Macy’s to shut five stores, cut 2,500 jobs; will save $100 million annually
Cincinnati — Macy’s on Wednesday said that it plans to close five underperforming stores in early spring 2014 and cut 2,500 jobs in “organizational changes” to sustain its profitability. The cost-reduction initiatives are expected to save the retailer about $100 million annually, beginning in 2014.
“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, Macy’s, Inc. chairman, president and CEO.
Separately, Macy’s reported that its holiday same-store sales, together with comparable sales from departments licensed to third parties, rose 4.3%. The chain narrowed the range of its guidance for same-store sales growth in the second half of 2013 to a range of 2.8% to 2.9% (from previous guidance of between 2.5% and 4%), and maintained its full-year 2013 earnings guidance. Macy’s also forecast profit for its next fiscal year that is higher than analysts estimate.
The retailer described the store shutterings as a series of “normal-course adjustments” to its portfolio of Macy’s and Bloomingdale’s locations nationwide.
“Our stores remain a very important component of our omnichannel strategy for both the Macy’s and Bloomingdale’s brands,’ Lundgren said. “We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations while also trimming those that no longer meet our performance requirements or where our leases were not renewed.”
The stores to be closed are in Fiesta Mall, Mesa, Ariz. (opened in 1979); Metcalf South Shopping Center, Overland Park, Kan, (opened in 1967); Jamestown Mall, Florissant, Mo. (opened in 1994); Medley Centre, Irondequoit, N.Y. (opened in 1990); and Fashion Place Mall, Murray, Utah (opened in 1988).
In organizational changes:
- The Midwest Region of Macy’s stores is being combined with the North Region, creating a new North Central Region and reducing the ongoing number of regions to seven from the current eight. Nine existing stores districts also are being combined with nearby districts – thus reducing the ongoing number of districts to 60 from the current 69.
- In the merchandise planning organization, the district planner role is being eliminated for soft home categories. Going forward, responsibility for soft home planning will be shifted to the regional and national level.
- Some positions in Macy’s stores will be realigned, combined and reduced in a manner that “improves productivity and efficiency while also fostering high standards for customer engagement and service,” Macy’s said.
- Certain central office, administrative and back-of-the-house expenses across the company will be trimmed, which involves reductions in workforce, as well as in non-payroll costs.
- Macy’s stressed that it 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, workforce is expected to remain at a level of approximately 175,000 associates.
Big moves at Macy’s prep chain for 2014
Macy’s rocked the retail world late Wednesday announcing record holiday sales while simultaneously cutting 2,500 jobs and detailing plans to close five stores.
The nation’s leading department store retailer late Wednesday issued two separate, oddly juxtaposed announcements; one heralding a record holiday season and confirming a strong profit performance and the other detailing a series of cost reduction and organizational changes that will save the company $100 million, but cost 2,500 people their jobs and result in the company taking a charge of between $120 and $135 million.
In explaining the restructuring and cost reduction moves, Macy’s chairman, president and CEO Terry Lundgren said, “our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy’s, Inc. We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope.”
Lundgren said the success of those strategies, evident in the company’s holiday performance, allowed it to identify areas where it can improve efficiency without compromising effectiveness in serving the evolving needs of our customers. Among the changes, Macy’s said it would combine its Midwest and Northern regions to create a new north central region, reducing its number of regions to seven from eight and number of districts to 60 from 69. In addition, the retailer’s merchandise planning organization and store level organizations will see positions eliminated. Gone is the role of district planner for the soft home category while the stores will see some positions combined or reduced in a manner that is said to “improve productivity and efficiency while also fostering high standards for customer engagement and service.”
While the changes will result in 2,500 employees being laid off, the company said its total workforce will remain stable at around 175,000 people due to additions in other areas. A portion of the lost jobs will be absorbed by the planned opening of eight new Macy’s and Bloomingdale’s stores offset by the closure of five stores.
“Our stores remain a very important component of our omnichannel strategy for both the Macy’s and Bloomingdale’s brands. We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations while also trimming those that no longer meet our performance requirements or where our leases were not renewed,” Lundgren said.
New Macy’s stores planned to open in 2014 through 2016 will be located in Sarasota, FL., Las Vegas, The Bronx, Puerto Rico and Miami while new Bloomingdale’s will be located in Palo Alto, CA., Honolulu and Miami. Stores slated for closure are stores located in Mesa, AZ., Overland Park, KS., Florissant, MO., Irondequoit, NY and Murray UT.
The series of moves were announced as Macy’s reported an enviable 4.3% same store sales increase for the November and December time frame and confirmed a full year profit forecast in the range of $3.80 to $3.90 a share.
“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,” Lundgren said. “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.”
Looking ahead, the company said it expects same store sales in 2014 to range between 2.5% and 3% with earnings per share in the range of $4.40 to $4.50.
Report: Mobile customers increase store visits during 2013 holiday season
Austin, Texas — Shoppers with registered devices and retailer mobile apps made more store visits during the 2013 holiday season than during the previous year’s holiday season. According to data from mobile analytics provider Digby, mobile consumers made 29.6% more store visits during the 2013 holidays than in 2012.
Many mobile hoppers made repeat visits during the shopping season, with 47% returning to the same retailer two or more times. Many customers had more than one retailer in mind when shopping during the holidays, with 50% of loyal shoppers visiting two or more separate retail stores. Digby data reports an average of 51-minute dwell times among shoppers during the holiday shopping season. On average, Digby found 2% of shoppers were in & out” of stores in five to 30 minutes, 94% lingered for 31 to 60 minutes, and 4% dwelled from an hour to an hour and a half.
The 2013 holiday season’s busiest shopping days were Nov. 29 and Dec. 14. On Nov. 29, store visits peaked at 11 a.m.
“We’re at a turning point in capturing shopper attention, especially during the holiday season,” said David Sikora, CEO and founder of Digby. “The actions of shoppers we witnessed over the last couple of months—where they shopped, how long they stayed, when they visited, etc., confirm our understanding that shoppers are determined, even more so during the holidays, to find the best deals and get the best experience possible.”