Macy’s, the largest department-store company in the U.S., has cut its earnings outlook, vowed to eliminate 10,000 jobs, or about 4 percent of its workforce, and close over 60 stores before the spring. Following a sluggish holiday season, the beleaguered retailer is taking more drastic steps to slim down as it copes with sluggish traffic and weak sales in key categories, such as handbags. It previously announced plans to shut 100 underperforming stores, and the chain has been evaluating ways to squeeze more money out of its real estate.
“We had anticipated sales would be stronger,” Chief Executive Officer Terry Lundgren said in the statement. “Ongoing weakness in handbags and watches negatively impacted our results.”
Of the job cuts, 6,200 are management positions, he told WWD “That is a significant portion of our executive population — 17 percent. It’s a huge cut.” The move to cut costs should generate annual savings of $550 million, beginning in 2017, Macy’s said. That’s higher than a previous goal of $500 announced in 2015. The idea is to pump the savings into its e-commerce business, Chinese operations and other units, such as its Bluemercury makeup division.
“We have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time,” Lundgren said. But the trends remain challenging, he said.
Next year’s sales are expected to be similar to what Macy’s experienced in November and December, per Lundgren. “We continue to experience declining traffic in our stores where the majority of our business is still transacted,” he said.