Macy's has just announced that it will close 100 full-line stores (out of a current portfolio of 728 Macy’s stores, including 675 full-line locations) to focus on its best-performers.
Most of the stores will close early in 2017, with the balance closing as leases and certain operating covenants expire or are amended or waived. The locations of the 100 stores to be closed will be announced at a later date, once the company makes final decisions.
Austrian-lites are sure to jump on these closings as a signal of problems in the overall economy. But that is far from the case. Brick and mortar retailers continue to be hurt by online retailers such as Amazon.
Further, Macy's reports that in a number of cases, stores will be closed as the value of the real estate exceeds their value to Macy’s as a retail store. This is not the reason you see for the closing of businesses during an overall downturn. Prices are signalling here that there are more demanding uses for the locations,
The company also said that it is in negotiations to sell the Macy’s Men’s Store building on Union Square in San Francisco for redevelopment. San Francisco is in a Federal Reserve Bank created boom right now and no doubt the real estate that the SF Macy's Men's Store sits on is probably one of the most valuable parcels of land in the world.
" If a transaction is finalized, the Union Square Men’s Store likely will be closed after a comprehensive and compelling men’s shopping experience is built within the main Union Square store, which is located across the street. In that scenario, the Men’s Store will remain open until the new shopping environment in the main store is completed." the retailer said.