The holiday season didn’t bring joy for Macy’s.
Citing declining profits, the retailer will close 40 stores by year-end, with up to 4,800 employees’ positions cut.
About 3,000 of those affected employees come from the 40 stores the retailer is closing, but Macy’s says roughly half are “expected to be placed in other positions.”
The news comes after disappointing holiday sales numbers. The Wall Street Journal reported:
Sales at existing stores in November and December fell 4.7%, and the company said it expects the decline to continue this month. It would be the sharpest holiday period decline since 2008. The company had been expecting fourth quarter sales, which also includes January, to decline between 2% and 3%.
In a press release, Macy’s announced several additional initiatives to cut costs, including consolidating its retail regions, replacing back office positions with technological processes and consolidating its credit and customer service centers.
Macy’s chairman and chief, Terry J. Lundgren, said there would be “short-term pain” as the mega-retailer, as he put it, realigns its resources as part of a long-term vision:
“In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations. Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity. We will continue to invest in strategic initiatives that anticipate emerging customer needs and create shareholder value,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc. “The cost efficiencies represent more than two-thirds of our goal of annual SG&A expense reduction of $500 million, net of growth initiatives, from previously planned levels by 2018. In some cases, there will be short-term pain as we tighten our belt and realign our resources. But our eye is on a long-term vision of Macy’s, Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace.”
The closings and layoffs are projected save the retailer roughly $400 million annually.