Macy's closing 150 stores nationwide, including San Francisco's flagship Union Square store

SAN FRANCISCO - Macy's will close 150 stores nationwide in the next two years, including San Francisco's flagship Union Square store.

Mayor London Breed said the Union Square store will be shuttered in the second phase of closures and that the store will remain open and employees will still have jobs until then. 

It will also take time to sell the 400,000 square foot property, Breed added, and she vowed to work with the next business to move in there.

On a Tuesday earnings call, Macy's officials said that 50 stores across the United States will be closed in the first year, and the remaining 100 in the second. 

Macy's is more than just a department store to many, it's a nod to shared cultural experiences. Mayor Breed characterized this move as a business decision on Macy's part. 

"That being said, as someone who grew up in San Francisco, Macy’s has always meant a lot to the people of this city," Breed said. "It’s where families came to shop for the holidays. It’s where many people from my community got their first jobs, or even held jobs for decades. It’s hard to think of Macy’s not being part of our city anymore."

Marisa Rodriguez, CEO of the Union Square Alliance, echoed similar sentiments. 

"Macy’s will remain open and could still be open for years to come," Rodriguez said in a statement. "In all likelihood, there will be a holiday shopping season and Macy’s great tree in 2024." 

That said, Rodriguez conceded that Tuesday's announcement during an earnings call with investors "hurts." 

"For generations, Macy's has been synonymous with Union Square," Rodriguez continued. "I believe that we should work toward a solution that allows Macy’s to keep this iconic store open."

It wasn't immediately clear what will happen to the Bay Area's 20 other Macy's, such as locations, in Concord, Santa Rosa, Pleasanton and Walnut Creek.

Macy's is the largest department store chain in the nation.

It owns not just 350 Macy's stores, but it is also the parent company of Bloomingdale's and the cosmetic store, Bluemercury. 

City leaders stressed that the closure, especially in San Francisco, isn't about safety. In fact, they pointed out, Union Square saw its lowest rate of crime in the last holiday season than it had in years, and larceny theft remains down 39% so far in 2024.   

Instead, it's about profitability.

Macy's and Bloomingdale's sales during the 2023 holiday shopping season were down compared to a year before.

Ray Wimer, professor of retail practice at Syracuse University, acknowledged that Macy's is in a tough spot, especially in light of online shopping and competition, including Target and Walmart. 

"They've been trying to restructure and find strategies to find a path to success into the future," Wimer said. "Right now, there's just so much competition."

Wimer said if companies can create a retail experience with smaller spaces, which requires less staff, shoppers will get a better experience. 

"The really big department store in many areas of the country is not as attractive as it used to be," Wimer said. 

A new CEO, Tony Spring, took over the company last year and investors had threatened to take the company private if it didn't turn things around.

On the earnings call, Spring said he had identified 150 stores that the company is calling "non-go-forward" locations, which are not that profitable. 

Spring said the company spent seven months trying to diagnose and find solutions to the company's problems.

They surveyed 60,000 customers and said the Macy's stores that stay open will undergo renovations and get more resources including more workers in women's shoes and clothing departments.

It is the second major downsizing of the Macy’s chain since 2020 and will leave the company with 350 stores, slightly more than half the number it had before the pandemic.

While Macy's is contracting, Bloomingdale's will grow.

Spring said that while they will close 50 Macy's stories this year, and another 100 by 2026, he plans to open 15 new Bloomingdale's stores and 30 new Bluemercury stores.

He said that's a sign the company wants to shift its focus towards higher-end luxury brands, and the skin care cosmetics market.

San Francisco politicians seized the moment to discuss this new "opportunity" and lay out their visions for the future Macy's site. 

The mayor said the city's goal is to focus on the opportunities this creates and to ensure the space is used for something that is "profitable." She envisions the space as a continued destination that will attract people. 

Supervisor Aaron Peskin said he was "devastated" by Macy's downsizing plan.

But he said that he'd like to see the property become a mixed-use space, including building a new sound stage in Union Square to attract world-class performances. 

At nearby historic John's Grill, the news was devastating. 

"We have guests that, you know, during the holidays go to Macy's, come to John's Grill. It's family tradition," said John Konstin.

The restaurant has stood here in Union Square since shortly after the Great 1906 earthquake. They welcomed Macy's in the 1940s. The restaurant's current generation of owners is sorry to see Macy's and the traditions built around it disappear. 

"It'll be interesting to see kind of where this goes and we're going to embrace the next operators to the downtown area," said Konstin.