Macy’s State Street store might get a makeover

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Macy’s might scale back its retail space on State Street as part of a redevelopment of the flagship store.

The retailer said Wednesday it is considering redevelopment projects for its flagship stores in Chicago, Manhattan, San Francisco and Minneapolis. The company has already announced a project to re-do a store in Brooklyn.

“The company has begun a process to explore joint ventures or other deal structures with third parties to redevelop Macy’s flagship real estate assets … in a manner that maintains a robust Macy’s retail store presence while also bringing alternative use into those buildings,” Macy’s said in connection with the release of its quarterly earnings.

Macy’s said it will look for deals “where the business is simultaneously enhanced … or where the value of real estate significantly outweighs the value of the retail business.”

The store at 111 N. State St. is in a 12-story, nearly 1.3 million-square-foot building, which was completed in 1909, Crain’s Chicago Business reported.

The Cincinnati-based retailer said it has abandoned, at least for now, the idea of spinning off its real estate holdings into a real estate investment trust. The board “concluded that a REIT does not offer sufficient upside potential for value creation,” the company said.

Separately, Macy’s and LensCrafters announced plans to open up to 500 LensCrafters optical retail centers inside Macy’s stores. The first LensCrafters will open by April, with 100 slated to open by the end of 2016.

Looking to the holiday season, Macy’s CEO Terry Lundgren said markdowns are likely as falling sales have left the department store with excessive inventory.

Sales for the Cincinnati company fell 3.6 percent at established locations for the three months ending Oct. 31. And for the last three months of the year that encompasses the critical holiday shopping season, Macy’s expects sales to fall between 2 percent and 3 percent from a year ago.

The company also blamed warmer weather, which cut into sales of coats, boots and down comforters.

“We’re going to take markdowns, I mean, great for consumers,” he said during an interview on CNBC. “Consumers are going to have a field day because we’re going to have lots of values out there.”

Lundgren said the company needs to clear space for new merchandise in the new year.

“We’re not selling lumber, so I can’t carry the lumber over into 2016,” he said.

Contributing: The Associated Press

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