Macy’s (M) to Cut 2,500 Jobs, Improves 2014 Forecast

Shares of Macyâ s Inc. (M) were trading up +3.65 or +7.04 percent to $55.49 per share in pre-market trading on Thursday, after the company announced it would reduce its workforce, close several stores and increase integration of in-store and online sales. Macyâ s stock closed at $51.84 per share, down -0.34 or -0.65 percent in Wednesdayâ s regular trading session.

In addition to the steep cost reductions, Macyâ s also posted positive same store profits during the holiday season and announced improved guidance for 2014. The company is implementing a strategy that includes filling online orders from its stores.
Cincinnati, Ohio based Macyâ s Inc. is one the countryâ s largest retailers. The company, originally founded as R.H. Macy & Co in 1858, has its flagship store in Herald Square in Midtown Manhattan, NYC. Macyâ s Inc, presently operates 793 stores in the United States, Washington DC, Guam and Puerto Rico under the names of Macyâ s and Bloomingdales. The restructuring will have the company lay off 2,500 employees in a plan to reduce the number of districts and eliminate district planners in the home furnishings area. According to the company, home furnishing inventories donâ t require the level of planning as other areas such as apparel. Macyâ s will also consolidate its administrative and back office operations with its central office. The cost cutting measures will save as much as $100 million per year according to Macyâ s. Macyâ s will also invest in its online presence and integrate Internet sales with stores. The companyâ s closure of five underperforming stores in the spring will be followed by the opening of five new stores under the Macyâ s name and three under the Bloomingdaleâ s brand. Same store sales for the November-December period increased +3.6 percent and +4.3 percent when taking into account departments licensed to third parties. Nevertheless, the company reduced its sales guidance for the second half to +2.8-2.9 percent from a previous +2.5-4.0 percent, which equals an increase of +2.3-2.5 percent for the fourth quarter. Analysts expected a +2.6 percent increase. Despite the lower fourth quarter increase, Macyâ s full-year outlook remained the same, with an expected $3.80-3.90 per share, an increase of +2.5-3.0 percent for same store sales and a profit of $4.40-$4.50 per share. The analyst consensus was for a range of $3.87- $4.36 per share this year. Chief Executive Terry Lundgren said that, â

Published on Jan 9, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

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