American retail giant Macy’s Inc. has announced the closure of 68 stores as part of a plan to streamline its store portfolio and increase cost efficiency.

The measures, which have already seen three stores close and will see a further 63 closed by early spring in the US, will save the struggling retailer approximately $550 million in 2017. $250 million of those savings will be reinvested back into the company’s digital presence, store-related growth and other related ventures.

“Over the past year, we have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time,” said Terry J. Lundgren, Macy’s chairman and CEO.

“We continue to experience declining traffic in our stores where the majority of our business is still transacted,” he continued. “Our omnichannel strategies continue to evolve based on the changes in our customers’ shopping behaviours, including a focus on buying online, pickup in store and mobile-enabled shopping.”

The company has also announced a raft of organisational changes, designed to drive greater productivity, including the elimination of management layers, reducing non-payroll costs and changes to field infrastructure. The company estimates that the initiatives will result in a staff reduction of approximately 6,200.

Retail analyst and CEO of Conlumino Neil Saunders said the jury is still out on whether Macy’s can reinvent itself, but that the store closures are a necessary evil on the path to getting the company back on track.

“There is an argument to be made that Macy’s has, for too long, neglected its store base and has failed to develop a compelling proposition to pull in shoppers in the digital era. However, what is done is done and the company is right to take action to put it on a firmer financial and commercial footing,” he said.

“In our view, it is vital that the consequent reduction in costs and the proceeds from property disposals resulting from this action are used to bolster the remaining bits of the business. It would be folly to simply use the gains to fund day-to-day operations or to return to shareholders.”