Macy’s Cutting Jobs After Weak Holiday Sales

Hours after Macy’s announced its same-store sales fell 4.7 percent in November and December, Penney’s countered with a 3.9 percent gain.

Macy’s has faced significant pressure from activist shareholders amid the sluggish sales run. And it’s offering buyouts to 165 senior executives; about 35 percent of those jobs won’t be replaced.

Investors, however, pushed shares of Macy’s higher yesterday after the company also said it would cut thousands of jobs and shut stores in a bid to boost profits.

“About 80 percent of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves”.

“This reflects a smaller portfolio of stores and new technologies and techniques for managing the store business and tailoring assortments to local customer preferences”, the company added.

Macy’s has corporate offices in Cincinnati and NY, and is one of the nation’s premier retailers, with fiscal 2014 sales of $28.015 billion, it said.

Macy’s (NYSE:M) gave a glimpse into the dark side of holiday 2015 with worrisome news late Wednesday.

As previously announced, 40 Macy’s stores are to close.

The 40 locations that will be closed represent about 5% of Macy’s overall store count.

The letter, signed by Chanel Bracey-Davis, the vice president of labor and stores employee relations, said it was informing workers that “job eliminations are expected to be permanent…and will occur between April 6, 2016 and April 19, 2016”.

The retailer said in November that it won’t form a real estate investment trust, an effort Starboard endorsed.

“In some cases, there will be short-term pain as we tighten our belt and realign our resources”, said Terry J. Lundgren, chairman and chief executive at Macy’s Inc.in a statement”.

Stores closed in 2015 and those set for closure through spring account from roughly $375 million in annual sales, the company reported.

The company said it doesn’t expect a major improvement in sales in January, and cut its earnings guidance for the year to $3.85 to $3.90 a share, down from $4.20 to $4.30 a share.

“We can operate more effectively with an organization that is flatter and more agile”, Lundgren stated in an announcement, according to Bloomberg, “so we can pursue growth and regain market share”.

On the cost-efficiency side, beginning in early 2016 the company will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s.