Macy's Announces Multi-Year Restructuring Plan
NEW YORK (AP) — Macy's announced a multiyear money saving restructuring program that it says will pare down its management structure and make the department store more nimble in a fiercely competitive environment.
The plan would result in cost savings of $100 million. A Macy's spokesperson said that the job cuts would include the elimination of 100 vice president positions.
The department store chain's move comes as it released fourth-quarter results that beat Wall Street expectations on sales and profits.
Shares rose more than 1 percent in premarket trading.
The results, announced Tuesday, come a little over a month after Macy's reported sluggish holiday sales that spooked Wall Street and sent shares down nearly 18 percent, the department store's worst one-day decline on record.
Macy's, like many other mall-based stores, is under pressure to reinvent itself as shoppers increasingly buy online. Macy's has been expanding its store labels, opening more off-price Backstage stores and putting into place technology that allows customers to skip the line at the register. It has technology to offer people something they can't get online, such as the use of virtual reality in furniture and cosmetics sections. The company's revamped loyalty card program has helped keep its best customers engaged. And after closing more than 100 stores over the past several years, it's going to see how a cluster of smaller stores work with today's customers.
A strong economy and Macy's reinvention efforts have helped produce a string of quarterly increases at established stores after a three-year sales slump. But Macy's as well as several other department stores, struggled through the holiday season after a strong start. That called into question whether such mall-based chains can compete in a changing landscape where shoppers are shifting more of their spending online. It also is putting pressure on Macy's and others that they need to do more to compete in the age of Amazon.
"The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations," said Jeff Gennette, Macy's CEO, in a statement.
Macy's earned net income of $740 million, or $2.37 per share, in the period ended Feb. 2. That compares with net income of $1.35 billion, or $4.38 per share, in the year-earlier period.
Adjusted results were $2.73 per share.
Revenue reached $8.46 billion, down 3.1 percent from $8.67 billion in the year-ago period.
Analysts expected profit of $2.53 per share on sales of $8.44 billion.
Sales at stores opened at least a year rose a meager 0.7 percent in the quarter and 2 percent for the fiscal year. That figure includes business from licensed departments. The number came in below analysts' expectations, but marked the fifth straight quarter of increases for that measure.
Neil Saunders, managing director of GlobalData Retail, cited some troubling issues gleaned from Macy's earnings report.
"First, Macy's full-year growth was achieved against the backdrop of a very strong consumer economy," he wrote in a report. "Second, despite its various initiatives, Macy's still lost market share across all of the categories in which it trades. Third, the fourth-quarter numbers represent a worrying material slowdown in the pace of advance.
By AP reporter Anne D'Innocenzio