The holiday season was less than bright for Macy’s and, as a result, the venerable department store will shutter stores, consider real estate options and cut staffing.
On Wednesday, the company announced that its November/December combined comparable sales on an owned plus licensed unit basis declined by 4.7% versus the same period last year.
In owned stores, comps declined by 5.2% in the combined period.
“The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry,” said Terry Lundgren, Macy’s chairman and CEO. “In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy’s and Bloomingdale’s are especially well represented.”
Lundgren said that approximately 80% of Macy’s year-over-year comparable sales declines is attributable to sales shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. The company also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong.
“That said, we are buoyed by a very strong performance in our digital business, with continued double-digit increases in online sales,” he added. “In November/December, we filled nearly 17 million online orders at macys.com and bloomingdales.com— a new record for our company and an increase of about 25% over last year.”
Macy’s detailed efficiency measures it will begin implementing in early 2016 designed to reduce SG&A expense by approximately $400 million while permitting investment in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s.
Among cost-cutting measures Macy’s detailed is the closure of 40 stores and consolidation to five regions and 47 local districts from seven regions and 58 local districts. The company also plans to adjust staffing at each Macy’s and Bloomingdale’s store in a move that will affect about 3,000 associates nationwide, with half absorbed into other jobs.
The company also is introducing a voluntary separation initiatives for about 165 senior executives in Macy’s and Bloomingdale’s central stores, office and support functions, cutting an additional 600 positions in back-office organizations by eliminating tasks, simplifying processes and combining positions, and consolidating the four existing Macy’s, Inc. credit and customer services centers into three with the shuttering of the St. Louis facility.
In an initiative announced in November, Macy’s is working with Eastdil Secured, real estate-focused investment bank, to approach potential interested parties regarding forming partnerships or joint ventures for the company’s mall-based properties, the retailer maintained.
Macy’s noted that it would report fourth quarter sales and earnings on Tuesday, February 23.