As has been widely forecasted for the last several weeks, the axe will be falling — and falling hard — at Macy's in the not-so-distant future. The store will be cutting thousands of jobs, closing over three dozen locations and is strongly reconsidering the status of its high-value real estate holdings in New York and San Francisco.
Sales are down, falling 4.7 percent in November and December, with no expectation that this trend will reverse in the immediate future. That makes this year Macy's worst holiday season performance since 2008 when the Great Recession was roaring along.
Plus, Macy's tough results aren't just a concern for Macy's: they are widely being treated as the canary in the retail coal mine this year and are thought to presage a run of tough figure, particularly from department stores that spent this season buried under excess inventory and under attack by the Web, which keeps stealing all their shoppers.
And, according to Terry J. Lundgren, Macy’s chief executive, the weather didn't exactly help matters any.
“About 80% 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,” he said.
Others have IDed a different source for the problems.
“Macy’s and other mall-focused peers have all but been crushed by the shopper migration to off-mall retailers such as off-price chains,” said Craig Johnson, the president of market-research firm Customer Growth Partners.
Macy's stock dropped 2 percent, but recovered 2.8 percent during after-hours trading on the news of about $400 million in annual cost savings through expense reductions.
Macy’s also plans to eliminate about 4,800 jobs due to low sales, although some employees will be relocated to other positions in the company. About 2,700 of the job cuts will come from 40 stores to be closed.
Macy’s employed about 166,900 full-time and part-time workers as of Jan. 31, 2015.