Department store giant Macy’s said Wednesday that it plans to slash more than 10,000 jobs and will close its location at Landmark Mall in Alexandria, Va., as part of a previously announced plan to shutter 100 of its 730 stores nationwide, a coda to a disappointing holiday season.
Early evidence suggests that the retail industry pulled down a solid holiday sales haul this year: Consumer confidence is high, growth in online spending was robust in December, and a blast of cold weather encouraged people to get shopping. And yet Macy’s struggled to get a piece of the action.
The chain said Wednesday that it saw a 2.7 percent decrease during November and December in comparable sales, a measure of online sales and sales at stores open more than a year.
The lackluster performance continues a long streak for Macy’s in which store traffic and sales have been pummeled by shoppers’ changing behavior: Women are opting to fill their closets with goods from fast-fashion outposts or off-price stores such as Marshalls. And many consumers are choosing to spend money on experiences instead of goods or are shopping online instead of wandering the mall.
These latest struggles underscore the challenges that Jeff Gennette will face in 2017 when he takes over the chief executive reins from longtime leader Terry Lundgren, a succession plan Macy’s had announced last summer.
During the holiday rush, the department store said that its apparel, furniture, bedding and fine jewelry businesses performed relatively strongly. But weakness in departments such as handbags and watches offset some of those successes.
“We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry,” Lundgren said in a news release.
As it responds to this challenging shopping environment, Macy’s said it will seek to cut costs by eliminating layers of management and “making changes to the way stores are operated.” Overall, these moves will result in 6,200 jobs being slashed.
Meanwhile, an additional 3,900 positions will be lost as the retailer executes a plan it announced last summer to trim its store portfolio. Lundgren has said he believes the United States is “overstored,” meaning it has too many brick-and-mortar shopping outposts for the e-commerce era. Those closures, which will largely take effect in the next few months, so far appear poised to claim only one Macy’s location in the Washington region: the store at the Landmark Mall in Alexandria.
However, on Wednesday, Macy’s named 68 outposts that it plans to close. In a statement, the company said it “intends to opportunistically close approximately 30 additional stores” as leases expire or sales transactions are completed. So it’s possible the Washington area could lose more Macy’s stores in the next few years.
Based on the closures it has announced so far, Macy’s said it expects its sales will take a $575 million hit in 2017. While many loyal shoppers may turn to Macy’s website or another nearby location, some of those sales won’t be recovered.
Macy’s stock sank more than 10 percent in after-hours trading. While the retailer reaffirmed its sales guidance for fiscal 2016, it lowered its earnings estimates to $2.95 to $3.10 per share.
The company will continue in 2017 to try to remedy its business by barreling ahead with new formats. It will open some 50 locations of its Bluemercury beauty chain, some of which will be standalone locations and some that will be shop-in-shops at Macy’s stores. It will also add 50 more of its Macy’s Backstage concept, an off-price area within existing stores.