Macy's cuts 7,000 jobs, slashes dividend

[jmcnamara96]

Macy's cuts 7,000 jobs, slashes dividend

By Aarthi SivaramanPosted 2009/02/02 at 4:35 pm EST

NEW YORK, Feb. 2, 2009 (Reuters) — Macy's Inc said on Monday it would slash about 7,000 jobs and cut its quarterly dividend as it forecast earnings for fiscal 2009 that fell far below Wall Street expectations, sending its shares down 4 percent.
A woman shops at the Macy's store at a mall in a Denver suburb in this May 16, 2008 file photo. REUTERS/Rick Wilking
Related Topics

    * Dividends
    * Economic Policy
    * Jobs and Labor
    * Layoffs and Downsizing
    * Shopping

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The department store operator said it took the steps to counter what it expects will be a very tough retail market this year, and that it would plan conservatively despite efforts by the U.S. government to build an economic stimulus package.

Macy's expects these initiatives, which also include integrating its divisions into one unit, to reduce its previously planned expenses by about $400 million per year starting in 2010, and $250 million in part of 2009.

"We just believe that this is a time when nothing should be considered a sacred cow," Chief Executive Terry Lundgren said in a conference call following the announcement.

On a pretax basis, Macy's expects costs of about $400 million in cash, mostly in fiscal 2009, tied to the steps.

Its Bloomingdale's stores will not be affected by these initiatives, Macy's said.

In 2008, retailers saw their worst holiday sales in almost four decades as recession-hit shoppers clamped down on spending or hunted for deep discounts.

For Macy's to win consumers over in the recession, it would have to be more promotional, said Patricia Edwards, a retail analyst with Storehouse Partners.

"The retail environment has changed so much. They have not been competing on a value proposition and this is a value market," she said.

OUTLOOK DISAPPOINTS

The job cuts announced on Monday are about 4 percent of the company's workforce and should mostly be completed by May 1, Lundgren said. Macy's also cut its quarterly dividend to 5 cents a share from 13.25 cents.

The company said it expected to earn 40 cents to 55 cents a share, excluding restructuring costs, for fiscal 2009, below the average analyst view of 79 cents per share, according to Reuters Estimates. Same-store sales are expected to decline between 6 percent and 8 percent, Macy's said.

The outlook assumes a steeper decline in the spring than in the fall of the year, CFO Karen Hoguet said during the call.

Its 2009 outlook looked "appropriately conservative," analyst Liz Dunn of Thomas Weisel Partners wrote, adding the cost savings could add another 15 cents per share to Macy's 2010 results.

Macy's also cut its 2009 capital expenditure budget to $450 million from a prior view of $550 million to $600 million.

The company said it would build on its store localization initiative, originally announced nearly a year ago to boost sales and cut costs, to focus on each local market's sales and customer needs.

According to that plan, it will group its stores into 69 geographic areas with an average of 10 to 12 stores in each district.

Macy's will integrate all its functions into a single unit, with its central buying, merchandise planning and senior store management and marketing units to be located primarily in New York. Its corporate affairs office will remain in Cincinnati.

The company said it would not raise salaries for executives in spring 2009 and will also cut the amount of matching 401(k) contributions in the year. It will recommend to the board to reduce other benefits for executives including company cars, life insurance and merchandise discounts.

Macy's shares closed down 36 cents to $8.59, above its previous low of $7.50. Shares also slipped for some of its major vendors, like Liz Claiborne, down 7.7 percent and Jones Apparel, which slid 3.5 percent.

[jmcnamara96]

Wow so sad in this econamey

[wwefan101]

 lets  get rid of all the high priced stores

[Ameskid]

Originally posted by wwefan101
 lets  get rid of all the high priced stores

We don't need to; in the state of the economy right now, they are basically destroying themselves.  People just aren't ready to buy upscale; that's why discount retailers like Wal-Mart are doing so well.

[videogamer75]

I agree with wwefan101. Although, I want Sears and Boscov's to stay open, because they are good stores and they still sell some very good quality products that are worth some extra money. I could care less about the likes of Macy's, JCPenney, Dillard's etc. though.

[jmcnamara96]

Yea Sears is a great store but ive never seen Boscovs only heard things of them but out with the rest

[nibw]

Deal to Aid Boscov's Faces Setbacks.
http://www.phoenixvillenews.com/articles/2009/02/05/news/srv0000004639737.txt

[jmcnamara96]

Wow

[XDeSuEhTX]

Seriously, why do people want to eliminate the option of quality or class? I'm a firm believer in the "you get what you pay for" philosophy. You don't go to these "high priced stores" and buy the same things you see at Wallyworld. People seem to forget that expensively made items have more expensive price tags. People act like these stores are just trying to sell these items for a higher price because they just don't know any better.

I really don't get the obsession with penny-pinching, and ultra-low prices meaning an instant win. I guess no one likes having nice things anymore.

[store215]

Originally posted by XDeSuEhTX
Seriously, why do people want to eliminate the option of quality or class? I'm a firm believer in the "you get what you pay for" philosophy. You don't go to these "high priced stores" and buy the same things you see at Wallyworld. People seem to forget that expensively made items have more expensive price tags. People act like these stores are just trying to sell these items for a higher price because they just don't know any better.

I really don't get the obsession with penny-pinching, and ultra-low prices meaning an instant win. I guess no one likes having nice things anymore.

 

The problem is, Macy's sells kohls-quality (not saying that is bad...Kohl's clothes are fairly decent) at a Neiman Marcus price. There is nothing really upscale about Macy's, especially since they took over a bunch of regionally-branded department stores.

[XDeSuEhTX]

Originally posted by MBZ321

Originally posted by XDeSuEhTX
Seriously, why do people want to eliminate the option of quality or class? I'm a firm believer in the "you get what you pay for" philosophy. You don't go to these "high priced stores" and buy the same things you see at Wallyworld. People seem to forget that expensively made items have more expensive price tags. People act like these stores are just trying to sell these items for a higher price because they just don't know any better.

I really don't get the obsession with penny-pinching, and ultra-low prices meaning an instant win. I guess no one likes having nice things anymore.

 

The problem is, Macy's sells kohls-quality (not saying that is bad...Kohl's clothes are fairly decent) at a Neiman Marcus price. There is nothing really upscale about Macy's, especially since they took over a bunch of regionally-branded department stores.  

Just saying that Macy's and Khols are higher up the quality chain than sweatshop stores (Walmart), or closeout clothing stores for the most part. ...Don't think it's a good idea to haray the closing of stores in-between crap and luxury.

[Caldor1999]

Originally posted by videogamer75
I agree with wwefan101. Although, I want Sears and Boscov's to stay open, because they are good stores and they still sell some very good quality products that are worth some extra money. I could care less about the likes of Macy's, JCPenney, Dillard's etc. though.  

still i dont understand why you would want them to go out u know how messed up malls would be if stores like Macys JC Penny and such went out im not shocked but there are stores that are even more expensive then macys im not gonna lie they have gone down hill from there and well ive found better merchandise at other stores but there name means quilty something alot of discounters dont give you and thats something sears needs to learn if they wanna stay around

but over all im not shocked about this im sure other deot stores will have to deal with this hopefully things will get back to the way they use to be im kinda getting sick of seeing all these stores going out