Macy’s started 2023 with more closures and layoffs. Over the past few years, hundreds of retailers have been closed and laid off employees. The last decade has not been an easy one for legacy retailers.
Shops that once dominated the mall landscape are now starting to collapse by reducing their location numbers—a huge reduction in iconic shops leading to layoffs. There are a variety of reasons behind these closures and layoffs.
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Is Macy’s Laying Off Employees?
During the onset of the Coronavirus pandemic, most retailers struggled with low sales. Due to this, stores laid off thousands of employees. Macy’s also joined the bandwagon of layoffs.
Since 2020, the layoff trend at Macy’s has been ongoing. According to reports, it is noted that the awards that are granted in March generally. But they were delayed in 2020 because of the Coronavirus pandemic.
Those bonuses counted for nearly 9.6 million US dollars and were on a two-year vesting regimen. At that time, financial conditions were unstable as every sector suffered from the deadly virus. So, Macy’s announced layoffs to streamline the process. Moreover, the retailer also sent hundreds of its employees on unpaid leave in May.
One of the Macy’s staff, Gennette, said at that time, “During the global crisis, having cash sufficiency in the company is the top priority over any other things.” Since the beginning of 2020, about 58 per cent of the company’s shares have declined.
Macy’s was facing a huge decline in sales. Besides, the retailer was unable to generate profits. Macy’s and the whole economy fell to its knees before and after the COVID-19 pandemic.
In February 2020, Macy announced the closure along with layoffs. Macy’s is estimated to have closed around 125 stores in February, along with 2,000 job cuts.
But reports said Macy’s C-suite remained unaffected and was comfortably paid. In April 2020, workers got their salaries but received half of their wages. Later in July, they got their full salaries.
As CEO, received 1.3 million US dollars annually, excluding its stock awards. Due to financial instability, many rival retailers filed for Chapter 11 bankruptcy at the beginning of 2020. Rival retailers filed for bankruptcy, which was a plus point for Macy’s. It was reported that, during that time, almost 24 restaurants and retailers filed for bankruptcy. While some were undergoing the liquidation process. Including J. Crew, Nieman Marcus, and JC Penney.
What Macy’s Locations Are Closing?
In the past few years, shoppers, especially Macy’s devoted shoppers, found that their beloved legacy store Macy’s, has shrunk its business by declining its retail footprint. At the start of the year, the iconic department store announced more closures and layoffs. It has already shuttered four locations at the beginning of 2023.
Customers also noted that Macy’s is reducing its stores’ number. The store was located at 4005 Crenshaw Blvd. – Baldwin Hills Crenshaw Plaza, Los Angeles, California, announced to be closed. Another half-century-old Foothills shopping mall in Fort Collins, Colorado, shut its doors in March 2023 for good.
Windward Center location in Kaneohe on Oahu closed its doors. Its closure impacted Hawaii shoppers as they lost one of their Macy’s stores in that location.
Macy’s department store: Lake Forest Mall, located in Gaithersburg, Maryland, shut down.
When these locations were closed at the start of 2023, no exact final dates were given for how long shoppers could shop there. Only it was disclosed that these stores were closed in late April or early May. One of the spokespeople for Macy’s confirmed that before the end date of each location. Macy’s planned to begin clearance sales. The sale will run for the upcoming month or more than it.
Is Macy’s Closing Stores?
Macy’s has kicked off the year with more closures. Customers are fuming in anger and want to know the reason behind it. So a variety of reasons are there. It is believed that shutting more stores is a part of the strategy. Let’s find out what were these reasons:
The latest store’s closure was part of a strategy. Besides Macy’s, the closure and layoff trend has recently become too common. The company announced store closings that are vital to its long-term strategy. In 2020, Macy’s shuttered around 125 of its stores.
One of the spokespeople confirmed, “Macy’s is closing stores to serve its customers better. Besides, the company planned to support omnichannel market sales growth.”
Another reason for the closures of Macy’s or other retail stores is:
As they are now focusing on opening new stores. People are mourning the loss of multiple Macy’s traditional format locations in the past few years. Still, the retailer planned to open new stores of some of its new concepts. Besid
es closing stores, the company opened four recent locations last year. At the same time, it also opened 42 recent off-price locations. It counted a total of 300 stores were opened in the previous year throughout the United States.
According to sources, more challenges are waiting for retailers including Macy’s. Macy’s has been coordinating a relatively soft restructuring so far. To do so, it is closing unproductive stores. Analysts said, “We have concluded that Retailers like Macy’s have to suffer more. As there are many challenges ahead.”
“There is a very weak earnings outlook for Nordstrom, Kohl’s, etc, including Macy’s. It indicates that the future is not bright. As the market does not fully appreciate challenges.” Moreover, high inflation and potential recession are the major factors important in worsening conditions for these department stores.
Why Are Layoffs Happening?
Due to shoppers’ high demand at the time of COVID-19. Retailers have increased their operations in multiple areas, such as:
Finance, technology, and human resources. But everything changed when the lockdown ended.
It is because, during the lockdown, people of all ages rushed to buy all kinds of goods online. But they want to spend less money on these kinds of stuff again. So they are more likely to spend less on merchandise like clothing and furniture.
During lockdowns, e-commerce was booming, but now it has dwindled compared to those days. Now consumers are more likely to buy day-to-day necessities such as food, Drinks, etc.
Other Retailers Also Announced Closures and Layoffs
Now, the situation is not the same as the coronavirus pandemic. So, retailers announced closures to streamline their business. These closures led to multiple Layoffs across the globe. Macy’s is also following the same pathway.
Other retailers such as Saks Off 5th, Wayfair, Amazon, and many other stores have also announced closures. These closures led to layoffs in recent years.
- The off-price retailer, Saks Off 5th, announced closures and layoffs. The retailer laid off an undisclosed number of employees this year.
- Saks.com announced a layoff in which 3.5 per cent of its workers, or about 100 employees, were impacted.
- Wayfair laid off 10 per cent of its workforce or around 1,750 workers.
- Stitch Fix announced closures in which it closed its distribution centre in Salt Lake City. It laid off 20 per cent of its salaried workers in 2023.
- Bed Bath & Beyond laid off an unspecified number of employees. The reason behind its layoffs could be:
The company tried to file for bankruptcy to revamp its financial structure.
- Amazon also announced a mass layoff. It laid off around 18,000 of its workforce in the layoff round.
The recent layoff trend concerns structural changes so companies may grow rapidly from pandemic-fueled shopping. Major prominent tech companies also joined the bandwagon of layoffs. The current layoff trend has affected tech companies the most.
How Is Macy’s Doing In 2023?
High inflation, low sales, and several other factors led to the closure of Macy’s stores in 2023.
It is predicted that higher rental and food prices pushed department stores to adopt either trade down cheaper prices options or cut back on purchases.
The retailer Macy’s planned to clear out excess stocks. To do so, it needed a discount in the second quarter.
Other store peers like Kohl’s Corp and Nordstrom planned to control inventory. It also maintained its annual forecasts to get maximum profit.
The CEO of Macy’s said, “The retailer is now focusing on spending on food, essentials, and services.” This year, Macy’s expects to generate sales between 22.8 billion US dollars and 23.2 billion US dollars. In comparison, its prior forecast expected between 23.7 billion US dollars and 24.2 billion US dollars.
Moreover, a full-year profit per share expects to be 2.70 US dollars to 3.20 US dollars. In comparison, the prior forecast expected around 3.67 US dollars to 4.11 US dollars.
Customers love to do online shopping. Their craze towards e-commerce forced many stores to close down entirely. While some iconic stores, such as Macy’s, decided to downsize rather than close their stores permanently. As these closures are a part of their strategy for the future. Undoubtedly, Macy’s has started this year with more closures.
Due to closures, hundreds or even thousands of employees were impacted. They had lost their jobs. According to the company, all the affected employees will get severance packages. Besides, they also provided job roles.
In truth, the ongoing layoff trend left no industry unscathed. Retailers are also trying to figure out its correct size.