Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed

Tyler Durden's picture

It was less than two months ago when we brought to you the "Macy's Massacre": on November 11, the stock of the iconic retailer crashed 13% and its CDS soared after Macy's announced a trifecta of weak data, reporting a miss on Q3 sales which came at $5.87 billion below the $6.1 billion expected, down from the $6.2 billion, as well as a plunge in comparable store sales which tumbled by 3.9%, far worse than the expected drop of -0.4%, and nearly three times as bad as the 1.4% drop a year ago.

Cash flow plunged: cash provided by operating activities was $278 million in the first three quarters of 2015, compared with $841 million in the first three quarters of 2014.

Finally, M also slashed its full year same store guidance down from flat to -1.8% to -2.2% with sales projected to drop -2.7% to -3.1%, compared to a previous guidance of -1%, as contrary to the propaganda, the discretionary spending of the US consumer is bad and getting worse by the day.

Fast forward to today when the massacre is back with a vengeance, after the company not only reported yet another cut in its guidance, but also announced it would be laying off another boatload of retailers, demonstrating just how strong the "service" economy truly is.

First, Macy’s said that its comparable sales on an owned plus licensed basis declined by 4.7% percent in the months of November and December 2015 combined, compared with the same period last year. This compares to previous, already poor guidance, of -2% to -3%. The weather was, of course, blamed.

“The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry. In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy’s and Bloomingdale’s are especially well-represented. About 80 percent 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. We also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.

Compare this to Macy's 8-K from precisely two years ago, and try not to laugh too hard:

"poor January sales were due to the unusually harsh winter weather across much of the country. Once warm spring weather arrives and our full assortment of fresh spring merchandise is in place, we believe customers will return to a more normalized pattern of shopping."

So much for the comedy, now back to the tragedy for shareholders, as the company admits not even "harsh cold weather" can save it as it slashes earnings guidance...

Macy’s, Inc. is not expecting a major change in sales trend in January and expects a comparable sales decline on an owned plus licensed basis in the fourth quarter of 2015 to approximate the 4.7 percent decline in November/December (from previous guidance of down between 2 percent and 3 percent for the fourth quarter). This calculates to guidance for comparable sales on an owned plus licensed basis in the full-year 2015 to decline by approximately 2.7 percent (from previous guidance of down 1.8 percent to 2.2 percent).


Earnings per diluted share for the full-year 2015 now are expected in the range of $3.85 to $3.90, excluding expenses related to cost efficiencies announced today and asset impairment charges associated primarily with spring 2016 store closings. This compares with previous guidance in the range of $4.20 to $4.30. Updated annual guidance calculates to guidance for fourth quarter earnings of $2.18 to $2.23 per diluted share, excluding charges associated with cost efficiencies and store closings. This compares with previous guidance for earnings per diluted share of $2.54 to $2.64 in the fourth quarter. Earnings guidance for 2015 includes an expected $250 million gain on the sale of real estate in downtown Brooklyn.

... and a tragedy for its employees, many of whom are about to be fired.

Macy’s, Inc. today announced a series of cost-efficiency and process improvement measures to be implemented beginning in early 2016 that will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s. The actions represent progress toward the company’s previously stated goal of re-attaining over time an EBITDA rate as a percent of sales of 14 percent.

To address the need for greater efficiency and productivity, among the changes being implemented by Macy’s, Inc. in early 2016 are:

  • Adjusting staffing levels at each Macy’s and Bloomingdale’s store in line with current sales volume to increase productivity and improve efficiency. An average of three to four positions will be affected in each of Macy’s and Bloomingdale’s approximately 770 going-forward stores (out of an average workforce of approximately 150 associates in each store), for a total of about 3,000 affected associates nationwide. Roughly 50 percent of affected store associates are expected to be placed in other positions.
  • Implementing a voluntary separation opportunity for about 165 senior executives in Macy’s and Bloomingdale’s central stores, office and support functions who meet certain age and service requirements and chose to leave the company beginning in spring 2016. Approximately 35 percent of these executive positions will not be replaced.
  • Reducing an additional 600 positions in back-office organizations by eliminating tasks, simplifying processes and combining positions, with about 150 of these associates reassigned to other positions.

Luckily, the US service economy is so very strong as Macy's results confirm, or otherwise someone might get the idea that the "manufacturing recession is not contained."

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Fireman's picture

Everybody already has everything. The end of history obviously.

Hitlery_4_Dictator's picture

I kinda feel bad for the employees, but if you didn't see that retail was a bad place to employed in since 2008 - you kinda deserved it. Being an idiot hurts.

Mark Mywords's picture

So working in retail automatically makes one an idiot. That means all CEOs and major executives are by rule geniuses.

How adorable.

NidStyles's picture

Only an idiot would think retail had a future when they have to automatically be disadvantaged against online markets like aAmazon. 

White Mountains's picture

It is difficult to compete with the Not-For-Profit Amazon.  Which is taking down every small business that sells stuff.  What could possibly go wrong?

BeerMe's picture

Amazon can't compete with a well-run retail business.

LowerSlowerDelaware_LSD's picture

My sister-in-law used to ask for Macy's gift cards for Christmas.  That changed a few years ago.  Apparently Macy's has really gone down hill.  Their employment must follow.

Scooby Doo's picture

It's an ok store. Nothing exciting. We used to go on Black Friday but then had to wait 30 minutes in line to checkout. Didn't want to do that anymore so we haven't been to Macy's in a couple of years.

balanced's picture

With weather having such a major effect on virtually every economic indicator, you'd expect to see more meterologists employed by major investment houses. Has anyone heard about JPM's meterology department? What about at Citi? No? Oh right right right, it's total bullshit.

KesselRunin12Parsecs's picture

OK, so they're EVERYWHERE except for Nebraska, Iowa, Arkansas, Mississippi & ALASKA... (so tell me again how your sales were hurt)?

Son of Loki's picture

No matter what they say about Amazon in my experience they are very reliable and the listings are accurate and they ship usualy superfast.  Malls are too crowded or dirty and even too dangerous with Thugs these days. With Barry importing thousands more refugees I can't see most malls being a place to be for an American middle class person. Add to that #BLM protests, etc....screw it! Malls are the 2016 dinosaur.


If I buy a brand new pair of Air Jordans, I want to keep my brand new pair of Air Jordans!!!

RAT005's picture

Checking out at our Macy's is a game of first finding a station and then finding a clerk while trying not to piddling off other customers doing the same.  Then a little discount tip from you: lay on a thick guilt trip about how shameful the check out service is and then wait for more discounts. 

Shocker's picture

Sad sad Recovery we have

Layoff List:



Jacksons Ghost's picture

You f'ng Hebe! Never pay retail, should be Israeli motto.

zeronetwork's picture

The company I work, most people are now making $10 an hour, same as in 1994. Above $10 are mostly fired.

Lore's picture

Canadians ought to look at the abysmal chart for Sears Canada (SCC). I doubt the company will last the year. A simple straight line on the current hard downtrend puts the shares near zero before end Q1.  I'm no expert, but that chart is as ugly as any I've ever seen.  I visited the nearest location right before Christmas and it was a tomb, with racks loaded with heavy outerwear (same mistake Eaton's and Woodward's made) and lots of crummy clothing made in Bangladesh.  Somebody in the purchasing department for apparel seems to like the "Pirate" look.  The old hardware section, formerly one of Sears' greatest strengths, was reduced to some snowblowers and a few shop vacs and not much else, all on clearance.  Walking around the deserted store with Christmas music in the background was depressing. Very sorry for some of the good employees who are about to find themselves wearing those pirate outfits on the street.  Same goes for staff at The Bay (HBC), another major Canadian department store with horrific technicals.  They're doing the same thing: filling shelves with third-rate shit, letting their stores run down and bleeding equity.

BlindMonkey's picture

Macy's should open a gun department.  Problem solved.

KesselRunin12Parsecs's picture

the non existent Nebraska, Iowa, Arkansas, Mississippi & Alaska stores should do well

Hitlery_4_Dictator's picture

LOL CNBC Headline - Macy's to cut over 4,000 jobs after poor holiday sales

Jan 06 4:58pm:

The pink slips are flying at Macy's following a holiday season clouded by warm weather

NoMoJackboots's picture

Perhaps they could sell some stuff on Amazon?

boattrash's picture

I hope they close the one in Chitcago that has been blockaded by the BLM Movement. They gave up the 2A, let 'em reap what they sow...

jerry_theking_lawler's picture

warm, cold, days too short, days too long, yada,yada,yada...always excuses. Any 'board' that puts up with excuses like this should immediately be shown the door (so then the management team can be axed...and quick).

cyberfossil's picture

Lower Slower:   That Gift Card purchase will soon have an announcement such as this:

Dear Valued Macy's Customers:  As part of our efforts to serve you better, we ask that you delay using your [insert politically correct term referring to year end celebration that promotes gift buying here] Holiday Macy's Gift cards until further notice so that we can keep your local Macy's doors open, as we already spent your Gift Card money on  excessive upper management golden parachute severance packages while laying off  more of the depressed and overworked low level workers that you see trudging through our stores who already have part time jobs with no benefits.  Thank you for your understanding and continued patronage during this unusually warm and unexpectedly slow sales season.  Oh and please don't return any gifts, as we regretfully are unable to give any cash refunds--only gift card credit--subject to the above limitations.

johngaltfla's picture

So the rain, sleet, snow, sun, cloudy, dry, hot, cold weather caused all this or did Macy's move most of their stores into nudist colonies?

The Saint's picture

LOL.  The "It's too hot so sales are down plus It's too cold so sales are down" double talk is classic.  Maybe they should just admit that upper management doesn't have a clue how to be competitive.

sun tzu's picture

Appease the 10% that are Muslims and fundamental atheists and screw the other 90% of the population. 

indygo55's picture

Print a million Gift Cards and give them to all the illegals. Then sales will soar and the problem is fixed. I learned that from a friend at the FED.

greenskeeper carl's picture

Its funny, I shop at macy's occasionally, but I haven't paid full price for anything in years. The one near me seems like all it has is 50% off signs everywhere, and its often almost completely empty. Even near christmas, the parking lot wasn't full. We take the kid to the mall occasionally when the weather is bad to get him out of the house and let him run around in their play area, and often times its a ghost town in there. Its not surprising macy's is hurting, can't even sell shit at half off. The rest of that mall doesnt seem to be doing much better either.

Son of Loki's picture

Macy's is doing a jcpenneys thingy trying to cater to the special interest PC crowd. None of the Macys where I live had much in the way of Christmas decorations I guess they didn't want to offend the moslim shoppers who evidently bought little to nothing this year.

A big draw to Macys in the 'old days' was their holiday decorations. They lost a huge crowd that way.


Screw them. Hope they go under.


NoMoJackboots's picture

How is their burkha selection?

JLee2027's picture

OT: Giant Foods near me has been selling Halal something or other. It's some kind of Muslim prepared meats. Probably left overs from exploded suicide bombers and beheaded hostages. Muther fuckers. Burn in hell.

hannah's picture

just think of all the shit that goes bye-bye when the world goes muslim. literally no modern consumer goods. just think in america at christmas even the jews liked xmas but today it is racist to get your picture taken sitting on a fat man dreesed in red lap....

fockewulf190's picture

They need snow flurries....lots of snow flurries...but nothing more than that, with temps between 28° and 32° for a solid three months.  And low gas prices. Big risk there.    And no cold and flu season.  No wage disputes.  No race riots either.  Low electricity also.  Taxes, shit, forgot about taxes...THEN, the business plan works...unless....

bpj's picture

Amazon out competes well run retail outlets, like hardware, auto parts, computer hard ware, all clothes, the only thing left is food. As to auto parts they are half price compared to my local parts store. No way the locals can survive.

WillyGroper's picture

Same model as whale-mart.

Run ma & pa OOB.

Soon AMZN.gub will be our choice.

skinwalker's picture

Amazon sells lots of food. 

Midas's picture

 I buy odds and ends at amazon, but I have favorite websites for my interests.  I buy my electronics from Newegg, car parts from Autohaus, etc.  Don't tell the investors, but considering it is the world's largest river, Amazon ain't got no moat.

Iam_Silverman's picture

"Amazon out competes well run retail outlets, like hardware, auto parts, computer hard ware, all clothes, the only thing left is food."

And Beer.

And Guns.

Oh, and gas/diesel.

PMs, ammo, prescription drugs and hookers probably round out the partial list of things you can't order from them - even if you're a Prime customer......

jonny quest's picture

Yes it is.  And I'm just as guilty as the next Amazon shopper, esp. when I know they treat their warehouse workers the same as the Nazi's or Soviet's treated their forced labor (only they pay them).  But what is one to do in this collapsing economy?  I work in academia and am wondering when my students are lectured by youtube and have Max Headroom for their TA.  Thank God I'm tenured and old and almost retired.

GotGalt's picture

+1000 at the 'not for pofit' pre-fix to Amazon, ha ha ha.  So true, so true.

ebworthen's picture

And brick-and-mortar retail being gutted by swarms of M.B.A.'s coming out of "Business" schools past 20 years.

Sears, J.C. Penney, Walmart, etc.  Cut employee and/or pay & benefits, buyback stock, run a bunch of commercials about how great you are while your product and service levels decline.

TBT or not TBT's picture

Either that or consumer demand shifted and margin compressed thanks to consumers using the internet to knkw what is available to buy and at what price.   All the king's MBA's tried as they might abd couldn't get back to the margins of the good old days when there was greater information assymmetry between retailers and their customers. 

Son of Loki's picture

Americans are Broke Donkeys. That has something to do with it also. There not much left to a middle class consumer group anymore. Barry's destruction of the well-paid hard working American middle class has a result. Add in the costs of Obamacare and the MC is toast.  Especially since the USA GDP is 60-70% consumer spending.


The middle class survivors who have a bit of discretionary income shop[ online. They know what style dress they want and/or what size shirt, color, fabric, etc. The poor peeples wander thru the mall looking for $3 flannel shirts and $24 pair of shoes.

o r c k's picture

Now those must be some high class footwear there.

847328_3527's picture

$24/pair shoes?


Who can afford shoes? $24 a pair...must be Air Nikes.

Crawdaddy's picture

The whole business world is doing the same retarded thing. It as if they all got together and decided to race for the bottom.

roddy6667's picture

I was lucky to retire from JCP 3 years ago. They are circling the drain. On average, every time they ring up a $100 sale they lose $4. Not a good business model. They burn many millions of cash a year. When the cash runs out in 2017, what happens then?