Macy’s Predicts $275M From Sales of Real Estate Portfolio, Will Close More Stores in 2025

After seeing a drop in in-store sales last quarter, Macy’s might make that up by selling off its real estate. 

The department store announced it expects to see $275 million in sales of its retail properties next year, nearly $125 million more than expected, but that uptick comes amid more store closures, the company said.

Macy’s is set to close 65 stores across the U.S. in 2025, an increase from the previously announced 55 stores, according to the company’s third-quarter earnings report released Wednesday.

A spokesperson for Macy’s did not immediately respond to a request for comment.

The move comes as part of CEO Tony Spring’s plan announced in February to shrink the department store’s retail footprint by 25 percent and close about 150 of its 502 stores over the next three years, as Commercial Observer previously reported.

“We at the start of the closure strategy said we had locations that were less profitable and less productive and we wanted to monetize them as soon as possible,” Spring said during an earnings call, as reported by CoStar. “So the fact that we are closing more stores this year is a reflection of the fact that our assets have value, and even in this less stable market we’re transacting.”

Macy’s announced expectation of $275 million in sales next year represents an increase from the previously announced $150 million, CoStar reported.

It also comes after the department store offloaded its historic Downtown Brooklyn location at 422 Fulton Street to a group of New York City investors for $23 million as part of a total $293 million deal for the property, CO reported.

United American Land, Crown Acquisitions and the Jackson Group joined forces last week to buy the roughly 440,000-square-foot store, but their plans for the property are not yet clear.

Macy’s seems to be taking action to shrink its footprint and sell off properties after reporting net sales of $4.7 billion during the third quarter, a decrease of 2.4 percent from the same period last year, according to the earnings report.

The poor sales performance has caused a few activist investors, including Barington Capital and Thor Equities, to urge Macy’s to start its own real estate unit to sell off more properties, the Wall Street Journal reported.

The investors said Macy’s real estate is valued between $5 billion and $9 billion, and creating its own real estate subsidiary would maximize the worth of its owned and leased locations, WSJ reported.

Isabelle Durso can be reached at idurso@commercialobserver.com.