Macy's has announced the closure of 40 of stores, besides saying it would eliminate thousands of jobs. The US retail chain cited weak holiday sales owing to unusually warm weather and a stronger dollar as the major reasons for the cost-cutting measures.
Almost 80% of the drop in sales at the chain of stores, which also includes Bloomingdale's, came on account of staggered sales of winter gear including sweaters, gloves and coats. Tourist spending across the stores also declined as a strong dollar made products dearer for the foreigners.
The sales were the sharpest holiday period decline since 2008. As a result, Macy's plans to cut 4,800 jobs.
"The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry. In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy's and Bloomingdale's are especially well-represented," said Terry J Lundgren, Macy's Inc chairman and chief executive officer.
Sales in November and December fell 4.7%. The company expects the decline to continue this month. It also lowered its earnings guidance for the fourth quarter to $2.18–$2.23 (£1.49–£1.52) a share.
"In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations. Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy's and Bloomingdale's omni channel businesses faster and with more intensity," Macy's said in a release where it detailed the 40 stores it plans to shut. To check the full list click here.
The Cincinnati-based department store chain said it plans to reduce its total costs by about $400m annually and focus on web shopping, which brought in surprisingly positive numbers. Growth in online sales increased 25% to nearly 17 million orders in November and December, a record for the company.
Macy's currently operates about 770 stores around the US. Its stock suffered a rough 2015 and has fallen more than 40% in the last 12 months. On 6 January the stock closed down 2.22% to $36.14 on the NYSE.