The department store chain Macy’s announced retrenchment of about 100 jobs in its management category as a part of the company’s efforts to cut down costs and enhance profitability even as sales continue to fall.
In the fourth quarter, the company however performed better than the market expectations which were lowered earlier. However the company did not meet expectations in revenues from same-store sales because of reduced spending by tourists during the end of 2018. Last month, the company was forced to bring down its 2018 outlook because of a very dull December sale as shoppers kept away from its stores during the holiday shopping season. While the retail chain still grapples with management issues for its inventory, the company’s gross margins also remained under pressure.
Macy’s has drawn up a plan for implementing an annual cost saving of $100 million which would start at the beginning of fiscal 2019 and would be achieved through a new restructuring plan. Reorganization of the upper management is a part of that restructuring plan of the company and as such it has announced the cutting of 100 hobs which would be at the level of vice-president and above roles. The company said that this was being done “to increase the speed of decision making.”
“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,” CEO Jeff Gennette said.
The news of the company performance and its restructuring plan saw its shares rise by 4 per cent.
According to Refinitiv data, the company clocked adjusted earnings per share at $2.73 compared to expected number of $2.53 against revenues of $8.46 billion compared to expected revenues of $8.45 billion. In terms of growth in same-store sales, the company reported 0.7 per cent growth while the market was expecting growth of 0.9 per cent, on an owned plus licensed basis.
For the fourth quarter, the retail chain reported net income of $740 million, or $2.37 a share while the values for the same period a year ago were $1.35 billion, or $4.38 per share.
The company however reported double digit growth in its online sales for the same period.
The outlook of company for 2019, Macy’s expects near flat growth of 1 per cent in its same-store sales, on an owned plus licensed basis. It also expects growth in sales to be flat. The company anticipates its earnings per share to be between $3.05 and $3.25 per share while the analysts expect earnings per share of $3.29.
The retailer has already clarified that it the holiday season sale was not good for it. During the middle of December, traffic at stores softened the departmental store had said last month, and this drop never picked up for the rest of the season as had been anticipated by the company, and peak during the Christmas week. Women’s sportswear, sleepwear, fashion jewelry, fashion watches and cosmetics were the consumer segments that were pointed out by the departmental store as being the poor performing segment which impacted it overall performance.
(Adapted from WSJ.com)