Macy’s to slash more than 10,000 jobs, close 68 stores
Online shopping results in ‘declining traffic’ for retail giant
After seeing sales drop during the holidays, Macy’s said Wednesday it has either closed or will shutter 68 stores and cut an additional 6,200 positions at a time when shoppers are going online to buy everything from scarves to lipstick.
Of the 68 stores out of 730 in total, nine closings had been previously announced and three locations have already shut down. But the retail giant revealed the locations of the remaining 59 stores, which will be shuttered by the middle of this year and affect 3,900 employees, some of whom may be offered jobs at other locations.
The locations span the country, from Florida to Oregon.
Some of the stores are relatively new to the chain. The Macy’s store in the Eastland center in Columbus, Ohio, opened in 2006, and has 73 employees. Some, however, are historic or have been around for decades. Macy’s said it will shutter its store in downtown Minneapolis that opened in 1902, where it has 280 employees.
Additionally the retail giant says that it will be cutting “layers of management” at its central operations and paring the number of managers supporting stores, making up the bulk of 6,200 jobs that will be lost.
“We continue to experience declining traffic in our stores where the majority of our business is still transacted,” Terry Lundgren, Macy’s CEO said in a statement. In regard to the store closings, he added, “We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape. ... These are never easy decisions.”
The news did not seem to sooth investors, with Macy’s shares plunging 8.7%, to $32.70, in after-hours trading.
“It’s a big reduction in space, and a lot of stores aren’t pulling their weight,” says Neil Saunders, analyst for Conlumino, a firm
that follows the retail industry. Having stemmed some of its losses, he says Macy’s can now pour some of the savings into improving stores that show more promise.
“In stores where they think they have potential, they will invest more,” Saunders says. “That is the right direction. They want to make sure the ones they have are really great stores, and that requires money.”
But the bloodletting probably isn’t over. “I don’t think this is the end of it,” he adds.
The announcement was in keeping with Macy’s guidance to investors in August that it would be shutting about 100 stores to try to reverse sliding sales and profits. The chain also mapped out a strategy to boost revenue,
“I don’t think this is the end of it.” Neil Saunders, analyst for Conlumino
ranging from hosting in-store events to woo foot traffic to enhancing the experience of searching online.
But efforts fell short in the allimportant holiday shopping period. Sales at stores open at least 12 months that include licensed businesses dropped a combined 2.1% in November and December compared to last year, while sales at stores that do not include licensed businesses and open at least 12 months dropped by 2.7%.
Macy’s is now reducing its fullyear earnings guidance, expecting diluted earnings, not counting special charges, of $2.95 to $3.10 per share, rather than the previously forecast $3.15 to $3.40.
Meanwhile, it maintained its full-year guidance predicting a 2.5% to 3% drop in comparable sales at stores with licensed businesses.