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Macy's December sales down 4 percent
Company to close 11 underperforming stores
January 09, 2009
Cincinnati--Same-store sales at Macy's Inc. decreased 4 percent in December and 7.5 percent for the combined November-December holiday selling period, compared with the same periods last year, the company reported on Friday.
Total sales for the five weeks ended Jan. 3 decreased 4.7 percent to $4.397 billion, compared with $4.614 billion for the five weeks ended Jan. 5, 2008.
For the year to date, Macy's sales total $23.679 billion, down 5.4 percent from total sales of $25.040 billion in the first 48 weeks of fiscal 2007. On a same-store basis, Macy's year-to-date sales are down 4.6 percent.
Total online sales (Macys.com and Bloomingdales.com combined) were up by 39.1 percent in December, by 26 percent in the November-December period and by 30.1 percent for the year to date. (Online sales are included in the same-store sales calculation.)
"The holiday shopping season ended with strong sales in the fourth and fifth weeks of December after a slow start to the month and unfavorable weather conditions in the Northeast, Midwest and Pacific Northwest," Macy's Inc. chairman, president and chief executive officer Terry J. Lundgren said in a media release. "This has been the most challenging economic environment in memory, and I am proud of our organization for staying focused on delivering a compelling combination of value and fashion to customers who were shopping cautiously."
Lundgren added that at the end of December, Macy's had lowered its inventory by approximately 7.5 percent on a comparable-store basis, compared with the same period last year, which has positioned the company well for 2009.
In addition, the company is also encouraged by its holiday season sales performance in My Macy's pilot districts, which tailor store assortments, service levels and the shopping environment to local customer needs and preferences.
"Of our top 15 best-performing geographic markets in December, 13 were My Macy's pilot districts," Lundgren said.
Looking ahead, the company said that same-store sales in the fourth quarter (the months of November through January) will be down approximately 7.5 percent, consistent with the November-December trend. This compares with previous guidance for same-store sales to be down between 1 percent and 6 percent for the fourth quarter.
The company expects to end the fourth quarter with more than $1 billion in cash on hand and no borrowings against its $2 billion bank credit agreement.
In related news, Macy's has announced that it will close 11 underperforming stores.
The stores to be closed are located in:
--Ernst and Young Plaza (Citicorp Plaza), Los Angeles, (135,000 square feet, 136 employees, opened in 1986)
--The Citadel, Colorado Springs, Colo., (195,000 square feet, 105 employees, opened in 1984)
--Westminster Mall, Westminster, Colo., (156,000 square feet, 110 employees, opened in 1986)
--Palm Beach Mall, West Palm Beach, Fla., (190,000 square feet, 71 employees, opened in 1979)
--Mauna Lani Bay Hotel, Island of Hawaii, Hawaii, (3,000 square feet, 3 employees, opened in 1983)
--Lafayette Square, Indianapolis, Ind., (160,000 square feet, 84 employees, opened in 1974)
--Brookdale Center, Brooklyn Center, Minn., (195,000 square feet, 72 employees, opened in 1966)
--Crestwood Mall, St. Louis, Mo., (166,000 square feet, 176 employees, opened in 1969)
--Natrona Heights Plaza, Natrona Heights, Pa., (73,000 square feet, 124 employees, opened in 1956)
--Century III Furniture and Clearance, West Mifflin, Pa., (83,000 square feet, 3 employees, opened in 2000)
--Bellevue Center, Nashville, Tenn., (211,000 square feet, 76 employees, opened in 1990)
"These closings are part of our normal-course process to prune underperforming locations each year in order to maintain a healthy portfolio of stores," Lundgren said. "While new store growth has slowed in the current economy, our long-term strategy is to continue to selectively add new stores while closing those that are underperforming."
Final clearance sales at these stores will begin within the next week (with the exception of the Hawaii location, which will not hold a final clearance sale).
Affected associates in good standing might be considered for open positions at other Macy's locations. Regular full-time and part-time associates who are laid off due to a store closing will be provided severance benefits and outplacement assistance.
Costs associated with these 11 store closings will be approximately $65 million (of which approximately $12 million will be cash), most of which will be booked in the fourth quarter of 2008.
The company opened four new Macy's stores and one furniture gallery in 2008, as well as re-opened a New Orleans store damaged by Hurricane Katrina.
In 2009, Macy's expects to open three new Macy's stores and one replacement store. Following the store closings announced today, Macy's will operate 848 stores: 808 Macy's and 40 Bloomingdale's.
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