Hoping to tap into consumers' new frugality, luxury department store chain Bloomingdale's plans to launch an outlet store concept this year.
The decision, announced Thursday by parent company Macy's Inc., calls for four outlets to open this summer or fall, with more locations expected for 2011 and beyond.
The first stores are scheduled to open in Paramus, N.J.; Miami; Sunrise, Fla.; and Woodbridge, Va.
"We have been studying the opportunities for entering the off-the-mall outlet business for some time, and the timing now is right given the consumer's particular focus on value in addition to fashion and quality," Terry J. Lundgren, chief executive of Macy's Inc., said in a statement.
Bloomingdale's will join other upscale retailers that operate outlet concepts, such as Saks Inc. and Nordstrom Inc.
Nordstrom spokeswoman Brooke White said the move would make Nordstrom Rack stores "work harder to earn our customers' business."
"Competition makes us better," she said. "Ultimately the customer benefits from more choices in the marketplace."
Outlets have become more popular because of the economic downturn as consumers cut down on spending. By offering luxury items at a discount, Macy's Inc. could broaden its appeal -- although industry experts said it remains to be seen how that will affect the company's performance.
"Our view is that this is a new growth opportunity," Wayne Hood, an analyst at BMO Capital Markets, said in a note to investors. "However, it will likely not be material to earnings in the near term."
At 25,000 square feet, the outlets will offer a range of apparel and accessories, jewelry, handbags and intimate apparel, the company said.
"Bloomingdale's outlet stores are an opportunity to expand our presence in new and existing markets, as well as to remove clearance from full-line Bloomingdale's stores in a timely manner," Michael Gould, the chain's chief executive, said in a statement. "The customer experience in these stores will reflect the Bloomingdale's brand with a strong value message."
Cincinnati-based Macy's Inc. has been trying to reverse a decades-long decline in the department store business model that has seen consumers migrate to big-box discounters, free-standing stores and the Internet. The company operates about 800 Macy's and 40 Bloomingdale's stores.
Macy's Inc. lost $35 million for the three months that ended Oct. 31, even after slashing 7,000 jobs and closing 11 underperforming stores -- including a downtown Los Angeles location -- last year.
Over the last eight quarters, its earnings have seesawed, swinging as high as $750 million in profit to as low as $4.77 billion in losses, a result of a write-down in assets. This month the company announced it would close five Macy's stores, none of them in California.
Shares of Macy's Inc. fell 70 cents, or 4.3%, to $15.74 on Thursday.
Occasional Bloomingdale's shopper Alexia Wolf said she hoped the chain would open an outlet in Southern California soon but wondered whether the merchandise would be significantly more affordable.
"I like Bloomingdale's, but it's so overpriced," the Huntington Beach resident, 49, said. "I don't know how low the prices would go even at an outlet. Sometimes at an outlet the prices are what you would get at the normal store when they were on sale, so it's kind of like, what's the point?"