Macy's Names 68 Stores It Will Shutter; 10,000 Jobs To Go

Macy’s yesterday said it was closing 68 stores of its 730 stores by the spring — wiping out about 3,900 jobs — and that it would lay off about 6,200 additional workers nationwide in a move it characterizes as a “need for greater efficiency and productivity.”

The closures are part of the plan to shutter up to 100 underperforming stores that it had announced last August. All told, Cincinnati-based Macy’s, Inc. operates 880 stores, including Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage and Bluemercury in 45 states, the District of Columbia, Guam and Puerto Rico. It still intends to close about 30 additional stores over the next few years, Lauren Zumbach reports for the Chicago Tribune

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“Like its rival, Kohl’s Corp., which also warned Wednesday of lackluster holiday results, Macy’s hasn’t been able to solve consumers’ shift to online shopping. Macy’s will close stores from San Diego to Bangor, Maine, and use the savings to boost its efforts to capture more e-commerce spending,” writes the Wall Street Journal’s Suzanne Kapner.

“While many of these stores under-perform, they all generate cash,” CFO Karen Hoguet told Kapner, adding that closures would enable Macy’s to focus on its best-performing locations.

“The retailer also announced that comparable sales, which include its booming e-commerce business and sales at stores open at least a year, fell 2.1% in November and December, prompting it to slash its full-year profit forecast. Shares were down 10% in afterhours trading,” reports Phil Wahba for Fortune.

“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,” points out Christopher Mele in the New York Times.

“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,” Mele continues.

“Department stores have also been hurt by a drop in demand for clothes and accessories like watches and handbags as consumers spent more on big-ticket items such as home renovations and cars,” write Reuters’ Nandita Bose and Gayathree Ganesan.

Overall, however, and despite the ongoing woes of old-line retailers including Sear’s (which itself is closing 108 Kmarts and 42 Sears by April), “early evidence suggests that the retail industry pulled down a solid holiday sales haul this year: Consumer confidence is high, growth in online spending was robust in December, and a blast of cold weather encouraged people to get shopping,” observes Sarah Halzack in the Washington Post

And the Macy’s news release outlined a prettier picture for the future, at least regarding the bottom line.

“The actions announced today are estimated to generate annual expense savings of approximately $550 million, beginning in 2017, enabling the company to invest an additional $250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage and China,” it said. “These savings, combined with savings from initiatives implemented in early 2016, exceed the $500 million goal communicated in fall of 2015, one year earlier than expected.”

Affected employees may be offered spots at nearby stores; all of those eligible will be offered severance benefits, according to the retailer.

And the news was not all glum for the working class. Over the next two years, the company plans to open approximately 50 Macy’s Backstage off-price locations inside existing stores, as well as about 50 Bluemercury beauty specialty stores — both freestanding and as inside shops. 

Macy’s CEO Terry Lundgren called the closings “part of our strategy to help us right-size our physical footprint” even as it expands its digital offerings. “We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape, as well as monetizing locations with highly valued real estate,” he said.

“These latest struggles underscore the challenges that Jeff Gennette will face in 2017 when he takes over the chief executive reins” from Lundgren — “a succession plan Macy’s had announced last summer,” the WaPo’s Halzack writes. 

Who knows? Miracles have been known to happen on 34th Street.

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