Macy’s, the New York-based department store chain, is downsizing its footprint by closing up to 150 stores through 2027. This new approach is one step within a comprehensive plan to improve its profitability. The announcement flies in the face of growing concern that the company is facing an existential crisis due largely to tariffs on biotech imports from China. These tariffs, now at 30%, have recently raised the alarm for some of these retailers, like Target, Walmart, and Nike.
The two tariffs, both set by Donald Trump, are a cut from the original 145% Chinese tariff. They are still much higher than the levels that we had before the beginning of Trump’s second term. Macy’s now imports about 20% of its merchandise from China. That makes the effect of tariffs particularly painful for the retail behemoth.
Macy’s Chief Executive Officer, Tony Spring, addressed the situation on Wednesday, emphasizing the company’s commitment to its long-term strategy. He stated, “We continued to execute against our Bold New Chapter strategy during the quarter, scaling key initiatives that improved our customer experience and contributed to stronger than expected performance across all three of our nameplates.”
The store closures are just one piece of a three-year strategy focused on “fixing” Macy’s balance sheet. The comprehensive plan that went into effect last month started more than a year ago. Its focus is on closing underperforming locations and improving Macy’s e-commerce fulfillment. The broader initiative is a reflection of a wider trend among retailers to improve their capabilities to sell online while lowering their cost of operations.
Macy’s argument in the stormy economic seas. Second, more importantly, it needs to face the reality that outside influences—sudden changes like tariffs—are an existential and immediate threat to its profitability. Walmart isn’t the only retail giant feeling the pinch, as other big box chains like Target are being hurt by continued import taxes.
