Macy’s stores to start slowly re-opening next week but CEO warns retailer will emerge ‘a smaller company’

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Finally some relief from the coronavirus crisis is coming for Macy’s.

The department store chain said on Thursday that it will begin reopening stores on Monday, starting with 68 locations of its 500 namesake stores, gradually ramping up from there. The company expects all stores will be open in some manner by mid-June, depending on what local authorities allow and the trajectory of the pandemic. (The company also operates Bloomingdale’s and Bluemercury.)

Macy’s chief executive officer Jeff Gennette warned investors that it will be slow going at first, saying on a virtual business update that some stores might get only 20% of normal sales volume in the first week, perhaps 25% the week after, with the timing of the return to business as usual unknowable.

“We’re going to be smaller, we’re going to be more levered but we have a path forward,” Gennette told Fortune. Macy’s had already been planning to shrink to bolster its turnaround, saying in February it would close 125 stores and expected a slight sales decline this year.

But the pandemic is accelerating that. As a non-essential retailer, Macy’s stores have been closed since mid-March, prompting the country’s largest department store chain to furlough 130,000 store employees, tap a credit line, slash salaries, and cut its capital spending by half.

“Our business model was not built not sustain the full closure of our stores for an extended period of time,” said Gennette.

Still, there have been bright spots for Macy’s. Gennette said e-commerce sales had been strong in April after a muted March, with beauty products and home furnishings, along with furniture, turning in better than expected numbers. Apparel, particularly dressier clothing, has taken a big hit. Macy’s rang up $6 billion in sales last year, making it a top 10 online retailer.

What’s more, its investments to connect stores and e-commerce has mitigated some of the pain: Early this month, some 230 Macy’s stores were partially open to allow staff to use store merchandise to fill online orders. That’s now up to 466. This will reduce how much Macy’s ultimately has to mark down and will speed up merchandise changeover for the summer and back-to-school seasons.

Macy’s has also set up 100 stores to offer curbside pickup, an option that has preserved sales at other retailers such as Target, Petco, and Home Depot.

The first group of stores set to re-open will be in states where shelter in place orders are lifted, namely Texas, Georgia, South Carolina, Tennessee, and Oklahoma. Another batch will reopen on May 11.

But that’s not to say stores will reopen as they were. Some might only be open to offer curbside pickup, in-store pickup, or both. They will all have reduced hours and staffing levels at first. And they are likely to only be partially open with big areas of the stores off limits, depending on the store.

And they will look different: There will be plexiglass barriers at cash registers, no fitting rooms, beauty consultations will be no-touch, and anyone trying on jewelry will have to sanitize their hands. Macy’s has no intention of requiring shoppers to wear masks.

In February, Macy’s announced a turnaround plan that included store remodels and trying out new store formats. But many of those plans are on hold as Macy’s looks to preserve cash while its basic business returns to some semblance of normalcy.

“I do believe that all of our stores will open at some point,” said Gennette “But we don’t want to get ahead of our skiis.”

More must-read retail coverage from Fortune:

—How luxury fashion shopping habits are shifting during the coronavirus pandemic
Vending machines—the original contactless delivery—now deliver ramen and art
Restaurants are converting their spaces into retail stores to ride out the pandemic
—The outdoor industry’s crucial spring season will be its most challenging in years
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The ugly toll COVID-19 has taken on retail

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