New York CNN —
One of the highest profile jobs in retail will change hands next year.
Macy’s (M) CEO Jeff Gennette will retire in 2024, the company announced Wednesday.
Gennette, 61, has been Macy’s CEO for seven years. He led the 165-year-old department store chain through the rise of Amazon (AMZN), the Covid-19 pandemic, and industry upheaval. Under Gennette, Macy’s most notably built out its online platform and shifted away from malls. Macy’s also fended off activist investors that called on the company to spinoff its e-commerce business.
Macy’s is no longer the dominant force in American shopping as it was during the 20th century. The department store format has faded in favor of online shopping, big box chains like Target (TGT), and discount clothing chains such as TJ Maxx.
But Macy’s, well known as the annual sponsor of the Thanksgiving Day parade and July 4 fireworks in New York City, has outperformed Kohl’s (KSS), Nordstrom (JWN) and other department store peers in recent years, while Sears, JCPenney and Neiman Marcus have filed for bankruptcy.
Gennette, one of the few openly gay chief executives in Corporate America, will be replaced next year by Bloomingdale’s CEO Tony Spring. (Macy’s owns Bloomingdale’s.)
Spring has been at Bloomingdale’s for 36 years. The chain hit record sales last year and is seen as the strongest part of Macy’s business.
The choice of Spring signals that Macy’s sees its future in upscale retail and higher-income customers.
One of the largest moves under Gennette was shrinking Macy’s.
Macy’s for decades was a reliable anchor tenant for mall owners and a draw for shoppers. But in 2020, Macy’s announced it would close 125 stores, roughly one-fifth of its portfolio. The company pulled out of “lower-tier” malls and focused on developing small, freestanding stores.
As of January, Macy’s had 566 stores, down from 613 in 2019.
Macy’s also recovered from the impact of the pandemic better than many of its rivals.
The company temporarily closed all of its stores early in the pandemic in 2020, but was able to bounce back in 2021 and 2022 as shoppers spent on new clothes and gifts.
The company’s sales are roughly what they were prior to the pandemic, and Macy’s has avoided the pileup of inventory that has plagued other apparel retailers.
Still, the future of Macy’s is uncertain.
Shoppers have pulled back on discretionary goods like clothing and shifted their spending to paying for groceries and household basics in the face of inflation. Macy’s projects that sales will decline by up to 3% this year from a year ago.
“Thanks to Mr. Gennette, Macy’s isn’t dead or even circling the drain,” GlobalData Retail analyst Neil Saunders said in a note to clients Wednesday. “However, it is still on a perilous glide path with weak long-term prospects.”