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