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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Wed, 01/06/2016 - 19:18 | 7007570 Will To Live
Will To Live's picture

How many of the Employees buy thier shit at Amazon?

Wed, 01/06/2016 - 16:34 | 7006733 NidStyles
NidStyles's picture

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. 

Wed, 01/06/2016 - 17:04 | 7006926 Bunghole
Bunghole's picture

Clothing is 100% markup at Macy's

Wed, 01/06/2016 - 17:08 | 7006951 hound dog vigilante
hound dog vigilante's picture

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.

 

Wed, 01/06/2016 - 17:23 | 7007026 Ms No
Ms No's picture

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.

 

 

Wed, 01/06/2016 - 17:35 | 7007081 AGAU
AGAU's picture

Merino wool is the business, I buy anything made out of Merino.

Wed, 01/06/2016 - 17:59 | 7007223 Squid Viscous
Squid Viscous's picture

Tim Cook in the house!

Wed, 01/06/2016 - 16:43 | 7006808 curbjob
curbjob's picture

We Macy'ed some folks ... : (

Wed, 01/06/2016 - 16:46 | 7006821 mandalou
mandalou's picture

So someone trying to provide for their family is an idiot. Fuck off mother fucker.

Wed, 01/06/2016 - 17:04 | 7006927 maxamus
maxamus's picture

And in what industry do you work that is 100% safe?

Wed, 01/06/2016 - 17:20 | 7006986 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

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. 

Wed, 01/06/2016 - 17:59 | 7007224 cornflakesdisease
cornflakesdisease's picture

Your actually a moron.  A smart person uses debt as a blessing and equity strips their assets to buy other appreciating assets.

 

 

Wed, 01/06/2016 - 18:56 | 7007271 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

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?

Wed, 01/06/2016 - 19:47 | 7007725 BarkingCat
BarkingCat's picture

Eye don't sea watt the problem is width his spelling.

Wed, 01/06/2016 - 21:51 | 7008408 stumbLebum
stumbLebum's picture

What's a "recesion"?  An "income revene stream"?

Are you doing something in the toilet we shouldn't be hearing about?

Wed, 01/06/2016 - 18:50 | 7007459 Kprime
Kprime's picture

government.  as long as you stick to watching porn and don't actually try to do your job, you will retire in style.

Wed, 01/06/2016 - 20:02 | 7007786 FIAT CON
FIAT CON's picture

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

Wed, 01/06/2016 - 20:05 | 7007798 tarsubil
tarsubil's picture

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.

Wed, 01/06/2016 - 16:28 | 7006678 Burt Gummer
Burt Gummer's picture

Looks like those former employees better start learning how to survive in the wild.

https://www.youtube.com/watch?v=sZ86Us0fXKk

Wed, 01/06/2016 - 16:35 | 7006738 I woke up
I woke up's picture

Sounds like the FPS Russia guy

Wed, 01/06/2016 - 16:49 | 7006841 Burt Gummer
Burt Gummer's picture

It probably is.

Wed, 01/06/2016 - 20:39 | 7007994 Platinum
Platinum's picture

I thought so as well.

Wed, 01/06/2016 - 16:41 | 7006787 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

I belive that's a skill we should all brush up on.

Wed, 01/06/2016 - 16:48 | 7006832 mandalou
mandalou's picture

You need to start ignoring yourself if possible.

Wed, 01/06/2016 - 16:43 | 7006800 JohnG
JohnG's picture

That was hilarious.

Wed, 01/06/2016 - 17:41 | 7007126 krispkritter
krispkritter's picture

 "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..."

Wed, 01/06/2016 - 18:52 | 7007465 NoPension
NoPension's picture

Was that Boris? Where the hell is he, btw?

Wed, 01/06/2016 - 19:57 | 7007767 BarkingCat
BarkingCat's picture

I too miss Boris.

Wed, 01/06/2016 - 16:38 | 7006769 Takeaction2
Takeaction2's picture

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.

Wed, 01/06/2016 - 16:51 | 7006850 mkkby
mkkby's picture

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.

Wed, 01/06/2016 - 17:11 | 7006965 hound dog vigilante
hound dog vigilante's picture

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...

 

Wed, 01/06/2016 - 17:15 | 7006984 InflammatoryResponse
InflammatoryResponse's picture

-->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 :)


Wed, 01/06/2016 - 20:07 | 7007813 BarkingCat
BarkingCat's picture

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.

Wed, 01/06/2016 - 21:26 | 7008286 WillyGroper
WillyGroper's picture

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.

Wed, 01/06/2016 - 22:21 | 7008619 StychoKiller
StychoKiller's picture

There's an intelligent thought in there somewhere, too bad it strangled itself with its own intestines!

Wed, 01/06/2016 - 17:50 | 7007180 nc551
nc551's picture

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.

Wed, 01/06/2016 - 18:48 | 7007443 Kprime
Kprime's picture

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.

Wed, 01/06/2016 - 18:56 | 7007480 NoPension
NoPension's picture

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.

Wed, 01/06/2016 - 21:26 | 7008284 techpriest
techpriest's picture

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.

Wed, 01/06/2016 - 20:12 | 7007836 BarkingCat
BarkingCat's picture

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.

Wed, 01/06/2016 - 16:56 | 7006884 BeerMe
BeerMe's picture

You're three days into the new year.

Wed, 01/06/2016 - 17:13 | 7006972 Winston Churchill
Winston Churchill's picture

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.

Wed, 01/06/2016 - 18:04 | 7007258 11b40
11b40's picture

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.

Wed, 01/06/2016 - 17:33 | 7007072 markitect
markitect's picture

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.

Wed, 01/06/2016 - 16:45 | 7006813 carbonmutant
carbonmutant's picture

Macys is the new Sears...

Wed, 01/06/2016 - 18:38 | 7007412 Kprime
Kprime's picture

that's a generous rating.

Wed, 01/06/2016 - 16:54 | 7006868 kill switch
kill switch's picture

This is the end of more.

Wed, 01/06/2016 - 18:36 | 7007394 stumbLebum
stumbLebum's picture

If Macy's is firing everyone - we've got ourselves a market, something Zero Hedge said we patently didn't have.

Rejoice!

Wed, 01/06/2016 - 20:20 | 7007880 swamp
swamp's picture

Has nobody linked the thousands who cut up their cards and swore off Macy's WHEN MACYS DOGGED TRUMP MACYS GOT DOGGED.

Wed, 01/06/2016 - 20:30 | 7007938 zeronetwork
zeronetwork's picture

I think people got no money to buy anything.

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