Bad news for Macy's employees. The retailer announced on Thursday that it will be laying off about 2500 of its employees despite having successful earnings over the Christmas season. Macy's announced that it intends to close a total of 5 stores in Arizona, Kansas, Missouri, New York and Utah by this spring. In addition to giving some employees the boot, the remaining staff will take on additional duties or be transferred, Macy's said. The decision is expected to save the company $100 million -- adding a big boost to its bottom line.
The news will likely be disheartening for its employees, especially given the stagnant U.S. job market.
On Wednesday Macy's CEO Terry J. Lundgren said that consumers gave it a "vote of confidence" during the holidays, "even in a questionable macroeconomic environment with challenging weather in multiple states." Macy's saw an increase in sales of 3.6 percent from the months of November through December for stores that were open for more than a year. The increase was 4.3 percent when third party licensee departments were included.
It did, however, adjust its predictions for this year's second half saying that "same-store" (stores open for more than a year) sales increased 2.8 to 2.9 percent instead of 2.5 to 4 percent. Nonetheless, that translates to 2.3 to 2.5 percent growth in the fourth quarter, said the company. This year should see earnings of $4.40 to $4.50 per share.
This earnings projections seem brilliant for Macy's and its investors but not quite as glowing for the folks who are soon to find themselves without a job. However, one bright spot could be found when Macy's said it will continue to hire employees in its online operations, direct-to-consumer fulfillment outfit, and new stores.
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