Question

Write a reaction paper on Macy’s closing nearly 30 stores. The link to the article is attached https://www.cnbc.com/2020/01/08/macys-store-closuresheres-where-they-are.html.

Answer 1

• Macy has planned to close around 30 stores in the US. This includes 28 Macy's store and 1 Bloomingdale's store mostly concentrated in the eastern part of US.
• The main reason for planning of closure is to boost the profitability of the company. and focus on the profitable stores.
• If we look in the past, Macy has been planning to cut down the number of stores since 2016. Also the SSSG (Same Store Sales Growth) has declined in the current year which led to analyst cutting the profit forecast. SSSG is an important metric in retail business valuation. Falling SSSG anf even declining SSSG is a source of worry for investor.
• So closing down the less profitable stores can help company increase the SSSG.
• Nowadays, consumer preference has been changing from Brick and mortar stores to buying online which gives more convenience and price discounts. So company's focus on investing in its website along with focusing on best real estate and off-price backstage business can help company turn around the ship and increase the SSSG and profitability.
• After the announcement, the share price has increased 2.4% which shows that market also is happy with the decision.