By Katherine Masters
NEW YORK (Reuters) - Macy’s is evaluating closing its San Francisco Union Square flagship, weighing the real estate value of the property against the potential for future sales growth at the store, a person familiar with the matter told Reuters.
The soonest the closure would take place is 2025, the person said. Macy's (NYSE:M) evaluation of the location is part of a new turnaround strategy announced by the retailer on Tuesday in an earnings call with investors. The department-store chain outlined plans to shutter an additional 150 underperforming Macy’s stores in the U.S. through 2026.
Aaron Peskin, president of the San Francisco Board of Supervisors, said in a statement that Macy’s notified him by phone that it intends to close the Union Square store. He was “devastated" to receive the message, he said in the statement. The San Francisco Chronicle and other local media outlets reported the store’s closure as a done deal on Tuesday, citing local officials.
San Francisco Mayor London Breed told local TV outlet KRON 4 that she had been "informed that Macy’s is looking to sell their Union Square property." She added: "The process to undergo the sale of their building to a new owner with their own vision for this site will take time, and Macy’s will stay open for the foreseeable future and people will remain employed at the store."
The historic property at 170 O'Farrell Street hosts the city’s annual Christmas tree lighting and is described in San Francisco property records as “one of the last traditional department stores in the downtown area.”
The move to shutter an additional 150 Macy's locations follows the company’s decision in January to close five stores and cut 2,350 jobs, or 3.5% of its overall workforce. The retailer had stores in 718 locations as of the end of the fourth quarter.
Macy’s Chief Financial Officer Adrian Mitchell said on a post-earnings call on Tuesday that the stores slated for closure represented 25% of Macy’s total square footage but less than 10% of its annual sales. The retailer has not publicly confirmed the location of stores set to close.