Macy's Inc. announced Wednesday that it plans to cut up to 4,800 jobs across the country and consolidate operations as part of an effort to trim costs and reverse sluggish sales.
With these changes in effect, Macy's expects to see annual selling, general and administrative expenses drop by roughly $400 million annually, though in the short-term, the retailer also expects to see a $200 million loss in profits for the fourth quarter, according to CNBC.
The restructuring comes after Macy's reported poor sales throughout 2015 and particularly weak sales during the holiday season. Comparable retail earnings per share dropped by about 5 percent in November and December, going from $2.54-$2.64 to $2.18-$2.23 and the company expects profits to miss previous projections, marking the second time Macy's has cut its earnings outlook in two months.
Macy's, like other retailers, blamed the unusually warm holiday season for its decline in sales, noting that roughly 80 percent of its losses are attributable to shortfalls in traditional winter attire such as coats, sweaters, hats, gloves and scarves.
"The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry," said Macy's Chief Executive Terry Lundgren, according to Reuters.
Though 4,800 jobs will be cut, it's not as if those employees will be fired. About half of the 3,000 sales associates impacted by the cuts are expected to be placed in other locations, while a portion of the remaining employees, representing back-office and service center positions, are expected to be reassigned to other jobs.
These job cuts and associated employee relocations are prompted by the closure of 40 stores that will be completed by early spring. Thus far, four stores have closed, leaving 36 to be closed before the end of the next quarter, according to the Associated Press.
News of the restructuring and store closures were received favorably on Wall Street, causing Macy's shares to go up 6 percent in after-hours trading on Wednesday. This is at least some good news for Macy's, whose stock tumbled by more than 40 percent last year, making it one of the 10 worst performers in the S&P 500 in 2015.
