CINCINNATI—Macy's Inc. has stepped up its previously announced real estate initiatives, announcing Wednesday that it had hired Eastdil Secured to market partnerships or joint ventures on its mall properties as well as flagship urban locations, including the iconic Herald Square store. The retailer also announced 40 store closings, including four that have already occurred, along with a revamp of its operations.
Eastdil, which will be assisted by Credit Suisse and Goldman Sachs, joins "a team of experienced advisors in banking, real estate, law and tax who are focused on monetizing real estate assets in a manner consistent with Macy's overall strategy," Macy's said Wednesday afternoon. Already part of that team is Tishman Speyer, which Macy's announced this past November as an advisor on potential store redevelopment projects.
The New York City-based owner/developer has expressed interest in pursuing partnerships on the four flagship locations—State Street in Chicago, Union Square in San Francisco and Nicollet Mall in Minneapolis as well as the Herald Square store—and won't be advising Macy's on those properties. However, Tishman Speyer will continue to advise Macy's on potential opportunities for maximizing the value of other real estate in its portfolio.
The slate of store closings announced Wednesday includes locations in 20 states and encompasses more than 4.3 million square feet of retail space. It includes the following Macy's locations: Irvine Spectrum, Irvine, CA; Country Club Plaza, Sacramento; Westfield Century City in Los Angeles, which will be succeeded in 2017 by a larger store at the same location; the Enfield Square main store and furniture store in Enfield, CT; North DeKalb Mall, Decatur, GA; Kailua, HI; Palouse Mall, Moscow, ID; Northwoods Mall, Peoria, IL;
Cortana Mall, Baton Rouge, LA; Valley Mall, Hagerstown, MD; Berkshire Mall, Lanesborough, MA; Eastfield Mall, Springfield, MA; the Shoppes at Stadium, Columbia, MO; Middlesex Mall, South Plainfield, NJ; the McKinley Mall main store and home store, Buffalo; Arnot Mall, Horseheads, NY; Hudson Valley Mall, Kingston, NY; Eastern Hills Mall, Williamsville, NY; Cary Towne Center, Cary, NC; Chapel Hill Mall, Akron, OH; Midway Mall, Elyria, OH;
Quail Springs Mall, Oklahoma City; Pony Village Mall, North Bend, OR; Roseburg Valley Mall, Roseburg, OR; Suburban Square, Ardmore, PA; Century III Mall, West Mifflin, PA; Ridgmar Mall, Ft. Worth; Chesapeake Square, Chesapeake, VA; Virginia Center Commons, Glen Allen, VA; Peninsula Town Center, Hampton, VA; Military Circle Mall, Norfolk, VA; Regency Square main store and furniture/home/men's store, Richmond, VA; and Downtown Spokane, Spokane, WA. Closing have occurred already at Owings Mills Mall, Owings Mills, MD; Bedford, NH; Essex Green Shopping Center, West Orange, NJ, which has been converted to a Macy's Backstage store; and the 1.2-million-square-foot Downtown Pittsburgh location.
The closings were announced concurrently with a disappointing holiday sales report: same-store sales for November and December were down 4.7% year over year, following three quarters of same-store declines. "The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry," says CEO Terry Lundgren. That being said, "we are buoyed by a very strong performance in our digital business, with continued double-digit increases in online sales."
Along with store closings, Macy's on Wednesday also announced organizational changes. It will consolidate the grouping of existing Macy's stores into five regions and 47 local districts, down from the current structure of seven regions and 58 local districts; adjust staffing levels at each Macy's and Bloomingdale's location in line with current sales volume; eliminate a few hundred executive and back-office positions; and consolidate seven call centers into three.
"It's really concerning news that a company as well managed as Macy's is having such a tough time growing sales," Burt Flickinger, managing director at retail consultancy Strategic Resource Group, told Reuters on Wednesday. "It's a broader issue. It's an acceleration of a retail ice age."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
