20 of the stores.
SITE Centers Corp.'s four leases with the department store totaled 183,000 square feet and represented roughly $2.2 million of the REIT's base rent on Sept. 30, 2019. Three of the locations are under the Macy's Furniture Gallery brand, and the other is a Bloomingdale's The Outlet.
Simon Property Group Inc. recently reported the most exposure to Macy's on a square-foot basis, with its 113 U.S. mall and outlet store leases with the department store totaling more than 21.7 million square feet at 2019-end, making it Simon's largest anchor tenant in the U.S. by square feet. The totals excluded leases under Macy's Bloomingdale's The Outlet brand.
Washington Prime Group Inc. reported 26 leases with the department store totaling approximately 4.6 million square feet as of Sept. 30, 2019.
Macy's also plans to trim its corporate and support headcount by 9%, or roughly 2,000 jobs, shutting down its corporate offices in San Francisco, Cincinnati and Lorain, Ohio, as well as its customer contact center in Tempe, Ariz.
The headquarters of the department store's e-commerce website macys.com, housed at office landlord Boston Properties Inc.'s 680 Folsom St. in San Francisco, will be relocated to New York City. A Boston Properties spokesperson confirmed to S&P Global Market Intelligence that Macy's office lease in San Francisco accounts for roughly 243,000 square feet.
Macy's plans to redeploy capital into 100 of its existing stores in 2020, including improvements to the physical stores, as well as merchandising strategies, technology, talent and local marketing. The department store noted it has applied this treatment to 150 of its stores to date, which account for roughly 50% of its total stores' sales in 2019 and outperform the rest of its portfolio.
Macy's also plans to expand its off-price offerings, Macy's Backstage and Bloomingdale's The Outlet, as well as test a new store format, Market by Macy's. The department store noted its off-price offerings have been a highlight of the company's recent performance.