Macy's unloads stores to mall operator General Growth Properties
- Mall owner and real estate developer General Growth Properties has acquired five anchor boxes from Macy’s for approximately $48 million, part of the department store chain's previously-announced plan to unload 100 stores by early next year.
- Four of the Macy's stores — locations in Carolina Place in Pineville, NC; Oakwood Mall in Eau Claire, WI; Quail Springs Mall in Oklahoma City, OK (closed by Macy’s this past spring); and Tysons Galleria in McLean, VA — were sold in the third quarter, while the fifth, located in Greenwood Mall in Bowling Green, KY, was sold earlier in the year.
- Three of the Macy’s stores sold to GGP will close after the holidays, while Macy’s will continue to operate the Tysons Galleria store under a lease arrangement with GGP.
Macy's said it is "committed to treating associates affected by store closings with respect and openness” in a statement issued Monday. “Associates displaced by store closings may be offered positions in nearby stores where possible. Eligible full-time and part-time associates who are laid off due to the store closings will be offered severance benefits.”
Those opportunities will become fewer and farther between, as Macy's closes a record number of stores, possibly many beyond the 100 it has slated so far, after gobbling up mall anchor stores and downtown department stores across the country in the late 20th and early 21st centuries.
"Macy's has entered a new phase of monetizing its real estate," Nick Egelanian, president of retail development consultants SiteWorks International, told Retail Dive in an email Tuesday. "They have signaled that this would be coming, so it is not really a surprise. I expect their asset sales and downsizing to be more orderly and less chaotic than Sears' efforts to date. Keep in mind that, as each store is minimized, overall chain volume (and relevance) continues to decline."
Egelanian believes that "the entire department store industry, now considerably smaller than individual stand-alone companies like Target, Home Depot, Costco and Amazon, will to continue to shrink for the next 10 to 15 years until it is less than half the size it is today by store count."
Also Monday, GGP reported that profits fell 2% during the third quarter to $336 million, missing analyst expectations for the period, according to Thomson Reuters. The company lowered its guidance for the fourth quarter from 42 cents to 44 cents per share and its full-year guidance to $1.52 to $1.54 per share.
During its conference call with analysts, scheduled for Tuesday morning, GGP executives are likely to face questions about the firm's participation in a consortium that bought bankrupt Aeropostale. There’s a general sense that the group, which also includes fellow mall landlord Simon Property Group, plunked down $243 million for the struggling teen apparel retailer to help malls avoid losses on those leases. But many are questioning the investment.
Last week Simon CEO David Simon pointed out that his company’s outlay to take over the retailer was $33 million, and Monday GGP noted that its investment was $20.4 million. Simon said the group’s aim is not just to avoid losses, but to actually make good money on the deal.