Macy's Buyout? Private ownership bid

[ClownLoach]

And speaking of Macy's.....news broke today that 150 locations are to close in the next few years.
https://www.cnn.com/2024/02/27/investin ... index.html

Wait... didn't they already close all their poorly performing stores? I'm now starting the countdown clock for them. T-5 years and counting.

I love how some media skews things.
So conveniently this news comes out and validates my (and others here) concerns about the poor consistency of the Macy's operation. But the headlines are different depending on where you look. CNBC is discussing the fact that Macy's is OPENING more stores and will remodel and upgrade all the stores they're keeping. Then they're going to get rid of what we can all presume are the dumps in the wave of 150 ahead. And they're also OPENING MORE Bloomingdales, presumably to capture business from the distracted and underperforming Nordstrom. And they're OPENING MORE Bluemercury stores.

Also, Macy's has been preparing to prune where they have two stores in the same mall. They oddly enough count two stores as one in their store count, but then will report it as a store closure when they consolidate into a single building. This means that they may be closing 150 stores, but that doesn't actually mean they're leaving 150 malls or shopping centers. They'll just move to having only one building which makes a ton of sense especially when they have oversized facilities. And they have made it clear to investors that 99% of the stores are profitable and cash flow positive (so assume the 1% that wasn't were the 5 or so stores they announced closing a few weeks ago). Thus this closure wave is intended to bolster profitability even further and strengthen the company. They made a good profit this year, good enough that they decided to record the closing costs for these 150 buildings immediately instead of in the future.

All I see is investment into expanding the business, as well as fixing the problems. The new CEO obviously has decided that the dumpy stores need to go and more importantly he said they're going to add payroll to improve service and upgrade the stores being kept. Sounds like all good news to me, not anything like the end of days. They're not going out of business, quite frankly they make too much money to do so. They aren't Sears.

[ClownLoach]

https://www.cnbc.com/2024/02/27/macys-w ... rcury.html

Better than the useless CNN article.

[J-Man]

The fact that they're closing their longtime West Coast flagship store in Union Square in SF is a MAJOR indicator of problems. This would almost be equivalent to closing the Herald Square store.

[babs]

And speaking of Macy's.....news broke today that 150 locations are to close in the next few years.
https://www.cnn.com/2024/02/27/investin ... index.html

Wait... didn't they already close all their poorly performing stores? I'm now starting the countdown clock for them. T-5 years and counting.

I love how some media skews things.
So conveniently this news comes out and validates my (and others here) concerns about the poor consistency of the Macy's operation. But the headlines are different depending on where you look. CNBC is discussing the fact that Macy's is OPENING more stores and will remodel and upgrade all the stores they're keeping. Then they're going to get rid of what we can all presume are the dumps in the wave of 150 ahead. And they're also OPENING MORE Bloomingdales, presumably to capture business from the distracted and underperforming Nordstrom. And they're OPENING MORE Bluemercury stores.

Also, Macy's has been preparing to prune where they have two stores in the same mall. They oddly enough count two stores as one in their store count, but then will report it as a store closure when they consolidate into a single building. This means that they may be closing 150 stores, but that doesn't actually mean they're leaving 150 malls or shopping centers. They'll just move to having only one building which makes a ton of sense especially when they have oversized facilities. And they have made it clear to investors that 99% of the stores are profitable and cash flow positive (so assume the 1% that wasn't were the 5 or so stores they announced closing a few weeks ago). Thus this closure wave is intended to bolster profitability even further and strengthen the company. They made a good profit this year, good enough that they decided to record the closing costs for these 150 buildings immediately instead of in the future.

All I see is investment into expanding the business, as well as fixing the problems. The new CEO obviously has decided that the dumpy stores need to go and more importantly he said they're going to add payroll to improve service and upgrade the stores being kept. Sounds like all good news to me, not anything like the end of days. They're not going out of business, quite frankly they make too much money to do so. They aren't Sears.

I don't disagree with what you are saying. However, the news of stores closing is likely to cause some people not to shop there anymore.

On the flip side, they should ramp up openings of their smaller format Macys much more quickly. A great example. I'm sure the downtown Salem, OR store will close since it has seen little investment. However, they should at the same time open a smaller, replacement store at Keizer Station to blunt the sales loss and publicity. If they do this, it could be viewed as a win. Not doing so, is nothing more than poorly managing their real estate and overall business strategy.

[arizonaguy]

The fact that they're closing their longtime West Coast flagship store in Union Square in SF is a MAJOR indicator of problems. This would almost be equivalent to closing the Herald Square store.

There is an article that specifically mentions that the store closure is pending the sale of the property. It reads to me that this could be a major cash grab as that store is probably the 2nd most valuable piece of real estate that the company owns.

[ClownLoach]

The fact that they're closing their longtime West Coast flagship store in Union Square in SF is a MAJOR indicator of problems. This would almost be equivalent to closing the Herald Square store.

There is an article that specifically mentions that the store closure is pending the sale of the property. It reads to me that this could be a major cash grab as that store is probably the 2nd most valuable piece of real estate that the company owns.

How is over $2 a share of profit a problem? How is a 99% profitable store fleet a problem? Kroger, Albertsons, CVS, Target, and even Walmart admit to having money losing stores when Macy's has managed to eliminate all of them. By your figuring we should expect to see all of the retailers I named here close down including Walmart. Obviously ain't going to happen.

This is actually a smart move because the activist investors who were trying to take over basically wanted to loot the company for its real estate and then close the rest. It is well known that Harold Square is worth more than the stock value of the company. Now the company gets the return on the sale instead of a bunch of bastards who would sell their own mothers house and put her on the streets if it meant a good profit. Why should Macy's allow itself to be ravaged of assets by these Wall Street fat cats that basically steal these buildings, when instead they can cash in and use it to open the dozens of new stores planned? Added bonus is now they no longer have the asset so they become less of a target for these vultures.

In this case, selling what is assuredly a very costly to operate store while they can still get an acceptable return on it in a troubled San Francisco real estate market is smart. They have explicitly stated the stores closing collectively represent LESS THAN TEN PERCENT of the company's sales. That means that Union Square was a LOW VOLUME STORE in the BOTTOM TEN PERCENT OF THE COMPANY. That is not a Macy's problem, it represents the deterioration of the market.

This is a good decision. Macy's is not in trouble at all, but San Francisco sure is.

[ClownLoach]

Wait... didn't they already close all their poorly performing stores? I'm now starting the countdown clock for them. T-5 years and counting.

I love how some media skews things.
So conveniently this news comes out and validates my (and others here) concerns about the poor consistency of the Macy's operation. But the headlines are different depending on where you look. CNBC is discussing the fact that Macy's is OPENING more stores and will remodel and upgrade all the stores they're keeping. Then they're going to get rid of what we can all presume are the dumps in the wave of 150 ahead. And they're also OPENING MORE Bloomingdales, presumably to capture business from the distracted and underperforming Nordstrom. And they're OPENING MORE Bluemercury stores.

Also, Macy's has been preparing to prune where they have two stores in the same mall. They oddly enough count two stores as one in their store count, but then will report it as a store closure when they consolidate into a single building. This means that they may be closing 150 stores, but that doesn't actually mean they're leaving 150 malls or shopping centers. They'll just move to having only one building which makes a ton of sense especially when they have oversized facilities. And they have made it clear to investors that 99% of the stores are profitable and cash flow positive (so assume the 1% that wasn't were the 5 or so stores they announced closing a few weeks ago). Thus this closure wave is intended to bolster profitability even further and strengthen the company. They made a good profit this year, good enough that they decided to record the closing costs for these 150 buildings immediately instead of in the future.

All I see is investment into expanding the business, as well as fixing the problems. The new CEO obviously has decided that the dumpy stores need to go and more importantly he said they're going to add payroll to improve service and upgrade the stores being kept. Sounds like all good news to me, not anything like the end of days. They're not going out of business, quite frankly they make too much money to do so. They aren't Sears.

I don't disagree with what you are saying. However, the news of stores closing is likely to cause some people not to shop there anymore.

On the flip side, they should ramp up openings of their smaller format Macys much more quickly. A great example. I'm sure the downtown Salem, OR store will close since it has seen little investment. However, they should at the same time open a smaller, replacement store at Keizer Station to blunt the sales loss and publicity. If they do this, it could be viewed as a win. Not doing so, is nothing more than poorly managing their real estate and overall business strategy.

They're not closing them all at once. It sounds like the near term plans will result in more stores opening, or having grand reopenings after remodels and upgrades, than closings. Customers will see more new store and remodel activity than closing activity. The stores closing make money but they're the bottom ten percent of the company volume. And many of these won't really be closings outright, but just consolidation of two stores into one. They've got over a hundred 2 store malls and they have made it clear previously that except in the most elite malls they will consolidate to one building. That means zero closing sale activities where combined. Customers will find it to be more convenient when men's, women's, children's and home are in the same building and they can just take an escalator to the other category instead of having to check out and walk across the entire mall to the other store. This will make sales go way up, and profits explode as they cut overhead in half. The strategy behind the two stores was just to squeeze out competition who wanted these spaces. Now nobody else does, so they can let them go.

And don't forget they're going to open 30 more Bloomingdales, so a good number of these Macy's that close in two store malls will probably be converted to that more productive format. Again more grand opening activities not closing activities.

[Romr123]

I love how some media skews things.
So conveniently this news comes out and validates my (and others here) concerns about the poor consistency of the Macy's operation. But the headlines are different depending on where you look. CNBC is discussing the fact that Macy's is OPENING more stores and will remodel and upgrade all the stores they're keeping. Then they're going to get rid of what we can all presume are the dumps in the wave of 150 ahead. And they're also OPENING MORE Bloomingdales, presumably to capture business from the distracted and underperforming Nordstrom. And they're OPENING MORE Bluemercury stores.

Also, Macy's has been preparing to prune where they have two stores in the same mall. They oddly enough count two stores as one in their store count, but then will report it as a store closure when they consolidate into a single building. This means that they may be closing 150 stores, but that doesn't actually mean they're leaving 150 malls or shopping centers. They'll just move to having only one building which makes a ton of sense especially when they have oversized facilities. And they have made it clear to investors that 99% of the stores are profitable and cash flow positive (so assume the 1% that wasn't were the 5 or so stores they announced closing a few weeks ago). Thus this closure wave is intended to bolster profitability even further and strengthen the company. They made a good profit this year, good enough that they decided to record the closing costs for these 150 buildings immediately instead of in the future.

All I see is investment into expanding the business, as well as fixing the problems. The new CEO obviously has decided that the dumpy stores need to go and more importantly he said they're going to add payroll to improve service and upgrade the stores being kept. Sounds like all good news to me, not anything like the end of days. They're not going out of business, quite frankly they make too much money to do so. They aren't Sears.

I don't disagree with what you are saying. However, the news of stores closing is likely to cause some people not to shop there anymore.

On the flip side, they should ramp up openings of their smaller format Macys much more quickly. A great example. I'm sure the downtown Salem, OR store will close since it has seen little investment. However, they should at the same time open a smaller, replacement store at Keizer Station to blunt the sales loss and publicity. If they do this, it could be viewed as a win. Not doing so, is nothing more than poorly managing their real estate and overall business strategy.

They're not closing them all at once. It sounds like the near term plans will result in more stores opening, or having grand reopenings after remodels and upgrades, than closings. Customers will see more new store and remodel activity than closing activity. The stores closing make money but they're the bottom ten percent of the company volume. And many of these won't really be closings outright, but just consolidation of two stores into one. They've got over a hundred 2 store malls and they have made it clear previously that except in the most elite malls they will consolidate to one building. That means zero closing sale activities where combined. Customers will find it to be more convenient when men's, women's, children's and home are in the same building and they can just take an escalator to the other category instead of having to check out and walk across the entire mall to the other store. This will make sales go way up, and profits explode as they cut overhead in half. The strategy behind the two stores was just to squeeze out competition who wanted these spaces. Now nobody else does, so they can let them go.

And don't forget they're going to open 30 more Bloomingdales, so a good number of these Macy's that close in two store malls will probably be converted to that more productive format. Again more grand opening activities not closing activities.

Ding ding ding. Husband and I were talking---this is a bit of a nothingburger, around Detroit (heritage Hudson's/single nameplate/one store per mall), but a few pretty large (>250k sqft) mall stores remain (Oakland/Genesee/Southland/Franklin Park (Toledo) maaaybe one store closes. (Minneapolis--same situation)

Likely, though, a Bloomingdales will come (perhaps re-nameplating Macys Somerset; perhaps out at Twelve Oaks, perhaps buying out Saks or Neiman) so....more choice, net-net. (again, Minneapolis may regain a Bloomingdales in this go-round)

You could see 5-7 of those new Bloomingdales going into larger cities which still have Class AA malls and have never had Bloomingdales (Detroit/Kansas City/Denver/Cleveland) competing with Neiman/Saks/Nordstrom. Remainder would be infill to Bloomingdales existing markets.

Southern California and NE Corridor though---where there are countless dual-box Macy's malls--lots of "closures" here but minimal loss of access to Macys.

[Super S]

On the flip side, they should ramp up openings of their smaller format Macys much more quickly. A great example. I'm sure the downtown Salem, OR store will close since it has seen little investment. However, they should at the same time open a smaller, replacement store at Keizer Station to blunt the sales loss and publicity. If they do this, it could be viewed as a win. Not doing so, is nothing more than poorly managing their real estate and overall business strategy.

I was in that Salem Macy's about a year ago. That store is getting very tired looking and wasn't very clean. It also predates the now-closed Lloyd Center store by about 4 years.

I wonder if their sales picked up a little since Nordstrom and JCPenney closed. Salem Center is in a weird position right now. The anchors were built long before the mall, and are mostly connected by skybridges. However, the Lancaster Mall/Willamette Town Center has seen its interior mall corridor shrink considerably since the Macy's there closed.

Around Portland, I see potentially a consolidation back into one building at Clackamas, and the Tanasbourne store, which seems out of place despite being a standalone store, closing. Washington Square still seems to be a pretty busy mall so I think that one is safe for now. Portland isn't really overstored.

I also wonder what is going to happen to the behemoth stores at Southcenter and Tacoma Mall. Those are both 1960s vintage stores and are also showing their age a little. I could see one or both downsizing, with Tacoma Mall potentially closing to focus on the newer (and smaller) store in Puyallup. A lot will have to do with whether stores are owned or leased.

[Jeff]

I wonder how many of the Macys closures could be used to add a Bloomingdales to certain malls.

Mission Viejo could be a possibility for a Macys closure. I know they have two huge stores (one a former Robinsons-May the other a Bullocks). Talks to combine the stores into the huge women's store have been there for years. Maybe add a Bloomingdales here.

I feel the following locations could close in Los Angeles area:
Westminster
Northridge (Mens store - it takes only a small part of the former Robinsons-May)
Palmdale
Victorville
San Bernardino
Montebello (Home Store - its never busy and could be combined back to the main store).

My big question is Pasadena. I wonder if the old Bullocks could close. Its never busy but historic.