Macy's plans to cut 6,200 jobs
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| © Nick Turner BC-MACY-S-JOB-CUTS |
Macy’s Inc., the largest department-store company in the U.S., plunged in late trading after cutting its earnings outlook and vowing to eliminate 6,200 jobs, or about 4 percent of its workforce.
Following a sluggish holiday season, the company now expects profit of $2.95 to $3.10 a share this year, excluding some items. It previously predicted a range as high as $3.40.
The beleaguered retailer is taking more drastic steps to slim down as it copes with sluggish traffic and weak sales in key categories, such as handbags. It previously announced plans to shut 100 underperforming stores, and the chain has been evaluating ways to squeeze more money out of its real estate.
“We had anticipated sales would be stronger,” Chief Executive Officer Terry Lundgren said in the statement. “Ongoing weakness in handbags and watches negatively impacted our results.”
Macy’s shares fell as much as 9.2 percent to $32.55 in late trading. That follows a 2.4 percent gain for the stock last year.
Comparable-store sales declined 2.1 percent from a year earlier in November and December, the Cincinnati-based company said on Wednesday. It maintained its prediction that sales will decrease 2.5 percent to 3 percent for the full year, which lasts until the end of this month.
Deeper Cuts
The move to cut costs should generate annual savings of $550 million, beginning in 2017, Macy’s said. That’s higher than a previous goal of $500 announced in 2015. The idea is to pump the savings into its e-commerce business, Chinese operations and other units, such as its Bluemercury makeup division.
“We have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time,” Lundgren said. But the trends remain challenging, he said.
Next year’s sales are expected to be similar to what Macy’s experienced in November and December, Lundgren said.
“We continue to experience declining traffic in our stores where the majority of our business is still transacted,” he said.
Macy's to close stores and cut more than 10,000 jobs
After a disappointing holiday season, Macy’s said it is cutting more than 10,000 jobs and going ahead with plans to close 68 stores — including locations in San Diego and Santa Barbara.
The department store chain reported Wednesday that same-store sales in November and December dropped 2.1% compared to the same period a year earlier. Macy’s also lowered its full-year earnings guidance to $2.95 to $3.10 per share, down from a previous forecast of $3.15 to $3.40.
Terry J. Lundgren, chief executive of Macy’s, said the company “had anticipated sales would be stronger.”
“We believe that our performance during the holiday season reflects the broader challenges facing much of the retail business,” he said in a Wednesday statement.
Although Macy’s has been doing well online, traffic continues to decline in brick-and-mortar stores, which Macy’s relies on for the majority of its business, Lundgren said. The changes will save the company about $550 million beginning this year.
Macy’s said the 68 stores are among about 100 locations that it announced in August it would close. Three, including one in North Hollywood, closed last year. Locations in San Diego and Santa Barbara are earmarked for closure this year, along with a store in Simi Valley that offers home goods and men’s and children’s clothing.
Macy’s isn’t the only retailer cutting back in the aftermath of a challenging holiday season. On Wednesday, Sears said it planned to close 150 locations — 42 of its namesake stores and 108 Kmart stores — according to the Business Insider.
Macy’s Will Cut 10,000 Jobs After Poor Holiday Sales
Struggling with sagging sales over another crucial holiday shopping season, Macy’s announced on Wednesday that it was eliminating more than 10,000 jobs as part of a continuing plan to cut costs and close 100 stores.
Macy’s, the country’s largest department store chain, said sales at its stores had fallen 2.1 percent in November and December compared with the same period in 2015. Terry J. Lundgren, the company’s chairman and chief executive, said in a statement that while the trend was “consistent with the lower end of our guidance, we had anticipated sales would be stronger.”
He attributed the decline to “broader challenges” facing much of the retail industry.
Consumers, who endured a long recession, have turned to low-cost chains like T. J. Maxx and shifted their spending away from brick-and-mortar stores for the convenience of online shopping with the retail giant Amazon.
The announcement on Wednesday continued a trend for Macy’s, which announced last January that it was eliminating about 4,500 jobs in a major restructuring. Then, too, it said slumping holiday season sales had hurt its bottom line.
The company, which now has 730 stores, announced in August that it would close 100 of them. On Wednesday, it identified 68 stores to be closed.
The 158,000-square-foot store in the Douglaston neighborhood of Queens, which opened in 1981, will close. Stores at the Marketplace Mall in Rochester; at the Oakdale Mall in Johnson City, N.Y., near Binghamton; and at the Preakness Shopping Center in Wayne, N.J., will close, the company said.
Of the 68, three were closed by the middle of 2016, 63 will close in the spring and two will be closed by the middle of 2017. Three other locations were sold or are to be sold. The company said it planned to close about 30 other stores over the next few years.
Some employees may be offered positions at nearby stores, but Macy’s estimated that 3,900 workers would be affected by the closings. It also said it planned to restructure parts of its business, leading to a reduction of an additional 6,200 jobs. Over all, the job cuts represent about 7 percent of its work force.
The company estimated that the changes would save about $550 million a year, starting in 2017.
Mr. Lundgren said the company was closing stores that were “unproductive or are no longer robust shopping destinations because of changes in the local retail shopping landscape.” Other sites were being targeted for closing to take advantage of their highly valued real estate.
The company, which owns the Macy’s and Bloomingdale’s brands, has been struggling with declining traffic in its stores, where the bulk of its business is still conducted. It plans to invest some of its savings in expanding its digital business.
Macy’s said it now expected to earn $2.95 to $3.10 per share on an adjusted basis for its 2016 fiscal year, compared with its prior forecast of $3.15 to $3.40 per share.
Shares in Macy’s fell nearly 10 percent to $32.30 in after-hours trading on Wednesday.
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