Macy's will close 150 stores nationwide over the next three years as part of a plan meant to right the ship for the storied retailer, which has struggled in recent years, particularly since the pandemic.

The first 50 stores are scheduled to close by the end of the fiscal year, Macy's said in a release Tuesday, with the rest of the closures occurring by the end of 2026. The statement also mentioned the monetization of $600M to $750M of assets by the end of 2026, indicating the potential sale of properties.

Macy's said it would begin notifying affected employees Tuesday, The New York Times reported. The impacted stores account for 25% of the company's square footage but just 10% of sales.

When the closures are complete, Macy's will be left with about 350 stores, just over half its pre-pandemic store count. The company announced a similar plan in February 2020, closing 125 stores in the three years that followed.

The company also announced a pivot toward its luxury brands, Bloomingdale’s and Bluemercury. The renewed focus on these brands is expected to result in 15 new Bloomingdale's locations and 30 Bluemercury stores in the next three years. Another 30 existing Bluemercury stores are slated for remodeling.

Bloomingdale's and Bluemercury are more upmarket brands that Macy's characterizes as standouts within its portfolio.

The move comes amid slumping sales for the legacy department store chain, as well as a looming proxy fight for Macy's with Arkhouse Management, which nominated a slate of nine directors for Macy's 14-person board not long after the retailer rejected a bid by Arkhouse and Brigade Capital Management to go private.

The real prize in taking the company private would likely be its real estate. Macy's is worth billions more than the $5.8B Arkhouse and its partner put forward, mainly because of its prime real estate, according to analysts.

Last year, Macy's net sales dropped 5.5% compared to 2022, and comparable store sales were down 6% year-over-year. The chain experienced a loss of $71M in 2023, down from a net income of $105M in 2022. For the fourth quarter of 2023, net sales were off 1.7% compared with a year earlier, and comparable store sales dropped 4.2%.

Macy's faces the same headwinds as the entire department store sector, which has been slowly contracting for years. In January, department stores suffered a 6.7% drop in sales compared to a year earlier, according to the Census Bureau.