One of the well-known department stores in the United States is facing a survival crisis. Macy’s, the iconic New York retailer renowned for its annual Thanksgiving parades, intends to shut down stores and lay off thousands of employees. Despite years of efforts to navigate the challenges of online retail, it seems the chain has yet to discover a viable solution.
As of January 18, the Wall Street Journal stated that Macy’s is working towards reducing expenses by shutting down five out of its 508 stores and letting go of 2,350 employees, accounting for approximately 3.5% of its permanent workforce. The company asserts that this move is a strategic initiative to streamline its operations, positioning itself more competitively against online retailers.
In addition to other measures, Macy’s intends to externalize certain roles, without specifying which ones, and introduce automation into segments of its supply chain. The company frames this as a “new strategy to meet the needs of an ever-changing consumer and marketplace.”
However, it appears that Macy’s is encountering challenges in maintaining profitability.
It is customary for businesses to reduce their workforce in January if the holiday season was unfavorable. However, as per the Department of Commerce, Americans exhibited robust spending in December. Nevertheless, it should be noted that this strong spending might not have been directed towards Macy’s.
Macy’s stock reached its highest point at $73 per share in 2015, but since then, it has experienced a nearly 75% decline. As of the market closure on January 22, a Macy’s share was priced at $18.26, factoring in a 3.5% rebound from Friday. Concurrently, the company has shut down nearly 300 stores during this period.
The most recent set of five stores to shut down includes locations in Arlington, Virginia; San Leandro, California; Simi Valley, California; Lihue, Hawaii; and Tallahassee, Florida. Macy’s has commenced the process of informing employees who will be affected by these closures, and the layoffs are scheduled to commence on January 26.