On February 4, 2020, Macy’s outlined a new three-year strategy to stabilize profitability and “position the company for growth,” which the company refers to as the Polaris plan. It focuses on the following areas:

1. Strengthening customer relationships: Build long-term customer relationships, accelerate personalization and monetization loyalty programs.
2. Curating quality fashion: Expand the product assortment and offer exclusive, trendy products at great value, including a plan to build four, $1 billion brands.
3. Accelerating digital growth: Continue investing in websites and digital apps to deliver a seamless buying experience.
4. Optimizing the store portfolio: Adjust the number of stores and staffing, and test new, smaller store formats located off-mall in lifestyle centers.
5. Resetting the cost base: Streamline the organization with a net reduction in corporate and support function headcount of 9%, or about 2,000 positions.

Macy’s Will Close Approximately 125 Stores within Three Years Macy’s plans to close approximately 125 of its stores over the next three years, including approximately 30 stores that are already in the process of closing. These 125 stores represent 14% of the company’s fleet and account for approximately $1.4 billion in annual sales, according to the company. As of November 2019, Macy's Inc. operated 871 stores, including Macy's, Backstage, Bloomingdale's, Bloomingdale's Outlets and Bluemercury. So far this year, excluding the Macy’s closures, Coresight Research has recorded 1,161 store closure announcements in the US. Read our latest Weekly US and UK Store Openings and Closures Tracker here and find the Coresight Research Retail Store Databank here. Macy’s Will Move Its San Francisco Macys.com Headquarters to New York City, And Expand Its Technology Presence in Atlanta As part of the Polaris plan, Macy’s will also consolidate corporate operations, making New York City the company’s only corporate headquarters. The company will close offices in San Francisco, Cincinnati and Lorain (Ohio). The company will also close a customer contact center in Tempe and consolidate operations into its Mason, Ohio and Clearwater, Florida facilities. The company will increase staff in its offices in Mason and Springdale, both in Ohio. The Atlanta area will be the primary technology center for Macy’s, and the company will add positions to its facility in Johns Creek, Georgia, and open an office in nearby Atlanta. Financial Impact Macy’s anticipates the Polaris plan will yield total annual gross savings of $1.5 billion by 2022 and savings of $600 million in 2020, which it expects to improve operating margins and profitability. Further, the company expects to plow some of the savings into growth areas, such as its Backstage off-price format, off-mall expansion, continued improvements to the digital business and technology focused on analytics and automation. Macy’s expects the total cost of the Polaris program to be in the range of $450-$490 million, most of which to be recorded in 2019. About $270-$290 million of these costs will be cash. Updated 4Q19 and 2019 Guidance Macy’s announced the following preliminary results for 4Q19:

• Revenues: $8.3 billion (down 2%).
• Comps: (0.6%) for owned properties.
• Comps: (0.5%) for owned and licensed.

The company also updated full-year 2019 guidance: [caption id="attachment_103249" align="aligncenter" width="700"] Source: Company reports[/caption]   The company also expects 2019 EPS near the high end of the $2.57–2.77 range. Macy’s also provided guidance for 2020: [caption id="attachment_103250" align="aligncenter" width="700"] Note: EPS change assumes adjusted EPS of $2.75
Source: Company reports [/caption]   Macy’s also provided a three-year target for fiscal 2022. [caption id="attachment_103251" align="aligncenter" width="700"] Source: Company reports[/caption]