Macy's to shut 100 stores, invest in online

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Macy's Will Close 100 Stores Nationwide

Aug 11 (Reuters) - Macy's Inc said it would close about 100 stores and boost investment in its online operations as it seeks to turn around its business after six quarters of falling sales.

Shares of the company, which also reported a smaller-than-expected drop in quarterly sales at established stores, were up 11 percent at $37.79 in premarket trading on Thursday.

Total sales fell nearly 4 percent to $5.87 billion in the second quarter after falling 7.4 percent in the first quarter.

Department stores have been struggling with stiff competition from online and off-price retailers. They are also under pressure due to a shift in spending patterns, with shoppers increasingly preferring to spend on big-ticket items such as electronics and cars than on clothes.

Macy's said the annual net sales volume of the locations it plans to close was expected to be about $1 billion.

The company also said it was in talks to sell its Men's Store on Union Square in San Francisco for redevelopment.

A look at Macy's flagship store in New York City:

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Macy's flagship Herald Square store
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Macy's flagship Herald Square store
Pedestrians walk through Herald Square past a Macy's Inc. department store in New York, U.S., on Monday, August 10, 2015. Macy's Inc., the largest U.S. department-store company, is scheduled to report second-quarter earnings before the opening of U.S. financial markets on August 12. Photographer: Michael Nagle/Bloomberg via Getty Images
Photograph shows a corner view of the 1924 addition to the Macy's department store building on 34th Street at Herald Square in Manhattan, New York, 1930s. (Photo by FPG/Getty Images)
An exterior view of Macy's Department store July 14, 1994. View is from Herald Square in the busy midtown section of New York City at 34th Street. (AP Photo/Marty Lederhandler)
Shoppers stand outside a packed vestibule entrance to Macy's Herald Square store in New York minutes before the 7 a.m. opening Friday, Dec. 26, 2003. (AP Photo/Tina Fineberg)
397655 01: Shoppers make their way across Herald Square near Macy's department store November 23, 2001 in New York City. The Christmas shopping season started kicked off in the United States the day after Thanksgiving, one of the busiest shopping days of the year. (Photo by Chris Hondros/Getty Images)
NEW YORK - NOVEMBER 22: A holiday scene is depicted in a Macy's at Herald Square department store window during the unveiling of the retailer's holiday windows November 22, 2002 in New York City. (Photo by Matthew Peyton/Getty Images)
NEW YORK - FEBRUARY 28: The Macy's Herald Square entrance is seen February 28, 2005 in New York City. Federated Department Stores Inc. is buying rival May Department Stores Co. for $11 billion in cash and stock in a deal that would enable them to compete against Wal-Mart Stores Inc. as well as upscale retailers. (Photo by Stephen Chernin/Getty Images)
UNITED STATES - AUGUST 15: Pedestrians and shoppers pass by the Macy's flagship store at Herald Square in New York, Wednesday, Aug. 15, 2007. Macy's Inc., the second-largest department-store chain, reported quarterly profit that exceeded analysts' estimates because of reduced advertising and retirement costs. (Photo by Michael Nagle/Bloomberg via Getty Images)
UNITED STATES - AUGUST 15: Pedestrians and shoppers pass by the Macy's flagship store at Herald Square in New York, Wednesday, Aug. 15, 2007. Macy's Inc., the second-largest department-store chain, reported quarterly profit that exceeded analysts' estimates because of reduced advertising and retirement costs. (Photo by Michael Nagle/Bloomberg via Getty Images)
NEW YORK - NOVEMBER 05: The New Year's Eve Ball, which will be seen by millions as it descends above Times Square to ring in 2009, is displayed at the Macy's Store in Herald Square November 5, 2008 in New York City. The Waterford Crystal ball is comprised of 672 crystal triangles and is themed 'Let There Be Light.' (Photo by Jeff Zelevansky/Getty Images)
Shoppers look at shirts at Macy's Herald Square department store in New York, U.S., on Friday, Nov. 27, 2009. Shoppers gathered at Best Buy Co., Target Corp. and Toys 'R' Us Inc. stores from New Jersey to Texas well before midnight yesterday to take advantage of Black Friday deals on televisions, laptops and robot hamsters. Photographer: Jin Lee/Bloomberg via Getty Images ***
Pedestrians walk past Macy's department store at Herald Square in New York, U.S., on Tuesday, April 6, 2010. March sales at U.S. retailers probably jumped almost three times as much as previously anticipated, as the early Easter holiday, warm weather and an improved job market boosted consumer spending. Photographer: Jin Lee/Bloomberg via Getty Images
FILE - In this Thursday, Nov. 28, 2013, photo, a shopper takes a selfie as crowds pour into the Macy's Herald Square flagship store in New York. The government reports on sales at U.S. retailers in November on Thursday, Dec. 12, 2013. (AP Photo/John Minchillo)
A shopper rests in the shoe section of the Macy's Herald Square store, Thursday, Nov. 28, 2013, in New York. Instead of waiting for Black Friday, which is typically the year's biggest shopping day, more than a dozen major retailers opened on Thanksgiving this year. (AP Photo/John Minchillo)
Shoppers carry bags as they cross a pedestrian walkway near Macy's in Herald Square, Friday, Nov. 27, 2015, in New York. The early numbers aren't available yet on how many shoppers headed out to stores on Thanksgiving, instead of waiting until today. But it's expected that more than three times the number who shopped yesterday will be out bargain-hunting today.(AP Photo/Bebeto Matthews)
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Macy's, under pressure from activist investor Starboard Value LP, is working on partnerships to monetize its huge real estate portfolio, which includes landmark properties such as its Herald Square and Union Square stores in New York.

Sales in stores open at least a year, including sales in departments licensed to third parties, fell 2 percent in the latest quarter. Analysts polled by research firm Consensus Metrix had expected a 4.6 percent drop.

Net income attributable to the company's shareholders fell to $11 million, or 3 cents per share, in the second quarter ended July 30, from $217 million, or 64 cents per share, a year earlier.

The latest quarter included charges of $255 million, or 51 cents per share, mainly related to the upcoming store closures.

Excluding the charges, the company earned 54 cents per share.

Analysts' on average had expected earnings of 45 cents per share and revenue of $5.75 billion, according to Thomson Reuters I/B/E/S.

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