Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed
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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How many of the Employees buy thier shit at Amazon?
Not just retail, but Macy's retail, where everything is marked up at least 50% from everywhere else. Not quite as bad as Nordstrom's though.
Clothing is 100% markup at Macy's
If I must shop at a (department) store, I shop at Nordstrom's.
If any department store can survive the 'death of retail', it's Nordstrom's IMO.
I have a red long sleeved shirt in my closet that I bought at Nordstroms probably 15 years ago. Still red, hasn't faded a bit, still looks nice, hasn't shrunk and no peely bugs. It's plain so it's not out of style. I am into quality rather quantity anymore and I think it makes financial sense. I just make sure that it's not dry clean only because if you end up with too much of that it costs in the long run and it's a pain in the ass.
Merino wool is the business, I buy anything made out of Merino.
Tim Cook in the house!
We Macy'ed some folks ... : (
So someone trying to provide for their family is an idiot. Fuck off mother fucker.
And in what industry do you work that is 100% safe?
I recesion proofed myself way back in 2009, I have back up plans for my back up plans. I have my own income revene streams and businesses that do well no matter if we are in a downturn or if things are doign well. It's called thinking, everyone should try it. Nothing is of course 100% safe, but I can say I've been doing a lot better than the average american ever since. I am not getting rich by any means, common sense seems to have helped me and my Wife quite a bit. I don't have a TV, no smart phone, and I have no CC debt.
Your actually a moron. A smart person uses debt as a blessing and equity strips their assets to buy other appreciating assets.
Sorry, I have more self respect than to use the enemy's system helping to prop it up. But feel free to go bankrupt when they call all those loans in and selling those appreciating assets when they crash. LOL. For being a moron , at least I can spell "You're" correctly. What does that make you?
Eye don't sea watt the problem is width his spelling.
What's a "recesion"? An "income revene stream"?
Are you doing something in the toilet we shouldn't be hearing about?
government. as long as you stick to watching porn and don't actually try to do your job, you will retire in style.
If anyone has a job that a foreigner can do or retail you had better be planting a big garden and learning some real skills or you will be replaced /laid off
I know two good guys that work for Macy's in IT and facilities management. Uh, no, they don't deserve this. The guys that deserve to be laid off (or hung or shot out of a cannon at a cement wall or, well you get the idea) are the suits hollowing out these companies and this country.
Just heard about a corporate suit coming into a company and firing the beloved family business CEO. So much of the top leadership is just utter shit.
Looks like those former employees better start learning how to survive in the wild.
https://www.youtube.com/watch?v=sZ86Us0fXKk
Sounds like the FPS Russia guy
It probably is.
I thought so as well.
I belive that's a skill we should all brush up on.
You need to start ignoring yourself if possible.
That was hilarious.
"Now you may be asking yourselves 'Why are you alone in the woods with an egg and a potato?' ...I don't have a fucking clue..."
Was that Boris? Where the hell is he, btw?
I too miss Boris.
Gentleman...something weird is going on. In our Electronics store...I have told you this before on how it has been a measure of what is going on for 30 years (Canary in the mine type signals). I last reported that over the holidays, cash sales had declined DRAMATICALLY...and now, people are just not coming into the store. I have never seen it this slow...it is like sales just fell off a cliff. Jan-Feb we always see a 10 to 20% drop in sales after the holidays every year, but NOT 60 to 80% drop. Something is very eerie about this.
What do you expect? There is nothing anybody needs. Everyeone who ever wanted an iCrap, phone, TV or computer -- already has TOO MANY.
The hardware quality sucks. The software sucks goats.
Sell something needed at a fair price that doesn't fall apart an hour after you open the box. Get rich.
I agree. Electronics have reached a point of saturation. When the folks in trailer parks have iPhones, two flat screens & a new laptop, we've plateau'd...
Nothing against trailer parks, mind you, just an observation...
-->mkkby
NO kidding...
our cheapy LED TV just bit the dust the other day. just powered off. turns out a ribbon cable is likely getting pinched due to a manuf. defect. how swell... I'll spend an hour or so fixing that.
OTOH,
FITBIT loser asses make cheap stuff too. my ONE died 3 months after warranty ended. they "kindly" offered me a 25% discount to buy another one. I told the nitwit in customer service it should be more than 50% off. she said BLAH BLAH blah and no 25% was it. so I told her I'd badmouth their crappy products every chance I got. so that's number 346 or so :)
4 years ago I bought a top if the line LG TV. About 6 months ago it bit the dust.
To make it worse , it got noworsefor 12 months after first 2 years as I was working in another state.
So I got about 3 years of use out of it. Now it just sits in the corner. I have not bought a replacement. The previous TV was another expensive piece of shot made by Panasonic. It faired not any better.
The irony is that they replace an old console TV that was left with the house when I bought it. That thing was at least 30 years old and still working when I put it corner.corner.
Oh and if you are going to bad mouth their product, it helps if you give the brand.
smart meters pulse up to 190K times a day.
they're not UL approved & the sockets are causing house fires everywhere.
it plays hell on electronics even if you have a voltage/current regulating UPS on it.
There's an intelligent thought in there somewhere, too bad it strangled itself with its own intestines!
I've noticed a weird trend this last year... I'm in the tech biz and a rediculous number of people I know are now buying chinese knockoffs directly from chinese web stores, paying 2x what they cost in china, but still 10x less what you pay for the brand names here for a similar quality product. Example, 4k GoPro for $499 at 'Best' Buy or $35 clone shipped from China. Consumers used to their gadgets will follow the monetary path of least resistance. I'd say it is partially the big box stores fault getting everyone used to shitty products. Why go through them if you can get the same shitty product from the source.
I searched the internet for replacement fans on two HP Business class laptops (original price 2500 ea). Cheapest price was on Amazon. Amazon wanted $35 each. I found them on a Chinese site, $12 for one $14 for the other, shipping $6. They arrived in 8 days. Perfect replacements. Looked OEM.
They have been performing beautifully for 6 months. One laptop which was running hot, 155 f, for the past year now runs at 109 f.
Looked OEM???? They were!!!!
If we can just start buying our junk right from the source ( China) and cut out all the middlemen, holy shit...look out below.
They didn't teach this one in business school.
When I do that, I get it from any of these 3:
Alibaba
ZHGate.com
Chinese suppliers on eBay
I do a variety of projects with small solar panels, and unless you buy direct from manufacturer the costs are obscene.
I have been doing that for few years now.
It is all made there anyway.
I started with cell phone batteries. US retailers wanted $60 to $80 but I found a seller in Hong Kong that would deliver to my door for about $12
Why the f7ck would I pay 3 or 4 middle men and get the same product?
They want to sell me cheap Chinese shot? I will get it from the source if I can.
You're three days into the new year.
Know your feelings well.My biz used to be quite predictable,now its all over the place.
Down 30% yoy in Q1.Then ended up 9% for the year.
Just can't plan anymore and driving by your ass.
Same here. I am a multi-line independent rep, and it feels like I have no visibility out more than about 90 days - the basic lead time from China. Retailers hedge placing orders until the last minute, and I can't blame them. Everyone is afraid of excess inventory and getting stuck with it.
I posted on here back in June we had never gone 6 months without a new project, never in 25 years. Then in October I posted how we let our staff go. We finished the year without a single new project, just additional services on stuff already under construction. 2016 is going to be worse than 2008, mark my words. Industry = Architecture and Engineering, Midwest region, nongovernmental.
Macys is the new Sears...
that's a generous rating.
This is the end of more.
If Macy's is firing everyone - we've got ourselves a market, something Zero Hedge said we patently didn't have.
Rejoice!
Has nobody linked the thousands who cut up their cards and swore off Macy's WHEN MACYS DOGGED TRUMP MACYS GOT DOGGED.
I think people got no money to buy anything.