The Cincinnati, Ohio-headquartered department store business Macy’s Inc (NYSE:M) has decided to close many of their stores across the country after a poor holiday season sale. Originally Federated Department Stores, the business currently operates 885 stores in Puerto Rico, Guam, and the United States employing close to 160,000 workers.
Macy’s Closing Stores, Relocating and Sacking Workers
Macy’s have announced that around 36 stores are going to be closed as early as spring this year. Last year, the company had announced that 100 stores will be closed down. The 36 announced this time, is just the first batch, with others to follow soon. 3,000 people working there will lose their positions, but half of these workers are to be relocated elsewhere, the company disclosed. On top of this, 1,350 more jobs will be lost, mostly in back-office operations and a call center.
Not just a poor holiday season, Macy’s is expecting a poor January as well. It was revealed that there is likely to be a 2.7 percent drop in sales, which is more than what the company had initially expected. Earlier, Macy’s had predicted there would be a 2.2 percent sales contraction, but now it’s likely to be worse.
Terry J. Lundgren, the Chief Executive issued a statement saying, “In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations”. Issuing a warning to the existing employees, Terry asked them to be ready for short-term pains as the business tightens their belt and realigns their resources.
US Department Stores Are Losing Out To E-Commerce
Department stores in the United States haven’t been doing well as a bulk of the buyers is now shopping online. Amazon (NASDAQ:AMZN) recently announced that the 2016 holiday sale was their best ever. Macy’s is losing out to low-cost rivals like TJ Maxx, and the deep discounts offered by online stores like Amazon.
Macy’s (NYSE:M) has disclosed already they want to save $550 million to remain competitive. The business had expected profits to between $3.15 and $3.40 for each share. However, that projection has been lowered to between $2.95 and $3.10. Its stock has fallen by 13 percent.
Stock prices of other department stores in the US have also been falling. Kohl’s have gone down by 19 percent as they too announced a cut in their profit forecast. Sears recently announced they will be selling Craftsman tools business for $900 million to Stanley Black & Decker.