Warm weather and lower spending by worldwide tourists hurt sales.
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The largest chain of department stores in the US, which also operates the chain of Bloomingdale’s, announced late on Wednesday that it was cutting as many as 4,800 jobs along with lowering its outlook on profit after a holiday season it called miserable.
Macy’s will also cut an additional 600 positions in back-office operations.
Macy’s is closing a store that anchors one of the Pittsburgh-area’s biggest malls as part of a move to shutter 40 stores nationwide.
Macy’s, which has its corporate offices and NY and Cincinnati, says its sales at its existing stores dropped by 5.2% during the shopping season between November and December.
It sees fourth-quarter earnings per share at $2.18 to $2.23, compared with the average analyst estimate of $2.56 per share.
Like other retailers, Macy’s blamed the “historically warm weather” in northern climates. But increasingly, Amazon.com and other online rivals are becoming a threat.
However, like all other retailers, Macy’s has contended with the broader changes of consumers’ spending habits. It purchased upscale beauty brand Bluemercury past year and made its first foray into discount stores under Macy’s Backstage to go head-to-head with T.J. Maxx.
“In today’s rapidly evolving retail environment, it is essential that we maintain a portfolio of the right stores in the right places”, chairman and CEO Terry Lundgren said in a statement. “But our eye is on a long-term vision of Macy’s Inc.as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches”.
Macy’s closed its iconic downtown Pittsburgh store in September. Currently, there are 770 Macy’s stores.
About 36 stores will also be closed by early spring of this year.
Macy’s shares were up more than 3% in after-hours trading as investors digested the news of the cost savings.
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Macy’s expects the cost-cutting moves to hurt fourth-quarter profits by $200 million. Macy’s shares have lost more than 44 percent in the last 12 months.
