Macy’s announced Wednesday afternoon that it is cutting 10,000 jobs as it embarks on a major restructuring amid weak store traffic and sales.
The company, a high-volume industry customer, described holiday sales as disappointing, with same store sales for November and December combined down 2.1%. Macy’s expects the weak sales trends to continue in 2017.
Kohl’s also warned Wednesday that holiday sales came in lower than expected, with November and December same store sales falling 2.1%, leading the company to cut its earnings guidance for the year.
Weakness at Macy’s and Kohl’s makes Zumiez’s results look even brighter – the company said December same-store sales rose 3.4%, on top of a 5.7% increase in November. (See more details about Zumiez's results here.)
Macy’s shopping trends echo what many retailers have been experiencing over the past few years – strong digital sales more than offset by anemic traffic and sales in stores. While digital sales are growing quickly, they are still a very small part of most retailers’ total sales.
The company detailed the 68 stores that will be closing as part of the previously announced plan to shutter about 100 stores in the next few years. Currently, Macy’s operates 730 stores.
About 3,900 employees are expected to lose jobs because of the store closures.
Another 6,200 jobs will be cut as a result of a major restructuring of the company’s central organization, which will be streamlined to cut costs and speed up decision-making. Macy’s will also trim non-payroll costs and reduce its field infrastructure because it has fewer stores.
The moves announced Wednesday are expected to save $550 million, some of which will be invested in digital initiatives, store growth strategies, expanding the bluemercury beauty business, opening more Backstage off price locations, and investing in China.
A bright spot in holiday was apparel sales, with women’s, men’s and kids performing well, especially in active and cold weather.
Digital sales grew double digits.
However, major weakness in handbags and watches dragged down results, the company said.
For the full year, Macy’s expects same-store sales to come in at the low end of its negative 2.5% to negative 3% guidance.