I went inside the Macy’s at Scottsdale Fashion Square last week and it was like a ghost town in there. There were shoes and purses as far as the eye could see, but they were pricey brands that I don’t consider worth the splurge. The shopping experience just isn’t as fun as discount stores like T.J. Maxx and Marshall’s. Macy’s doesn’t even carry Tory Burch items, which is ludicrous for a luxury retailer in Scottsdale. I can’t be the only one who thinks that way, because there were far more employees than shoppers inside the store. It came as no surprise to me when I saw a headline today about Macy’s closing 150 of its stores.
Macy’s explained its changing strategy in a public announcement on February 27, 2024. The store closures are expected to take place gradually through 2026. It will start by closing 50 locations before the end of the current fiscal year. When the closures are complete, Macy’s should have approximately 350 store locations. While Macy’s as a company plans to close many of its Macy’s stores, it will be expanding the brands it owns, Bloomingdale’s and Bluemercury. It expects to open 45 new locations of these two brands by 2026. This plan is projected to monetize somewhere between $600-$750 million in assets. Because of its significant assets, Macy’s won’t need to accomplish all of this through a bankruptcy filing like other companies might. However, only time will tell if increased focus on higher-end luxury goods will be a profitable choice. If you are considering filing for bankruptcy in Scottsdale or Phoenix, Arizona, you might not be sure where to turn. Our skilled bankruptcy team offers affordable payment plan options and free consultations over the phone. To get started with your free appointment with a Phoenix bankruptcy lawyer today, call 480-470-1504.
Macy’s Game Plan Versus Bankruptcy
Macy’s has reframed this new business strategy as prioritizing the customer, but legally, Macy’s has an obligation to prioritize its shareholders. Macy’s itself has admitted that it is lacking in relevance and value, however it also recognizes itself as a leader in the luxury market. With the luxury goods industry increasing despite inflation making essentials unaffordable for many families, failure to take advantage of this status could result in loss. It considers Bloomingdale’s and Bluemercury to be higher-end brands than Macy’s. It also plans to update its technology to make shopping easier and more convenient for customers.
For a company without the brand power like Macy’s, significant troubles like these could indicate a future bankruptcy filing. Businesses can either file for chapter 7 or chapter 11 bankruptcy. Chapter 7 is used to liquidate debts, but a business that files under this chapter must shut down for good. A business that declares chapter 11 bankruptcy can shut down or try to reformulate and become profitable. The strategies that Macy’s plans to employ aren’t dissimilar from tactics used by other major companies to file for bankruptcy. Closing unprofitable locations to focus on more productive locations is an extremely common chapter 11 bankruptcy technique. Many companies see their needs met best by moving away from brick-and-mortar and focusing on e-commerce. Others may simply need financing to bridge the gap during financial struggles. If you’re considering a personal bankruptcy filing in Maricopa County, call 480-470-1504 to set up your free consultation with an experienced member of our bankruptcy team.
Other Fashion Retailers That Have Declared Bankruptcy
Macy’s has managed to avoid a bankruptcy filing for now, but if the department store ever does end up in bankruptcy court, it wouldn’t be the first fashion retailer to do so. Some of the biggest names in fashion to declare bankruptcy include:
- Neiman Marcus: As a department store specializing in luxury products, Neiman Marcus was one of Macy’s biggest competitors. However, it was one of many businesses to fall victim to the financial ramifications of the COVID-19 pandemic. When Neiman Marcus filed for bankruptcy in 2020, it cleared more than $4 billion in debt. This eliminated $200 million per year in interest fees for the company.
- Brooks Brothers: This men’s suit retailer was founded in 1818, making it a leader in the industry based on age alone. But people don’t buy suits when quarantine measures cause men that work in suits to work remote and when large events like weddings are canceled for months on end. The pandemic wiped out 51 of more than 250 Brooks Brothers locations. It also closed three of its factors in the United States. Unfortunately, this bankruptcy filing also means that several people lost their jobs.
- Forever 21: This shopping mall staple’s bankruptcy filing came well before the pandemic in September 2019. It opened too many stores too quickly, and found itself struggling with debt when some of those locations turned less profits than others. It had more than 800 locations at the time its chapter 11 bankruptcy petition was filed, with some of those locations being larger than 100,000 square feet. The retailer shifted its focus to quality and design, with a larger emphasis placed on online sales rather than brick-and-mortar sales.
- JC Penney: While JC Penney’s financial struggles began long before the pandemic, COVID-19 was the final impetus that pushed the department store to file for chapter 11 bankruptcy. Its filing came in May 2020 after 118 years in business. JC Penney is another competitor of Macy’s, but this retailer is focused more on affordability than luxury products.
- Lucky Brand: Known for its bohemian flare on modern trends, Lucky Brand was another victim of the COVID-19 pandemic. Its bankruptcy plan included closing 13 of its 200 store locations. When it filed chapter 11 bankruptcy, the brand also announced its intentions to be acquired by SPARC Group, which also owns Aeropostale and Nautica.
- True Religion: While perhaps past its heyday, this denim company may see a resurgence in popularity as 90’s and 00’s trends come back into style. It has that option because its pandemic bankruptcy filing was under chapter 11 rather than chapter 7. This was the jeans retailer’s second bankruptcy filing in a 3-year period, as it had previously filed chapter 11 bankruptcy in 2017.
Bankruptcy Isn’t Just for Major Corporations- Learn More About Your Debt Relief Options As An Individual Consumer
It seems that for now, Macy’s will address its financial issues without turning to bankruptcy. When a company files for chapter 11 bankruptcy, it may sound like an infeasible option as an average person- which is probably true. Most people can have their debt relief needs met by either chapter 7 or chapter 13 bankruptcy. However, chapter 11 bankruptcy has provisions available for small business owners that speed up the process and reduce the cost. A skilled bankruptcy attorney can walk you through your options so that you can feel confident and informed about your decision. We pride ourselves on delivering positive results to our clients, no matter their financial situations. Most of our clients qualify to file with our firm, LegalHelp-AZ.com for Zero Dollars Down. To see if you qualify, and which chapter of bankruptcy is best for you, schedule your free consultation with our firm by calling 480-470-1504 and contact us!
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