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RAPAPORT... Macy's Inc. reported that comparable-store sales on an owned basis for the months of November and December combined rose 2.1 percent year on year, a rate of growth that was inline with the retailer's expectations for Christmas season. With licensed business revenue included, comparable-store sales improved 2.7 percent.
"We feel very good about our performance in the November/December period as we reversed trend from a soft third quarter and set the stage for continued progress going forward. Our success was rooted in the ability of our exceptional team to thoroughly execute our M.O.M. strategies (My Macy's localization, omnichannel integration and Magic Selling customer engagement), and our passion for delivering the right combination of fashion, freshness, value and service to our customers," said Terry J. Lundgren, Macy's CEO.
Macy's has announced a series of restructuring measures and store closings that are largely driven by changes in how consumers shop. The retailer will restructure its merchandising and marketing functions at Macy's and Bloomingdale's to be consistent with the company's omnichannel approach to retailing, as well as a series of adjustments to its field and store operations to increase productivity and efficiency. "Going forward, Macy's and Bloomingdale's will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops. Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions," Lundgren said.
Macy's expects to increase its workforce in some functions and locations, while decreasing headcount in others. In all, Macy's plans to maintain a workforce level at about 175,000 associates. Merchandising and marketing functions for Macy's and Bloomingdale's will be restructured to develop and present assortments seamlessly across channels and provide a single omnichannel view for all product categories. A unified merchandising and marketing organization -- a hybrid of store and online buying -- will support the entire Macy's business to encourage both store and digital growth.
Simultaneously, Macy's will make changes to its merchandising-related functions in local districts (administrative grouping of Macy's stores) around the country as it continues to improve its ability to localize assortments by size, color, fabric weight, style, fit, category and brand. The company will discontinue district planner positions and reinvest in new regional teams that are devoted to specific themes of merchandise localization.
This year, the retailer expects to create a team to explore potential opportunities for a Macy's off-price business, along with innovative ways to deliver value to additional segments of the customer marketplace through the omnichannel strategy. It will invest in further developing technology, business systems and information technology, including security infrastructure. Macy's will also increasing direct-to-consumer fulfillment capacity in every full-line Macy's and Bloomingdale's store and at the five existing dedicated fulfillment centers located in Arizona, California, Connecticut, Tennessee and West Virginia.
"Our omnichannel strategy depends on great Macy's and Bloomingdale's stores that not only welcome shoppers through the door and deliver an outstanding shopping experience, but that also fulfill orders that are shipped directly to customers around the country. In 2014, about $1 billion of Macy's and Bloomingdale's direct-to-customer shipments originated from Macy's and Bloomingdale's stores. Moreover, our process for Buy Online Pickup in Store has established a new dimension in customer access and convenience," Lundgren said. "We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations, while also trimming those that no longer meet our performance requirements, where the real estate can be redeployed to more productive uses, or where our leases were not renewed." New stores planned include a three-story Bloomingdale's, of 150,000 square feet, at the Westfield Valley Fair Shopping Center in San Jose, California and Macy's will build a 155,000-square-foot store on two levels to replace its existing 136,000-square-foot Westfield Century City location in Los Angeles. The existing Macy's will be closed in January 2016 and razed to accommodate new development. Seven other new Macy's and Bloomingdale's stores are currently planned and/or under construction.
The company will close 14 Macy's stores in early spring 2015. Final clearance sales will begin on Monday, January 12 and run for between eight to 12 weeks. These stores include Metro Center in Phoenix, Arizona; Cupertino Square Mall in Cupertino, California; Promenade main store and furniture gallery in Woodland Hills, California; Gulf View Square in Port Richey, Florida; Northland Center in Southfield, Michigan; Wendover in Greensboro, North Carolina; Ledgewood Mall in Ledgewood, New Jersey; ShoppingTown Mall in DeWitt, New York; Rotterdam Square in Schenectady, New York; Kingsdale Shopping Center in Columbus, Ohio; Richmond Town Square in Richmond Heights, Ohio; Upper Valley Mall in Springfield, Ohio and Southland Mall in Memphis, Tennessee. The stores accounted for approximately $130 million, but Macy's contended that some revenue will be retained in nearby stores and with online/mobile sales. Once all of these changes have been implemented, Macy's will operate about 830 stores in 45 states, the District of Columbia, Puerto Rico and Guam, down from 840 at present. The retailer anticipates cost savings of about $140 million per year, beginning in 2015.
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