Macy’s Outlines Store Closure, Layoff Plans Following Holiday Sales Decline
When Macy’s Inc. released its holiday results on Jan. 4, the retail giant included news of a massive round of layoffs and outlined its plans to close stores in the coming months.
Same-store sales for the retailer’s crucial holiday 2016 season declined 2.1 percent.
“We had anticipated sales would be stronger,” said Terry J. Lundgren, the chairman and chief executive officer of Macy’s Inc., which operates stores under the Macy’s and Bloomingdale’s nameplates. “We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry. We are pleased with the performance of our digital business, with double-digit gains at both Macys.com and Bloomingdales.com; however, store sales continued to be impacted by changing customer behavior.”
In August Macy’s announced plans to shutter 100 stores. The first wave of those closures—63 stores—will happen by early spring. Two more will be closed by mid-2017. Macy’s estimates that 3,900 of its associates will be displaced because of the store closures. Eligible associates will be offered severance benefits. When possible, associates will be offered jobs at neighboring stores that are slated to remain open. The retailer currently runs a fleet of 880 stores.
Macy’s is planning to lay off an additional 6,200 executives from the retailer’s executive workforce.
The department-store company forecast that it will see savings of $550 million from its closed locations. It will invest the funds in digital business, further developing its physical locations and also expanding its off-price division Macy’s Backstage, its beauty retailer Bluemercury and its expansion in China.
Macy’s Inc maintained its guidance for its full-year sales for 2016, which will be a 2.5 percent to 3 percent decrease in comparable sales. But on Jan. 4, it forecast that sales will come in at the lower end of the forecast. It revised its guidance per diluted earnings per share to $2.95 to $3.10 per share, compared to a previous guidance of $3.15 to $3.40 per share, Lundgren said in a company statement.
Stores slated to be shuttered include California locations such as San Diego’s Mission Valley area, Paseo Nuevo in Santa Barbara and Simi Valley Town Center in Simi Valley. In 2016 it closed the Laurel Plaza location in North Hollywood.
The upcoming year also holds some store openings for Macy’s. It will unveil a 155,000-square-foot store at the Westfield Century City retail center in Los Angeles. It had previously operated a 136,000-square-foot emporium at the center. It had closed in January 2016.
In the next two years, the retailer plans to open 50 Macy’s Backstage locations. They will be placed in existing Macy’s stores. It also will open 50 Bluemercury shops, both inside existing Macy’s and also as freestanding locations.