Macy’s Herald Square

MACY’S SEES SALES BOOST FOR HOLIDAY BUT PLANS MORE CUTS, STORE CLOSURES

by Stephen Garner

Macy’s Herald SquareMacy’s had a happy holiday! The department store chain has reported positive comp sales for November and December, with an increase of 1 percent.

Macy’s, Inc. saw improved holiday sales across Macy’s, Macy’s Backstage, Bloomingdale’s, Bloomingdale’s The Outlet and Bluemercury, with exclusive gifts showing strong performance. Active apparel, shoes, dresses, coats, fine jewelry, men’s tailored clothing, children’s and home were all top performers. Beauty was also a highlight and showed a marked improvement in trend, with particular strength in fragrance, prestige skincare, and cosmetic gifting.

“Macy’s had a solid holiday shopping season, and we are pleased that our November/December performance resulted in positive comp sales for the period, setting us up for a positive fourth quarter,” said Jeff Gennette, CEO of Macy’s, Inc. “Consumers were ready to spend this season, and we delivered with solid execution, fresher inventory, a curated gift assortment and a focus on customer experience. We saw improved sales trends in our stores and continued to see double-digit growth on our digital platforms. Customers also responded well to our new loyalty program. We intend to close the fourth quarter in a good position and head into 2018 with momentum.”

But everything isn’t coming up roses. The company is also taking actions intended to continue improvements in organizational efficiency and to allocate resources to support its growth strategy. Major components of these restructuring activities include staffing adjustments across the stores organization with reductions in some stores and increases in others; further streamlining in some non-store functions; and, closure of 11 stores (four of which were previously disclosed) in early 2018.

The company expects annual expense savings of $300 million from these actions beginning in fiscal-year 2018, which it intends to reinvest in the business. Also associated with these actions, the company anticipates one-time charges of approximately $160 million to be booked in the fourth quarter of 2017 for restructuring activities, asset impairment, store closings and other costs.

With these closures, the company will have completed 81 of the approximately 100 planned store closures announced in August 2016. The company intends to close approximately 19 additional stores as leases or operating covenants expire or sale transactions are completed. These closures are part of a multi-year effort by the company to ensure the optimal mix of brick-and-mortar stores and digital footprint. Including the stores announced today, Macy’s, Inc. has closed 124 stores since 2015.

“Our primary focus in 2017 has been to continue the strong growth of digital and mobile, stabilize our brick-and-mortar business and set the foundation for future growth,” continued Gennette. “We’ve made good progress on each, including encouraging trend improvements in our brick & mortar business. A healthy store base combined with robust digital capabilities is Macy’s recipe for success. Looking ahead to 2018, we are focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”