In a massive structural change, Macy’s announced plans Wednesday to close 68 stores early this year, including its store in downtown Santa Barbara’s Paseo Nuevo, where it has been located for the past 27 years.
The cutbacks, which will save the retailer about $550 million annually beginning this year, are meant to “streamline its store portfolio, intensify cost efficiency efforts and execute its real estate strategy,” according to a news release.
Macy’s has seen a decline in traffic in its stores, where the majority of its business is still transacted, according to Macy’s Chairman and CEO Terry Lundgren, who noted that the retailer’s strategies will evolve based on customers’ shopping behaviors, such as online shopping.
The company says nearly 4,000 employees will be displaced by the closures. About 77 associates work at the 141,000 square-foot Paseo Nuevo location.
While large format retailers have found Santa Barbara’s market is “extremely difficult” to secure space, Brad Frohling, a partner and principal with Radius Group Commercial Real Estate, was optimistic the location would find a replacement.
“It remains a premier location so there will be interested tenants and the Paseo Nuevo mall management will be motivated to accommodate quality operators,” Mr. Frohling said.
Macy’s has another store in La Cumbre Plaza and Mr. Frohling said that in a small, coastal town like Santa Barbara, having two stores has long been a point of discussion.
“Hopefully there will be near-term news of a great new plan,” he said.
Mr. Frohling noted it wasn’t long ago when Marshals took the place of Borders, H&M filled Barnes and Noble, and Forever 21 took over Anthropology on State Street.
“We are a very resilient market,” he said.
The closures are part of a plan to shut down about 100 stores over the next couple of years.
Macy’s also will close two stores in San Diego and Simi Valley.
Final clearance sales will begin Monday and run for approximately eight to 12 weeks.
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Summary of market insights and analysis from Q2 2019 South Coast commercial sales and leasing activity: Download the complete report here …