Retailing giant Macy’s Inc. is closing its department stores at the Eastern Hills and McKinley malls and cutting at least 155 jobs locally as part of a larger restructuring and cost-cutting move in response to disappointing sales.
The two Western New York stores, together with a related home store at McKinley, will close in early spring, along with 34 other stores nationwide and four stores that closed in the last quarter of 2015. In all, the 40 stores account for about $375 million in annual sales, but officials hope to retain some of that business through other nearby stores, online sales and mobile sales. The company operates 900 stores including stores at the Boulevard Mall and Walden Galleria.
Affected employees, who were notified Wednesday, may be offered positions in nearby stores, or will receive severance benefits, according to a press release issued by the Cincinnati-based company.
Macy’s said that, nationwide, it would eliminate about 4,500 jobs, or about 3 percent of its workforce, in the major restructuring drive. It said slumping holiday season sales had hurt its bottom line.
The department store chain’s holiday woes were a harbinger of what could be a difficult winter for retailing. Hhgregg, the consumer electronics and home furnishings merchant, reported an 11 percent plunge in sales in the fourth quarter at stores open for at least a year.
Macy’s said sales at its Macy’s and Bloomingdale’s stores fell 4.7 percent in November and December, partly because unseasonably warm weather across much of the country discouraged shoppers from buying coats and other outerwear. Also, brick and mortar retailers are facing increasing competition from Internet sites, though many of them have their own web outlets.
The company also blamed a stronger dollar, saying that weighed on spending by international tourists.
“The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry,” Terry J. Lundgren, Macy’s chairman and chief executive, said in a statement.
Four-fifths of the company’s sales declines could be traced to a drop in demand for coats, sweaters, boots, hats, gloves and scarves, Lundgren said.
The problems facing traditional retailers contrast starkly with the online juggernaut Amazon, which announced a record-breaking holiday sales season. Macy’s has struggled to compete with heavy discounters like T.J. Maxx, as well as so-called fast fashion brands like H&M and Zara.
Macy’s aims to save $400 million a year from various cutbacks and a streamlining of its store operations into five regions, down from seven. About 3,000 of the jobs being eliminated are store employee positions, the retailer said, while 165 senior executive posts are being trimmed. It will also cut 650 back-office jobs, and close a call center in St. Louis.
In a bid to better compete with discounters and fast fashion brands, Macy’s said it would open about 50 off-price locations under the Macy’s Backstage banner, which it introduced last year. That will add to the six Macy’s discount stores the retailer has opened so far, all in the New York area.
Macy’s is also extending its overseas reach, with new Macy’s and Bloomingdale’s stores in Abu Dhabi, United Arab Emirates, which are expected to open in 2018.
Macy’s is under pressure from activist investor Starboard Value, which wants the retailer to extract more value from its property holdings. Macy’s said in November that it won’t form a real estate investment trust, a move Starboard had endorsed as a way to boost the stock price. Now, Macy’s is looking for other ways to capitalize on its real estate as sales and profit take a hit from an unseasonably warm November and December and unfavorable currency valuations.
The New York Times and Bloomberg News contributed to this report. email: firstname.lastname@example.org