OHIO (Reuters) - If you can't beat 'em - join 'em. Macy's is boosting investment in its online operations and closing about 100 of its stores. Most of the store closings will come in 2017. The department store operator also reported better than expected overall earnings and a smaller-than-expected drop in quarterly comparable store sales.
The company has been under pressure from activist investor Starboard Value to monetise its huge real estate portfolio.
Retail industry analyst at Consumer Edge Research David Schick said: "Stores, footage, that retailers either lease or own can almost be a liability today, right? Because the amount of time we spend shopping and communicating online shrinks the amount of time we actually spend in stores."
Shares of the company soared on the news, but O'Shares ETF's Kevin O'Leary says Macy's stock is not a bargain.
"Macy's is not a stock I would buy right now. I don't like buying re-inventing business models. There is too much risk in it for me."
Just like other department stores, Macy's has been struggling with stiff competition from online and off-price retailers. It's also facing shifting spending patterns, with shoppers shelling out on big-ticket items, like electronics and cars, rather than on clothes.