Someone is doing something right in retail, and someone is doing something wrong. Mid-tier retailer Macy’s Inc. (NYSE: M) said it would close 40 stores in an announcement released in January. The problem may have cost CEO Terry J. Lundgren his job. Ross Stores Inc. (NASDAQ: ROST) now has said it will open 31 new locations and should add about 90 new stores this year.
The tenor of the two announcements was very different. Macy’s press release on January 6 in part read:
The company today listed 40 Macy’s store closings (out of a current total of about 770 Macy’s stores). Of the 40, 36 will be closed in early spring 2016, consistent with its announcement in September 2015. The other four stores were closed in the final three quarters of 2015, as previously announced. (A list of planned store closings, as well as openings, is included at the end of this news release.)
“Our company is committed to operating great Macy’s and Bloomingdale’s stores in the best locations – both to serve shoppers who walk through the door and to fulfill orders that are shipped directly to customers around the country,” Lundgren said. “In today’s rapidly evolving retail environment, it is essential that we maintain a portfolio of the right stores in the right places. So we will continue to add stores selectively while also being disciplined about closing stores that are unproductive or no longer robust shopping destinations because of changes in the local retail shopping landscape.”
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The Ross press release in part read:
Ross Stores today announced the opening of 24 Ross Dress for Less and seven dd’s DISCOUNTS stores across 15 different states in June and July. These new locations are part of the Company’s 2016 expansion plans to add approximately 70 Ross and 20 dd’s DISCOUNTS locations throughout the year.
Jim Fassio, President and Chief Development Officer, commented, “These recent openings reflect our ongoing strategy to expand our store base across both new and existing markets. The 31 new locations include the addition of ten stores in our newer Midwest market, with four of those locations in our newest state of Wisconsin. Over the longer-term, we continue to see expansion opportunities across all of our markets, and remain confident in our ability to grow to 2,000 Ross Dress for Less and 500 dd’s DISCOUNTS locations over time.”
What is the difference between Macy’s and Ross? It probably is not a success or failure of e-commerce, since Amazon.com Inc. (NASDAQ: AMZN) seems to take business from all the rest of the industry. It could be that mid-market Macy’s merchandise and prices are not appealing at this point, while Ross’s discounted merchandise is.
Or it could be management, which is often the difference between success and failure among companies in the same sector.
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