Macy’s Inc. (NYSE: M) plans to cut thousands of jobs as part of a restructuring plan after holiday season sales were worse than expected.
The job cuts plan is going to eliminate three to four workers at each of about 770 Macy’s and Bloomingdale’s store. It is about 3000 jobs and 2 percent of Macy’s total workforce. The company said half of those employees would be offered other jobs. In addition to job cuts, the company also plans to close 40 physical stores. The restructuring plan will help the company save about $400 million in annual expenses.
Macy’s suffered a lot from its poor sales in holiday season. According to The Wall Street Journal, sales at existing stores in November and December fell 4.7% and it was the worst holiday period decline since 2008. The company expected that the sales would continue to decline between 2% and 3% in next quarter.
Macy’s chief executive Terry Lundgren said that the warm weather was one of the reasons why holiday sales declined.
“About 80% of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves,” he said.
Another reason is that retailers had been suffering a lot from the boost of e-commerce online sales. Consumers now prefer to do shopping online rather than do it in physical stores. Because online shopping provides more choice and it is more convenient.
Macy’s share price dropped nearly 47% last year, one of the worst performing stocks on the S&P 500. But it rose as much as 6.4 percent this morning.