Macy’s to open more small stores in the mall

Messi On Tuesday, it said it would open four more stores that look a lot different from the typical giant malls as it tries to refresh a brand that has lost its luster with many shoppers.

The struggling retailer thinks the format is working.

New stores are scheduled to open in the fall in Boston, Las Vegas and San Diego, and another store will open this month in suburban Indiana. The locations will be smaller and located in malls. They will host events and exchange merchandise frequently.

On a call with CNBC on Tuesday, CEO Jeff Genette said smaller Macy’s stores outperformed the company last quarter. Those that had been open for more than a year reported sales growth over the three-month period. Across the company overall, comparable sales on an owned and licensed basis were down 7.3%.

Department stores also outperformed the company during the holiday quarter, which is a key period for the retailer.

Macy’s has already opened 10 similar stores to test the new concept. It unveiled the first one in the Dallas-Fort Worth, Texas area about three years ago. Some are called Market by Macy’s, a smaller version of the Macy’s department store of the same name, and others are called Bloomie’s, a smaller version of the upscale Bloomingdale’s department store.

The company opened stores to replace an enclosed mall site, to add density to a high-demand market or, in some cases, to enter a new area such as Seattle.

And with the four new locations, Macy’s will test a new approach: it will just call it what it is, Macy’s.

The off-mall stores are one way Macy’s is trying to tackle an existential question: how it can update its reputation and its merchandise to attract younger shoppers, who might only look at the 165-year-old department store as a place for their parents or children. Grandparents will go shopping. Led by CEO Genet, the retailer has embarked on a three-year turnaround plan, called Polaris, that has focused on strategies including driving growth online and closing underperforming stores.

A difficult consumer background complicated these transformation plans. Macy’s on Tuesday beat its fiscal second-quarter sales and earnings forecasts, but stuck with a full-year forecast calling for a sharp decline in sales year-over-year. Its shares fell 14% on Tuesday.

Along with the new stores, Macy’s is trying to shed its old reputation in other ways. It launched a new womenswear brand earlier this summer called On 34th, in homage to its flagship location in Herald Square. She has replaced other private label brands, including women’s brand INC

The company plans to update or replace all of its existing private brands and introduce three more new brands as well as 34 through 2025.