Macy’s, Inc. Announces Actions to Streamline Store Portfolio, Intensify Cost Efficiency Efforts and Execute Real Estate Strategy

CINCINNATI–(BUSINESS WIRE)–Macy’s, Inc. (NYSE:M) today announced a series of actions to streamline
its store portfolio, intensify cost efficiency efforts and execute its
real estate strategy. These actions bolster the company’s strategy to
further invest in omnichannel capabilities, improve customer experience
and create shareholder value. The actions include:

  • The closure of 68 stores and the reorganization of the field structure
    that supports the remaining stores, reinforcing the strategy of fewer
    stores with better customer experience. These store closures are part
    of the approximately 100 closings announced in August 2016.
  • The significant restructuring of the Macy’s, Inc. operations to focus
    resources on strategic priorities, improve organizational agility and
    reduce expense.
  • The sale of properties consistent with the previously announced real
    estate strategy.

The actions announced today are estimated to generate annual expense
savings of approximately $550 million, beginning in 2017, enabling the
company to invest an additional $250 million in growing the digital
business, store-related growth strategies, Bluemercury, Macy’s Backstage
and China. These savings, combined with savings from initiatives
implemented in early 2016, exceed the $500 million goal communicated in
fall of 2015, one year earlier than expected.

“Over the past year, we have been focused and disciplined about making
strategic decisions to position us to gain market share and return to
growth over time. While we are pleased with the strong performance of
our highly developed online business, as well as the progress we have
made on selling and visual presentation programs and expense reduction
initiatives in 2016, we continue to experience declining traffic in our
stores where the majority of our business is still transacted. Given the
overall trends challenging us and the broader retail industry, and the
time needed to execute new strategies, we expect our 2017 change in
comparable sales to be relatively consistent with our November/December
sales trend,” said Terry J. Lundgren, chairman and chief executive
officer of Macy’s, Inc. “Our omnichannel strategies continue to evolve
based on the changes in our customers’ shopping behaviors, including a
focus on buy online, pickup in store and mobile-enabled shopping. In
addition, we have invested in and enlarged our customer data and
analytics team, which will help drive our new marketing strategies for
2017. Whether it is improving corporate agility, enhancing our customer
engagement strategies, or continuing to capitalize on the potential
value of our real estate assets, we remain focused on the actions that
will ultimately improve our financial results and provide the greatest
return for our shareholders.”

In conjunction with today’s announcement, approximately $250 million of
charges or 50 cents per share (of which approximately $210 million is
expected to be cash) are expected to be recorded in the fourth quarter
of 2016. These charges were not previously included in earnings guidance
provided by the company and are in addition to the $249 million recorded
in the second quarter as an estimate of asset impairment and other
charges primarily related to 2016 store closings.

(Editor’s Note: Macy’s, Inc. this afternoon also issued a separate
news release announcing sales results for the November/December
2016 period and updating guidance.)

Store Portfolio Restructure

The company today announced 68 Macy’s store closings (out of a current
total of 730 Macy’s stores). Of the 68, three closed mid-year, 63 will
be closed in early spring 2017 and two will be closed in mid-2017. Three
other locations were sold, or are to be sold, and are being leased back.
(A list of planned store closings, as well as store openings, is
included at the end of this news release.) The company intends to
opportunistically close approximately 30 additional stores over the next
few years as leases or operating covenants expire or sale transactions
are completed.

As a result of closing 63 Macy’s stores in early 2017, along with the
three closed mid-year 2016, the company’s 2017 sales are expected to be
negatively impacted by approximately $575 million. This reflects the
company’s ability to retain sales at nearby stores and on macys.com
through targeted marketing and merchandising efforts.

Associates displaced by store closings may be offered positions in
nearby stores where possible. Eligible full-time and part-time
associates who are affected by the store closings will be offered
severance benefits. The company estimates that 3,900 associates will be
displaced as a result of these closures.

“As we’ve noted, it is essential that we maintain a healthy portfolio of
the right stores in the right places. Our plan to close approximately
100 stores over the next few years is an important part of our strategy
to help us right-size our physical footprint as we expand our digital
reach. We are closing locations that are unproductive or are no longer
robust shopping destinations due to changes in the local retail shopping
landscape, as well as monetizing locations with highly valued real
estate,” Lundgren said. “These are never easy decisions, and we are
committed to treating associates affected by these closings with respect
and transparency.”

Four new Macy’s and Bloomingdale’s stores are currently planned and/or
under construction, as previously announced. In addition, new Macy’s and
Bloomingdale’s stores are planned to open in Abu Dhabi, and one
Bloomingdale’s store is planned to open in Kuwait, all under license
agreements with Al Tayer Group. The company also plans to continue its
expansion of Macy’s Backstage (within Macy’s stores) and Bluemercury
(freestanding and within Macy’s stores).

Efficiency and Expense Reduction Initiatives

To address the need for greater efficiency and productivity, Macy’s,
Inc. will implement the following changes in early 2017:

  • Restructuring its central organization with a focus on eliminating
    layers of management to reduce costs while improving decision making
    and agility.
  • Intensifying efforts to reduce non-payroll costs companywide by
    achieving lower pricing and reducing consumption to deliver
    sustainable savings.
  • Making changes to the way stores are operated and reducing field
    infrastructure given the reduced store sales and evolving customer
    behavior.

The company estimates that these actions will result in a headcount
reduction of approximately 6,200.

Real Estate

The company continues to drive shareholder value through ongoing real
estate initiatives. As previously communicated, the three prongs of the
real estate strategy are: flagship assets, closure of approximately 100
stores and creating value from the remaining real estate portfolio.
Since the end of the third quarter, Macy’s, Inc. has completed the
following transactions that, in total, resulted in the receipt of
approximately $95 million of cash proceeds and gain recognition of
approximately $56 million:

  • Sale of the Stonestown store in San Francisco, CA, to General Growth
    Properties (GGP). Macy’s, Inc. will lease this store back from GGP as
    that company develops plans for this location.
  • Sale of the downtown Portland, OR, store (announced in the third
    quarter release).

In addition, the company has signed an agreement to sell the downtown
Minneapolis store to the 601W Companies, whose intention is to redevelop
the building into creative office space on the upper floors and to
pursue retail opportunities on the street and skywalk levels. This
transaction is expected to close by fiscal year end.

About Macy’s, Inc.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one
of the nation’s premier retailers, with fiscal 2015 sales of $27.079
billion. The company operates about 880 stores in 45 states, the
District of Columbia, Guam and Puerto Rico under the names of Macy’s,
Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage and Bluemercury,
as well as the macys.com, bloomingdales.com and bluemercury.com
websites. Bloomingdale’s in Dubai is operated by Al Tayer Group LLC
under a license agreement.

All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of Macy’s management and
are subject to significant risks and uncertainties. Actual results could
differ materially from those expressed in or implied by the
forward-looking statements contained in this release because of a
variety of factors, including conditions to, or changes in the timing
of, proposed real estate and other transactions, prevailing interest
rates and non-recurring charges, store closings, competitive pressures
from specialty stores, general merchandise stores, off-price and
discount stores, manufacturers’ outlets, the Internet, mail-order
catalogs and television shopping and general consumer spending levels,
including the impact of the availability and level of consumer debt, the
effect of weather and other factors identified in documents filed by the
company with the Securities and Exchange Commission.

(NOTE: Additional information on Macy’s, Inc., including past news
releases, is available at www.macysinc.com/pressroom).

Macy’s Store Closings

Already Completed 2016 Closings

  • Laurel Plaza, North Hollywood, CA (475,000 square feet; opened in
    1995; 105 associates);
  • Ala Moana Jewel Gallery, Honolulu, HI (2,000 square feet; opened in
    1986; 9 associates);
  • Valley Fair, West Valley City, UT (106,000 square feet; opened in
    1970; 53 associates);

Already Announced Year-End 2016 Closings

Final clearance sales at the following Macy’s stores closing in early
2017 will begin on Monday, January 9, and run for approximately eight to
12 weeks (with the exception of Lancaster Mall*, where final clearance
sales are already in progress):

  • Greenwood, Bowling Green, KY (124,000 square feet; opened in 1980; 63
    associates);
  • Carolina Place, Pineville, NC (151,000 square feet; opened in 1993; 69
    associates);
  • Douglaston, Douglaston, NY (158,000 square feet; opened in 1981; 144
    associates);
  • Downtown Portland, Portland, OR (246,000 square feet; opened in 2007;
    85 associates);
  • *Lancaster Mall, Salem, OR (67,000 square feet; opened in 1980; 53
    associates);
  • Oakwood Mall, Eau Claire, WI (104,000 square feet; opened in 1991; 55
    associates)

Year-End Closings

  • Mission Valley Apparel, San Diego, CA (385,000 square feet; opened in
    1961; 140 associates);
  • Paseo Nuevo, Santa Barbara, CA (141,000 square feet; opened in 1990;
    77 associates);
  • Lakeland Square, Lakeland, FL (101,000 square feet; opened in 1995; 68
    associates);
  • Oviedo Marketplace, Oviedo, FL (195,000 square feet; opened in 2000;
    83 associates);
  • Sarasota Square, Sarasota, FL (143,000 square feet; opened in 1977; 86
    associates);
  • University Square, Tampa, FL (140,000 square feet; opened in 1974; 73
    associates);
  • CityPlace, West Palm Beach, FL (108,000 square feet; opened in 2000;
    72 associates);
  • Georgia Square, Athens, GA (121,000 square feet; opened in 1981; 69
    associates);
  • Nampa Gateway Center, Nampa, ID (104,000, square feet; opened in 2009;
    57 associates);
  • Alton Square, Alton, IL (180,000 square feet; opened in 1978; 54
    associates);
  • Stratford Square, Bloomingdale, IL (149,000 square feet; opened in
    1981; 87 associates);
  • Eastland, Bloomington, IL (154,000 square feet; opened in 1999; 55
    associates);
  • Jefferson, Louisville, KY (157,000 square feet; opened in 1979; 52
    associates);
  • Esplanade, Kenner, LA (188,000 square feet; opened in 2008; 101
    associates);
  • Bangor, Bangor, ME (143,000 square feet; opened in 1998; 65
    associates);
  • Westgate, Brockton, MA (144,000 square feet; opened in 2003; 79
    associates);
  • Silver City Galleria, Taunton, MA (152,000 square feet; opened in
    1992; 82 associates);
  • Lakeview Square Mall, Battle Creek, MI (102,000 square feet: opened
    1983; 51 associates);
  • Eastland Center, Harper Woods, MI (433,000 square feet; opened in
    1957; 121 associates);
  • Lansing, Lansing, MI (103,000 square feet; opened in 1979; 57
    associates);
  • Westland, Westland, MI (334,000 square feet; opened in 1965; 106
    associates);
  • Minneapolis Downtown, Minneapolis, MN (1,276,000 square feet; opened
    in 1902; 280 associates);
  • Northgate, Durham, NC (187,000 square feet; opened in 1994; 72
    associates);
  • Columbia, Grand Forks, ND (99,000 square feet; opened in 1978; 53
    associates);
  • Moorestown, Moorestown, NJ (200,000 square feet; opened in 1999; 107
    associates);
  • Voorhees Town Center, Voorhees, NJ (224,000 square feet; opened in
    1970; 77 associates);
  • Preakness, Wayne, NJ (81,000 square feet; opened in 1963; 72
    associates);
  • Cottonwood, Albuquerque, NM (173,000 square feet; opened in 1996; 56
    associates);
  • Las Vegas Boulevard, Las Vegas, NV (178,000 square feet; opened in
    1966; 84 associates);
  • Great Northern, Clay, NY (88,000 square feet; opened in 1989; 55
    associates);
  • Oakdale Mall, Johnson City, NY (140,000 square feet; opened in 2000;
    58 associates);
  • The Marketplace, Rochester, NY (149,000 square feet; opened in 1982;
    77 associates);
  • Eastland, Columbus, OH (121,000 square feet; opened in 2006; 73
    associates);
  • Sandusky, Sandusky, OH (133,000 square feet; opened in 1979; 61
    associates);
  • Fort Steuben, Steubenville, OH (132,000 square feet; opened in 1974;
    59 associates);
  • Promenade, Tulsa, OK (180,000 square feet; opened in 1996; 58
    associates);
  • Neshaminy, Bensalem, PA (211,000 square feet; opened in 1968; 89
    associates);
  • Shenango Valley, Hermitage, PA (106,000 square feet; opened in 1976;
    69 associates);
  • Beaver Valley, Monaca, PA (203,000 square feet; opened in 1987; 78
    associates);
  • Lycoming, Muncy, PA (120,000 square feet; opened in 1995; 61
    associates);
  • Plymouth Meeting, Plymouth Meeting, PA (214,000 square feet; opened in
    1966; 74 associates);
  • Washington Crown Center, Washington, PA (148,000 square feet; opened
    in 1999; 67 associates);
  • Parkdale, Beaumont, TX (171,000 square feet; opened in 2002; 67
    associates);
  • Southwest Center, Dallas, TX (148,000 square feet; opened in 1975; 68
    associates);
  • Sunland Park, El Paso, TX (105,000 square feet; opened in 2004; 71
    associates);
  • Greenspoint, Houston, TX (314,000 square feet; opened in 1976; 70
    associates);
  • West Oaks Mall, Houston, TX (244,000 square feet; opened in 1982; 135
    associates);
  • Pasadena Town Square, Pasadena, TX (209,000 square feet; opened in
    1962; 78 associates);
  • Collin Creek, Plano, TX (199,000 square feet; opened in 1980; 103
    associates);
  • Broadway Square, Tyler, TX (100,000 square feet; opened in 1981; 65
    associates);
  • Layton Hills, Layton, UT (162,000 square feet; opened in 1980; 72
    associates);
  • Cottonwood, Salt Lake City, UT (200,000 square feet; opened in 1962;
    88 associates);
  • Landmark, Alexandria, VA (201,000 square feet; opened in 1965; 119
    associates);
  • River Ridge, Lynchburg, VA (144,000 square feet; opened in 1980; 60
    associates);
  • Everett, Everett, WA (133,000 square feet; opened in 1977; 109
    associates);
  • Three Rivers, Kelso, WA (51,000 square feet; opened in 1987; 57
    associates);
  • Valley View, La Crosse, WI (101,000 square feet; opened in 1980; 57
    associates)

Other 2017 Closings

  • Simi Valley Town Center (men’s/home/kids), Simi Valley, CA (190,000
    square feet; opened in 2006; 105 associates);
  • Mall at Tuttle Crossing (furniture/home/kids/men’s), Dublin, OH
    (227,000 square feet; opened in 2003; 52 associates)

Stores Sold (or to be Sold) and Leased Back

These stores have been or will be sold, and Macy’s will continue to
operate them on leases from the owners:

  • Stonestown Galleria, San Francisco, CA (280,000 square feet; opened in
    1952; 204 associates);
  • Union Square Men’s, San Francisco, CA (248,000 square feet; opened in
    1974; 256 associates; as previously announced);
  • Tyson’s Galleria, McLean, VA (265,000 square feet; opened in 1988; 122
    associates; as previously announced)

(The number of associates given by store reflects the number of
positions eliminated. Many of these associates will be placed in other
positions.)

Store Openings

Four new Macy’s and Bloomingdale’s stores are currently planned and/or
under construction, as previously announced.

New Macy’s stores will be opening in:

  • Westfield Century City, Los Angeles, CA (a 155,000 square-foot store
    to open in spring 2017; Macy’s previously operated a 136,000
    square-foot store in this location which closed in January 2016);
  • Fashion Place, Murray, UT (160,000 square feet; to open in spring
    2017; approximately 150 associates)

New Bloomingdale’s stores will be opening in:

  • Westfield Valley Fair Shopping Center, San Jose, CA (150,000 square
    feet; to open in spring 2019; approximately 250 associates);
  • The SoNo Collection, Norwalk, CT (150,000 square feet; to open in fall
    2019; approximately 200 associates)

In addition, in the next two years, the company plans to open
approximately 50 additional Macy’s Backstage off-price locations (all of
which will be inside existing Macy’s stores) and about 50 Bluemercury
beauty specialty stores (freestanding and shops inside existing Macy’s
stores).

Internationally, under license agreements with Al Tayer Group, a new
Bloomingdale’s store is planned to open in 360 Mall in Al Zahra, Kuwait
in Spring 2017 and new Macy’s and Bloomingdale’s stores are planned to
open in Al Maryah Central in Abu Dhabi, United Arab Emirates, in 2018.

Contacts

Macy’s, Inc.
Media – Holly Thomas, 646-429-5250
holly.thomas@macys.com
or
Investor
– Matt Stautberg, 513-579-7780