As the iconic department store chain, Macy’s, began closing multiple locations, one question that has been on the minds of shoppers across America is, ‘Is Macy’s going out of business?’

Like though the multiple store location closure is not enough, Macy’s also recently changed its CEO after serving the company for many years. These recent changes by Macy’s have sparked curiosity among the brand’s loyal customers.

But what is really happening with Macy’s? Why is the brand shuttering multiple locations? Or is Macy’s going out of business, really? Just keep reading to find answers to all your questions about the company.

A Closer Look at Macy’s

For the sake of the people who know little about the company, it will be wise to first check out what the company actually stands for.

Macy’s is a popular name in the American retail industry. The company started its journey in 1858 when Rowland Hussey Macy opened the first store. Macy’s gained prominence over the years, especially after being acquired by Federated Department Stores, Inc. in 1994.

Despite facing bankruptcy in the early ’90s, Macy’s bounced back, eventually replacing Federated’s name entirely in 2007. By 2015, it was the largest department store in the U.S. in terms of retail sales.

Macy’s uniqueness lies in its ability to offer a wide range of products, from clothing and shoes to household goods, across 508 stores nationwide. In recent years, Macy’s introduced notable changes, including a partnership with Toys “R” Us in 2021, an increase in the minimum wage to $15 per hour, and a commitment to cease selling leather goods from exotic animals.

However, the wave of change hasn’t stopped there. 2023 brought a change in leadership as Jeff Gennette was replaced as the CEO of Macy’ after serving for 40 years. This indeed signaled a strategic shift for the company.

Is Macy’s Going Out of Business?

Is Macy’s going out of business? The straightforward answer is no, Macy’s is not going out of business. However, it’s undeniable that the retailer is in the midst of a significant transformation. The closure of various stores since 2020, including more planned shutdowns in 2023, is part of a strategic initiative called the Polaris plan.

This strategy involves tightening operations, cutting costs, and reinventing the Macy’s shopping experience both in-store and online.

That means even though the company is presently on the spree of shuttering stores across multiple locations, it doesn’t in any way signal the end of the iconic brand. The move is to improve the offerings of the company and help Macy’s further strengthen its reputation in the retail industry. We will go into more detail about this in the section below.

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Why is Macy’s Closing Stores?

As we already said, the decision to close stores wasn’t made lightly. Macy’s, like many in the retail sector, has been grappling with a slow-growing U.S. economy and high inflation rates, which inevitably affect consumer spending.

People are more cautious with the way they now spend – they now focus primarily on buying only the essentials. This change in consumer behavior is a significant factor in Macy’s reassessment of its physical store presence.

Apart from that, Macy’s store closures are a strategic step to shed underperforming locations, most often found in traditional malls. The company is exploring innovative ways to serve its customers, including the launch of smaller, off-mall locations called Market by Macy’s.

These venues offer a curated selection of products, aiming to provide a more personalized shopping experience. The idea is to be more adaptable and resilient in a retail environment that is increasingly shifting towards digital spaces.

What Macy’s Stores Are Closing?

In line with their restructuring, Macy’s made the move to close down its stores in four locations by January 2023. These locations include California, Colorado, Maryland, and Hawaii.

These closures come alongside Macy’s attempts to redefine its brand appeal, which includes experimenting with new store formats and digital growth strategies.

Is Macy’s Facing Financial Troubles?

Looking at Macy’s financial reports, it’s clear the company is experiencing some pressure. Net sales in the fourth quarter of fiscal 2022 were down by 4.6% compared to 2021.

However, this doesn’t spell doom. Macy’s is proactively managing its financial health by realigning its business model, focusing on areas like private brands, luxury goods, personalized communication, and online marketplaces.

These efforts aim to keep the company relevant and competitive amidst industry challenges. So, with the present financial state of the company, is Macy’s going out of business? The answer is still no!

How Did Macy’s Avoid the Inventory Pileup?

2022 was particularly challenging due to shifting consumer spending patterns, leaving Macy’s with excess inventory. But like every other challenge the company has faced in recent years, it was also able to handle this without issues.

The retailer tackled the issue of inventory pileup by reducing prices on seasonal items, private labels, and pandemic-related merchandise. This proactive approach helped clear inventory, ensuring the company could maintain a more streamlined product offering in line with current consumer demands.

Are There Other Retailers Affected by the Inflation?

Macy’s isn’t alone in feeling the pinch from inflation. Major players like Kohl’s, Walmart, and Target have all reported similar challenges, with the middle-income consumer segment being the most affected.

These retailers, too, are undergoing strategic changes to navigate through the economic turbulence. They have implemented a range of strategies to make sure their companies stay afloat in the midst of the turbulence. Some have also closed multiple stores, while some shifted their focus to essential goods.

Who Bought Out Macy’s?

While this is not a recent development, it is still worth talking about. However, you should know it has no connection at all with the recent events happening at Macy’s.

The company was acquired in 1986 by Federated Department Stores, Inc. The company stepped in after Macy’s fell into financial distress due to a leveraged buyout in 1986, which was compounded by ill-advised acquisitions and a prevailing economic downturn, eventually leading to bankruptcy in 1992.

Recognizing an opportunity, Federated Department Stores, Inc., the parent company of notable retailers like Bloomingdale’s, orchestrated a merger with Macy’s in 1994, marking a significant turn in the retail landscape.

Final Note

So, is Macy’s going out of business? We already helped you see why the answer is no! While the company faces undeniable challenges, the current evidence suggests that rather than going out of business, Macy’s is strategically pivoting.

The recent store closures are just a part of a broader effort to adapt to the evolving retail environment. So, if you are a loyal customer of Macy’s, you should keep shopping with the brand without any concerns. Your favorite retail brand is not going out of business yet!