On Thursday, department store giant Macy’s announced it plans to close 100 stores by early next year, following six consecutive quarters of declining sales. Representing about 15% of all Macy’s department stores, the iconic retailer did not disclose which store locations would close, but said most of them will be shut down in early 2017.
Macy’s recent announcement is the latest in a wave of store closures amid the rise and success of Amazon and other online stores. Walmart announced plans in January to shut down 269 stores this year, while Sports Authority—once the nation’s largest sporting goods retailer—is shutting down all 450 of its stores after filing for bankruptcy in March. Other traditional retailers such as Target, JC Penney, Kmart, Sears and Kohl’s have also closed hundreds of stores in recent months.
Despite the rise of online shopping—especially in the fashion-apparel space, which has historically been owned by Macy’s—nearly 90% of all U.S. retail sales still occur in offline retail stores, which is one reason why more e-commerce shops, including Amazon, are starting to open their own physical brick-and-mortar stores.
Macy’s said it does not plan to pull out entirely of any of the top markets where it currently operates, but it will look to close stores that are in weak locations and ones where sales volume and profitability have been dwindling. The retailer further said its new strategy will be to concentrate its financial investments on its best-performing stores by highlighting new vendors, increasing the size and quality of its staff and investing in new technology.
Macy’s said the store closures could result in the loss of about $1 billion in annual sales. However, investors seem to applaud Macy’s store closure decision, with the department store’s stock soaring 17% following the announcement on Thursday—its highest day since 2008.
Macy’s said it is still finalizing which of its 728 stores will close, and thus has not yet determined exactly how many jobs will be cut. Macy’s said employees at stores slated for closure may be offered positions in nearby stores “where possible,” and that laid off workers will be offered severance benefits.