Will store closings and layoffs end Macy’s woes?
While overall sales were up, not every retailer had a merry Christmas. A case in point is Macy’s, which announced it would close 68 stores and cut some 10,000 jobs following a 2.1 decrease in same-store sales covering November and December. The store closings are part of the 100 the chain announced it would shutter back in August.
The cuts the chain is making are expected to save the company $550 million beginning this year. Macy’s said the savings, along with others it realized in 2016, put the company a full year ahead of schedule on its plan to trim costs. Management also announced the retailer would invest $250 million in its digital business as well as store-related growth strategies, Bluemercury, Macy’s Backstage and in China.
Terry Lundgren, Macy’s chairman and CEO, said that while the company saw healthy growth in its digital business, in-store sales, which still represent most of its business, dragged down its overall performance. Macy’s performance, he said, was reflective of “overall trends” affecting “the broader retail industry.”
Neil Saunders, an analyst at Conlumino, told USA Today that Macy’s actions were “harsh, but necessary.” He said Macy’s would invest in stores where they see opportunities for growth. “That is the right direction,” he said. “They want to make sure the ones they have are really great stores and that requires money.”
Mr. Lundgren, who will turn over CEO duties to Jeff Gennette, president of Macy’s, Inc., in the first quarter continues to remain positive about the future.
“Our omnichannel strategies continue to evolve based on the changes in our customers’ shopping behaviors, including a focus on buy online, pickup in store and mobile-enabled shopping. In addition, we have invested in and enlarged our customer data and analytics team, which will help drive our new marketing strategies for 2017,” he said. “Whether it is improving corporate agility, enhancing our customer engagement strategies, or continuing to capitalize on the potential value of our real estate assets, we remain focused on the actions that will ultimately improve our financial results and provide the greatest return for our shareholders.”
- Macy’s, Inc. Announces Actions to Streamline Store Portfolio, Intensify Cost Efficiency Efforts and Execute Real Estate Strategy – Macy’s, Inc.
- Macy’s, Inc. Reports November/December Sales and Revises 2016 Guidance – Macy’s, Inc.
- Macy’s cutting 6,200 jobs, closing 68 stores – USA Today
- Macy’s Declines After Reducing Outlook, Moving to Cut 6.200 Jobs – Bloomberg
- How badly will Macy’s be hurt by its Black Friday outages? – RetailWire
- Is Macy’s in trouble? – RetailWire
DISCUSSION QUESTIONS: Do you think Macy’s management is making the right moves to turn around the company’s business? What do you think are the major opportunities and challenges the company has to address?