New Year message to 10,100 Macy’s workers: You are fired
The actions are estimated to generate annual expense savings of approximately $550 million, beginning in 2017, enabling the company to invest an additional $250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage and China.
These savings, combined with savings from initiatives implemented in early 2016, exceed the $500 million goal communicated in fall of 2015, one year earlier than expected.
In conjunction with today’s announcement, approximately $250 million of charges or 50 cents per share (of which approximately $210 million is expected to be cash) are expected to be recorded in the fourth quarter of 2016.
These charges were not previously included in earnings guidance provided by the company and are in addition to the $249 million recorded in the second quarter as an estimate of asset impairment and other charges primarily related to 2016 store closings.
The company today announced 68 Macy’s store closings (out of a current total of 730 Macy’s stores).
Of the 68, three closed mid-year, 63 will be closed in early spring 2017 and two will be closed in mid-2017. Three other locations were sold, or are to be sold, and are being leased back.
As a result of closing 63 Macy’s stores in early 2017, along with the three closed mid-year 2016, the company’s 2017 sales are expected to be negatively impacted by approximately $575 million.
Associates displaced by store closings may be offered positions in nearby stores where possible. Eligible full-time and part-time associates who are affected by the store closings will be offered severance benefits.
The company estimates that 3,900 associates will be displaced as a result of these closures.
It also will eliminate about 6,200 other positions as part of an effort to streamline operations and reduce expenses so it can invest more in its digital operations.
Macy’s, Inc. maintains its previously provided full-year sales guidance of a 2.5 percent to 3 percent decrease in comparable sales on an owned plus licensed basis, and expects to come in at the lower end of that guidance, with comparable sales on an owned basis to be approximately 50 basis points lower.
The company now expects full-year 2016 diluted earnings per share (excluding asset impairment, restructuring, retirement settlement and other charges) to be in a range of $2.95 to $3.10 (compared with previous guidance of $3.15 to $3.40).