Macy’s is shuttering dozens of locations, but that’s not necessarily a bad thing for the iconic department store chain’s bottom line.
The company expects to generate $275M of revenue from real estate sales this year amid a favorable market, according to its third-quarter earnings report. That’s nearly twice as much as the $150M it anticipated in August.
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Macy’s is “encouraged by the pace and economics of non-go-forward stores asset sales” and now plans on accelerating its closure activity, the report says.
The corporation will shutter 65 stores by the end of fiscal year 2024, which finishes on Jan. 31. That figure is up from the 55 closures Macy’s anticipated in its Q2 report. The locations in question will remain open until after the holidays.
The closures in FY 2024 are expected to bring the company $135M in gains from sales. That comes after it made $66M in profit off real estate sales in Q3.
The downsizing initiative is not new for Macy’s. The chain announced plans to shutter 150 stores by the end of 2026 in its February earnings report.
One of the stores slated to close is the 440K SF Fulton Street location in Downtown Brooklyn. A collection of investors, including United American Land, Crown Acquisitions and The Jackson Group, bought the property for $23M last week, the New York Post reported Monday.
The $50 per SF sale is far less than the average of $250 per SF commercial properties go for in the neighborhood, Cushman & Wakefield Senior Director Ian Lerner told the outlet.
News of Monday's sale came the same day activist investors Barington Capital Group and Thor Equities made a series of suggestions to the company aimed at boosting shareholder value.
“Macy’s board should create a separate real estate subsidiary to collect market rents from Macy’s retail operations and pursue other asset sale and redevelopment opportunities,” Thor Chairman Joseph Sitt said in a statement.
He believes the chain’s brick-and-mortar assets are worth between $5B and $9M.
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