It's been a bad year for Macy's, and it just keeps getting worse.
The company said on Wednesday that it has seen a 5.2 percent drop in sales between the beginning of August to the end of October, and is responding to these figures by speeding up closures of struggling department store locations and doubling down on its discount store chain.
Macy's announced in September that it would close 35 to 40 poorly performing department store locations. On Wednesday, the retailer's CEO, Terry Lundgren, said he'd close more stores once those locations are all shuttered, according to the Cincinnati Business Courier.
The iconic retailer launched Macy’s Backstage -- which, much like competitors Nordstrom Rack or Off Fifth, has bare-bones decor and carries clearance items year-round -- in August. It currently has six locations in the greater New York City area, and the company announced plans on Wednesday to open 50 more of the stores over the next two years.
Lundgren also intends to experiment with adding Macy's Backstage sections to 10 department store locations, the Business Courier reported.
A key reason for the decline in Macy's sales is the growing popularity of so-called off-price stores like T.J. Maxx and Marshalls, as many customers who prioritized bargain-hunting during the recession have maintained their frugal habits.
So-called off-price or discount retailers saw their sales grow 44 percent from 2009 to 2014, according to The Wall Street Journal.
Macy’s share of department store sales actually rose significantly from 2006 to 2013, according to the Journal. However, department stores’ share of overall merchandise sales dipped during that same period.
News about declining sales prompted Macy's share price to fall 14 percent on Wednesday, the Journal reported, bringing the total drop to 40 percent on the year. Since Macy's is the first department store to report earnings, investors interpreted the news as an ominous sign for other traditional retailers. The stock prices of Kohl's, Burlington Stores and Hudson’s Bay Company, which owns Saks Fifth Avenue and Lord & Taylor, all fell the same day.
Macy’s will open its doors to shoppers at 6 p.m. on Thanksgiving Day, and offer Black Friday sales until 1 p.m. the following day.
H&M, by contrast, announced on Tuesday that it will close its stores nationwide on Thanksgiving Day. It joins a growing number of retailers, including Nordstrom, Costco and BJ’s, that have chosen to close all of their U.S. stores on Thanksgiving Day out of consideration for their employees.
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