The company blamed much of the poor performance in November and December on unseasonably warm weather.
“About 80 percent of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves,” said chief executive Terry Lundgren in a press release.
These results prompted the company to cut its forecasts for the full fourth quarter.
However, it’s clear that Macy’s believes its troubles run deeper than a temporary aberration off the thermometer. The retail giant said Wednesday that the poor financial performance this year has pushed it to begin implementing $400 million in cost-cutting measures. The company pledged to cut 600 back-office positions, though some 150 workers in those roles would be reassigned to other jobs. It also plans to offer “voluntary separation” packages to 165 senior executives. It will slash staffing at its fleet of 770 Macy’s and Bloomingdale’s stores, a move it says will affect some 3,000 employees.
The retailer also announced Wednesday the locations of 36 stores that it will close in early 2016. The company had previously announced the planned closures, but had not said which locations would be affected. None of the chain’s stores in the Washington metropolitan area are to be shuttered.
Despite the rough holiday results, investors sent Macy’s stock up about 4 percent in after-hours trading. That could be an indication that they are cheered by the planned pace and nature of the cost-cutting initiatives.
Investors may also be reacting to Macy’s statement that it has engaged an investment bank to help it explore options for “monetizing its real estate assets” through initiatives such as a joint venture. Activist investor Starboard Value has been urging Macy’s to spin off its real estate holdings, which Starboard has valued at $21 billion.
Macy’s has been moving aggressively to try to remake itself for a new era of shopping. It has plans to open more locations of Macy’s Backstage, a nascent off-price concept it hopes can help it better compete with high-flying T.J. Maxx. It is also pushing ahead in 2016 with an expansion of Bluemercury, the District-based beauty and spa chain it bought last year. At a time when millennial beauty shoppers are often turning to Sephora or Ulta instead of department store beauty counters, Macy’s hopes Bluemercury will help strengthen its position in the category.
One relative bright spot for Macy’s during the holiday season was the online channel, where it rang up “double-digit” increases in sales and a 25 percent increase in the number of orders it filled. That relative strength would be consistent with what what was seen in the wider retail industry during the early part of the holiday season. While Thanksgiving, Black Friday and Cyber Monday all saw record spending online, in-store sales plunged over that holiday weekend.