Developer 601W Companies has bought the historic Macy’s department store in downtown Minneapolis for $59 million in cash, the companies said Wednesday. 601W Companies plans a mixed-use redevelopment for the building, according to a press release.
Macy’s said it will record a gain from the deal of approximately $47 million in the first quarter of 2017; that gain was anticipated and already factored into previously provided earnings guidance for 2017.
The store on the Nicollet Mall, which many locals still call “Dayton’s” in reference to the original 1902 department store property owner, is holding a final clearance sale now and will shutter sometime this spring. Several of its 280 employees will be able to find jobs in other Macy’s locations in the Twin Cities area, the company said.
Macy’s retreat from the historic Dayton’s department store location, which it took over at the turn of the 21st century, is part of its steady withdrawal from the Midwest years after its massive incursion into that part of the country. That expansion has left it over-stored and ill-equipped to offer merchandise that shoppers find unique or exciting and is the root of Macy’s troubles today, Nick Egelanian, president of retail development consultants SiteWorks International, told Retail Dive last year.
Its takeover of so many department stores didn't just leave Macy's with too many locations over a wide swath of the country (though that's part of the problem). Macy's also gobbled up, Pac-Man-style, department stores like the Minneapolis Dayton’s that were once thriving local retailers deeply embedded in their respective communities and made them merely cogs in a machine — stripping away their local identities and connections while offering shoppers a homogeneous customer experience with few if any regional differentiators.
Macy's has begun to address this problem of subtraction by addition, scaling back massively; the Minneapolis sale is one of about 100 planned closures. But experts suggest its current store closure plans may very well turn out to be just the tip of the iceberg.
The final sale announced Wednesday is part of a downsizing effort that will leave some 3,900 Macy’s associates displaced, though additional measures — including a restructuring plan dedicated to eliminating layers of management in a push to cut costs and boost decision-making efficiencies — could signal the loss of roughly 6,200 additional positions, the company said in January.
“Twenty years ago, Dayton-Hudson sold its stores, which became Macy’s, and put all their eggs into the Target model,” Egelanian said. “Sometimes you think you’re beating your competitors, when you’re actually buying the remnants of their dying chains.”