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 - 16:39 | 7006773 froze25
froze25's picture

I dumped them because they sell over priced Chinese shit that I can get at target for half the price. Not to mention that I am frugal as a mofo. I like your reason to.

Wed, 01/06/2016 - 17:28 | 7007046 AGAU
AGAU's picture

My idea of being frugal as a mofo is not buying ANY Chinese shit

Wed, 01/06/2016 - 16:39 | 7006775 Make_Mine_A_Double
Make_Mine_A_Double's picture

They went multiculti/ghetto. Kiss of death for a middle road retailer since the only way out is up the food chain.

Down trading in this economy is a one way ticket to the glue factory.

Wed, 01/06/2016 - 16:56 | 7006886 AMPALANCE
AMPALANCE's picture

McDonalds did the same thing. "I'm loving it", They should fire that marketing company.

Wed, 01/06/2016 - 17:05 | 7006935 silverer
silverer's picture

I think McDonald's meant they were "loving it".  That is, that they could fire employees to reduce overhead.  Everybody else fell out of love.  McDonald's is done.  They should turn their stores into field offices for bankruptcy advice.

Wed, 01/06/2016 - 18:18 | 7007316 Kprime
Kprime's picture

maybe macy's should copy wally's and put in a McD's.

Wed, 01/06/2016 - 16:43 | 7006797 Richard Head
Richard Head's picture

Forgot about that, thanks for the reminder. Will shop elsewhere.

Wed, 01/06/2016 - 16:59 | 7006896 Squid Viscous
Squid Viscous's picture

jew owned since 1896

Wed, 01/06/2016 - 17:06 | 7006940 silverer
silverer's picture

Santa can sit in my living room to see the kids.  Welcome anytime.

Wed, 01/06/2016 - 16:29 | 7006684 Make_Mine_A_Double
Make_Mine_A_Double's picture

Someone didn't get the memo?

They are supposed to borrow a shit ton of money on margin from the WS shylocks and do a massive stock buy back even at this absurdly related price.

It's the only way forward. Since if they are relying on actually selling shit to people at full freight they are as good as gone already.

Wed, 01/06/2016 - 16:29 | 7006689 abyssinian
abyssinian's picture

Yes, too warm to go shopping for coats, but when it's cold, we will be too cold to get out of the door! hahahaa 

Wed, 01/06/2016 - 16:30 | 7006692 MoHillbilly
MoHillbilly's picture

Implementing a voluntary separation opportunity for about 165 senior executives

 

I would like to implement a voluntary separation opportunity

 

The Gov.s dick from the people's ass

 

Wed, 01/06/2016 - 16:30 | 7006698 Automatic Choke
Automatic Choke's picture

it IS the weather.  i'm sure that al gore and macy's can get together and define what the ideal weather should be.  any variations from this can be blamed on republicans, puppy thieves, spambots, and hitler.

Wed, 01/06/2016 - 16:30 | 7006699 I AM SULLY
I AM SULLY's picture

Everything's gonna be fine ...

https://www.youtube.com/watch?v=VlVmdGiAH2A

Wed, 01/06/2016 - 16:31 | 7006704 upWising
upWising's picture

Elevator operator announcing:

"Third floor: outdoor furniture, lawnmowers, leaf blowers, artificial green shoots"

Wed, 01/06/2016 - 16:32 | 7006716 lester1
lester1's picture

Notice how Macy's stock price started tanking at EXACTLY the same time they dumped Trump in favor of illegal immigrants ??

Wed, 01/06/2016 - 16:35 | 7006740 TideFighter
TideFighter's picture

Are illegal immigrants "good weather" or "bad whether"?

(See what I did there?)

Wed, 01/06/2016 - 16:40 | 7006777 froze25
froze25's picture

It's like climate change you can choose either as long as it fits whatever narrative you want.

Wed, 01/06/2016 - 18:15 | 7007308 Kprime
Kprime's picture

you mean the illegals didn't return the favor by shopping macy's instead of wally's?

Wed, 01/06/2016 - 16:46 | 7006728 orangegeek
orangegeek's picture

full retard season, aka earnings season starts next week

 

- Orville Redenbacher is locked and loaded

Wed, 01/06/2016 - 16:34 | 7006730 Temporalist
Temporalist's picture

"The weather.  The FUCKING WEATHER!!!" - Joe Lavagina

Wed, 01/06/2016 - 16:38 | 7006765 yogibear
yogibear's picture

No, it's China.

Second excuse now used  a lot by Wall Street.

Wed, 01/06/2016 - 16:45 | 7006736 White Mountains
White Mountains's picture

Everybody I know has a house stuffed full of extra unused stuff.  Many are getting rid of it in yard sales, thrift shops, even giving it away.  Enough is enough, in my family we no longer even give Christmas and birthday gifts, instead we meet and enjoy a day together doing activities as a family should.

The consumer is not only tapped out monetarily, many of us don't even want or need anything much more than the basics. 

Essentially, the channels (households) are stuffed with excess crap.  It's a paradigm shift.

Almost anything you need you can go to a thrift shop or ebay and get it slightly used (if even at all used) at a fraction of the cost.  It has already been manufactured and sold, now it just needs someone who has the time and use for it.

No need for the factories to make more and no need for the stores to sell more - the stuff is already out there looking for a good home.

Wed, 01/06/2016 - 18:14 | 7007299 Kprime
Kprime's picture

ditto.  We started about 5 years ago.  Now the entire extended family gave no store bought christmas gifts.  There was some homemade fudge, some knitted (or crotchet, i never can remember the difference, guy thing) booties and blankets.  We got together for a great meal.  Interesting thing this year, my wife requested no effort be put into decorations.  I didn't have to pull down those 30 tubs of decorations this year.  we just skipped the whole commercialized mess.

Wed, 01/06/2016 - 19:04 | 7007516 EddieLomax
EddieLomax's picture

It is going that way for us too although at first I thought it was just me getting older, but the more I look the more people now no longer buy everyone a present, or any presents at all, while on our side the presets are slowly reducing down in number.

We still do the decorations, and the food, but the endless buying of crap we do not need does appear to be coming to an end, it seems like it was just a passing fad, which is strange since myself and most of the people I know have plenty of money (not filthy rich, but have a comfortable lifestyle), yet it is not about the money, more that we no longer enjoy the present buying.

Wed, 01/06/2016 - 16:35 | 7006739 besnook
besnook's picture

it's depressing shopping at macy's. there used to be a clear difference between the stuff you bought at macy's(and saks) and walmart. now the stuff you buy at macy's is the stuff you could have bought at walmart 15 years ago and walmart is third world today.

Wed, 01/06/2016 - 16:48 | 7006829 herkomilchen
herkomilchen's picture

That's how inflation manifests.  Quality of goods slashed.  Prices for goods unchanged.  CPI stays flat.

Wed, 01/06/2016 - 17:06 | 7006941 ZeroPoint
ZeroPoint's picture

I love wearing fleece shirts. I can't find a decent fleece anymore. The quilling is thin as tshirt. All shit.

Wed, 01/06/2016 - 17:21 | 7007020 InflammatoryResponse
InflammatoryResponse's picture

ZeroPoint,

 

try old navy.    probably last until you get it HOME from the store then fall to bits.

 

we haven't shopped there in years.

 

Thu, 01/07/2016 - 04:32 | 7009590 SoCalBusted
SoCalBusted's picture

Yup, I gave up shopping at Macys, JCP, et al after spending too much fucking time looking through disorganized, picked through merchandise that was on sale trying to find what I wanted.  Bit the bullet and go to Nordstrom's.  I tell the person what I am looking for and my size, they bring it to me, I give a thumbs up or down and then try it on.  Their storebrand underwear lasts a long time too.  None of it is cheap, but at least I am in and out, with the added bonus of not having to replace the stuff in 6 months.  All the other places are simply transaction based models which is why Amazon is killing them.  I once bought a flannel t shirt at walmart a few years ago.  It was nice and thick and I've had it for a few years.  Went back to buy more, but the "new model" was shoddy and thin, so I left empty handed.

Wed, 01/06/2016 - 16:36 | 7006749 Tinky
Tinky's picture

What a grotesque, Orwellian phrase:

"Implementing a voluntary separation opportunity..." 

Wed, 01/06/2016 - 16:41 | 7006786 pupdog1
pupdog1's picture

Is it as bad as

 

"going-forward stores..." ?

Wed, 01/06/2016 - 16:43 | 7006801 Mark Mywords
Mark Mywords's picture

My other half once worked for Sony. When the company began to actually shrink its workforce, the euphamism was "Being furloughed", as it sounded much better than "Being shit-canned".

It's all in the lingo.

Wed, 01/06/2016 - 18:12 | 7007297 fishwharf
fishwharf's picture

In the UK it's called being "made redundant." 

Wed, 01/06/2016 - 16:49 | 7006835 edifice
edifice's picture

That's code for "golden parachute".

Wed, 01/06/2016 - 19:53 | 7007748 tenpanhandle
tenpanhandle's picture

"Implementing a voluntary separation opportunity..."   sounds like a descriptive way to say "gotta take a crap"

Wed, 01/06/2016 - 16:37 | 7006757 Ghost of Porky
Ghost of Porky's picture

I blame the gays.

Wed, 01/06/2016 - 16:42 | 7006792 froze25
froze25's picture

Yeah, really, why do they get to have a free ride.

Wed, 01/06/2016 - 16:39 | 7006771 MFL8240
MFL8240's picture

Good news for the employment picture Obama has told us is doing so good!

Wed, 01/06/2016 - 16:39 | 7006774 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

Long Macy's, Sears, Target, et cetera. What a relief that the Economy is coming back so soon. I was getting worried.

Wed, 01/06/2016 - 16:41 | 7006782 TheDanimal
TheDanimal's picture

Is this really a part of the service economy?  Someone please explain.  I assumed that retailers since retailers like Macy's are a part of the supply chain for goods that they would be accounted for somewhat differently.  Now I'm confused.

Wed, 01/06/2016 - 16:41 | 7006783 CHoward
CHoward's picture

Everyone just needs to get the fuck over using the weather as an excuse for every damn thing that sucks.  Jeez - get with the program people!  Some things are just fucking broken.

Wed, 01/06/2016 - 16:54 | 7006867 BSHJ
BSHJ's picture

It is not the weather silly......it is 'climate change'

Wed, 01/06/2016 - 16:42 | 7006791 yogibear
yogibear's picture

It's ISIS. They stopped buying from Macy's. That can be the new excuse. Obama stopped funding them.

The second-hand stores are crowded with new clothes.

Only thing worthwhile buying at Macy's or anywhere else is underwear.

Wed, 01/06/2016 - 16:43 | 7006807 Yen Cross
Yen Cross's picture

  A few more of these mass layoffs and the unemployment rate will drop under 5.00% and open the door for more rate hikes.

</sarc>

Wed, 01/06/2016 - 16:51 | 7006854 dreadnaught
dreadnaught's picture

some suggest doing deep research that the U6 is closer to 35% and this will help

Wed, 01/06/2016 - 16:43 | 7006809 insanelysane
insanelysane's picture

You can fit most of the stuff in your closet in your parents' basement.  But then you get married and now two people need to share the closet.  And then you have a kid and there really isn't much room for multiples of anything in the closet.

Wed, 01/06/2016 - 16:47 | 7006825 pupdog1
pupdog1's picture

Back in the day, Macy's was a fine store that sold fine things.

Today, my local Macy's is hoodie rats who inherently hate my guts trying to sell me dreadful Ching-a-ling crap that will be defective right out of the box.

Buh-bye.

Wed, 01/06/2016 - 18:07 | 7007272 Kprime
Kprime's picture

back in the day there were another 100 million working americans with middle class incomes. 

Buh-bye.

Wed, 01/06/2016 - 16:47 | 7006828 BeerMe
BeerMe's picture

As a business you are doing something wrong if you actually blame the weather for your poor performance.

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