Macy's to close 100 stores but still talking on Minneapolis remake plan

Macy's said Thursday that it will close about 100 stores early next year, as it also continues to "analyze possibilities" for flagship locations that include the one along Nicollet Mall in downtown Minneapolis.

As the nation's largest department store chain fights to keep up in a fast-changing retail landscape, it has been under pressure to shed weak locations and invest in online channels and stores that are doing better. Whether it will close any of its seven stores in the Twin Cities metro area is not yet known, as the company said it is still finalizing the list.

The company has also been looking to do more with stores it considers flagships, including the Nicollet Mall location and stores in Herald Square in New York and on State Street in Chicago. Executives said last year the company was looking to form joint ventures with real estate partners to redevelop those marquee locations "in a manner that maintains a robust Macy's retail store presence while also bringing alternative use into those buildings."

Jim Sluzewski, Macy's senior vice president of communications, said Thursday that the company continues to talk with interested parties in redeveloping those properties but declined to comment further.

Dave Brennan, co-director of the University of St. Thomas Institute for Retailing Excellence, noted that Macy's has already invested hundreds of millions of dollars at its New York City flagship store to revamp it and take it more upscale and plans to do the same in Minneapolis.

"I think they will likely move ahead on the project, which will likely compact the store but move it more upscale," he wrote in an e-mail.

Minneapolis boosters have been especially anxious about holding on to that store, which had been home for decades to the flagship Dayton's department store, especially since Macy's closed its store in downtown St. Paul three years ago.

It also has two furniture stores in the Twin Cities, as well as stores in Fargo, St. Cloud and Rochester.

The upcoming 100 closures represent about 14 percent of the chain's stores and are on top of 40 stores closed this spring. The company also operates Bloomingdale's stores.

At the same time, Macy's said it would ramp up its number of exclusive products and prioritize investments in the stores that offer the highest growth potential.

"The announcements we are ­making today represent an advancement in our thinking on the role of the stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth," Macy's President Jeff Gennette, who will succeed Terry J. Lundgren as CEO early next year, said in a statement.

He added that most of the stores being closed are still making money, but their volume and profitability have been steadily declining in recent years.

People are spending more on home improvement as well as experiences like travel or spas.

When they do buy clothing, they're going to T.J. Maxx or ­fast-fashion chains like H&M. They're also increasingly researching and buying online and gravitating toward Amazon.com, which is bolstering its private label fashion brands. Amazon is by some forecasts expected to surpass Macy's as the largest online seller of clothing next year.

"They continue to be in a tough place," said Sandy Stein, Twin Cities-based author of "Retail Schmetail." "The foot traffic is down in the malls — I don't see that turning around anytime soon. And the pie is getting cut thinner and thinner as more retail continues to move online. And the customer who used to be spending on fashion isn't. And if they are, they don't expect to find it at Macy's."

Macy's hasn't done enough to offer unique merchandise or a stellar level of service to keep people coming back to its stores or to attract the attention of younger shoppers who gravitate more toward fast fashion, he added.

"There's a real disconnect between where stores are at and what they need to make them relevant again," he said.

That's down about 23 percent from a peak in January 2007 of 868 stores including Bloomingdale's. Annual net sales at the stores Macy's plans to shutter were estimated at about $1 billion.

Macy's reported another quarter of falling profits and sales Thursday, but the numbers were better than analysts feared. Summer weather helped drive clothing sales, and Macy's says it's seeing results from efforts to add sales staff and revamping its fine jewelry area. Its shares rose 17 percent, or $5.80 to $39.81, on Thursday.

The Associated Press contributed to this report.

Kavita Kumar • 612-673-4113