Cincinnati—Macy’s Inc. released several pieces of news late Wednesday. For one, the department store company posted a comparable sales gain of 4.3% for the November/December 2013 holiday season compared with a 3.6% increase in the same period 2012.
But Macy’s Inc. made headlines for its cost-cutting initiative which includes laying off 2,500 employees (out of 175,000) and closing five underperforming stores.
“We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers,” said Terry J. Lundgren, chairman/president/ceo at Macy’s Inc.
Saving of $100 Million a Year
In addition to the layoffs, Macy’s Inc. plan to reassign with new duties or transfer other associates and some positions won’t be filled.
Meanwhile, the company continues to add positions in other parts of the company, such as in online operations, direct-to-consumer fulfillment and new stores. In total, the Macy’s, Inc. workforce is expected to remain at a level of approximately 175,000 associates.
The company estimated that the changes would generate a savings of approximately $100 million a year, beginning in 2014. These savings are incorporated in the company’s 2014 earnings guidance.
Macy’s Inc.’s initial forecast for fiscal 2014 is for comp sales to grow 2.5% to 3% compared to 2013 levels with per share earnings in the range of $4.40 to $4.50 a share.
Commenting on the just-completed holiday selling season, Lundgren said: “The 2013 holiday season was successful for Macy’s and Bloomingdale’s as we offered fresh and distinctive merchandise, delivered great value to the customer and provided a robust omnichannel shopping experience which served our customers whenever, however and wherever they chose to shop and to buy. Even in a questionable macroeconomic environment with challenging weather in multiple states, the positive response from our customers during the holiday season is yet another vote of confidence that our well-established strategies continue to work for us.”
In addition, Macy’s Inc. specified the changes in its portfolio of Macy’s and Bloomingdale’s stores across the country. First the five Macy’s stores slated for closing are:
- Fiesta Mall, Mesa, AZ (159,000 square feet; opened in 1979; 98 associates);
- Metcalf South Shopping Center, Overland Park, KS (216,000 square feet; opened in 1967; 88 associates);
- Jamestown Mall, Florissant, MO (200,000 square feet; opened in 1994; 88 associates);
- Medley Centre, Irondequoit, NY (129,000 square feet; opened in 1990; 96 associates);
- Fashion Place Mall, Murray, UT (26,000 square feet; opened in 1988; 42 associates).
Eight new and replacement Macy’s and Bloomingdale’s stores are planned and/or under construction, as previously announced.
- New Macy’s stores will be opening in:
- University Town Center, Sarasota, FL (160,000 square feet; to open in fall 2014; approximately 175 associates);
- Shops at Summerlin, Las Vegas, NV (180,000 square feet; to open in fall 2014; approximately 160 associates);
- Mall at Bay Plaza, The Bronx, NY (160,000 square feet; to open in fall 2014; approximately 225 associates);
- Plaza Del Caribe, Ponce, PR (150,000 square feet; to open in fall 2015; approximately 275 associates);
- Mall at Miami Worldcenter, Miami, FL (195,000 square feet; to open in fall 2016; approximately 150 associates).
- New Bloomingdale’s stores will be opening in:
- Stanford Shopping Center in Palo Alto, CA (120,000 square feet; to open in fall 2014), an all-new store to replace an older store in the same shopping center;
- Ala Moana, Honolulu, HI (167,000 square feet; to open in fall 2015; approximately 250 associates);
- Mall at Miami Worldcenter, Miami (120,000 square feet; to open in fall 2016; approximately 225 associates).