Macy's will close 150 underperforming stores over the next three years, the department store said Tuesday - more than a third of locations.

After posting a fourth quarter loss and declining sales, the troubled retailer said it would shut 50 locations across the US by the end of this year. 

By 2026, there will be just 350 Macy's stores, the 166-year-old company said.

The company, which appointed a new CEO this month, announced that it would focus on its luxury stores Bloomingdale's and Bluemercury - opening more, smaller versions of these locations in a bid to boost sales.

The major turnaround comes as the department store tries to win back shoppers, amid growing pressure from online rivals, and cut costs by culling stores in malls and downtown districts which experts say have been 'left to rot.'

Sales at the company fell to $8.12 billion in the fourth quarter, down nearly 2 percent from a year ago. Its digital sales decreased by 4 percent, while same-store sales were down 5.4 percent.

Macy's also suffered a quarterly loss of $71 million, or 26 cents per share, it announced.

'The plans are about correcting what has gone wrong at Macy's, and the biggest things that have gone wrong at Macy's are the quality of the stores and the product assortment, Neil Saunders, an analyst at GlobalData Retail, told DailyMail.com. 

'And so over the years customers have deserted it, sales have tumbled and store productivity has gone down. All the metrics have gone in the wrong direction.'

The company is closing down stores that are not working and investing in the locations that it wants to keep, he added, in order to put the business on a much better footing.