Macy’s Inc. (NYSE: M) had a tough run over the holiday season and the company suffered, but no one thought that it might be this bad. This department store posted its same-store sales for the November/December and at the same time announced “cost efficient initiatives.”

For this holiday season, comparable sales on an owned plus licensed basis declined by 4.7% in the months of November and December 2015 combined, compared with the same period last year. On an owned basis, comparable sales declined by 5.2%.

Terry J. Lundgren, Macy’s chairman and CEO, commented:

The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry. In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy’s and Bloomingdale’s are especially well-represented. About 80 percent of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. We also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong.

Overall, Macy’s is not expecting a major change in sales trends in January and expects a comparable sales decline on an owned plus licensed basis in the fourth quarter to account for the November/December numbers.

On the cost-efficiency side, beginning in early 2016 the company will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s.

Management is taking further action as well:

• Consolidating the grouping of existing Macy’s stores into five regions and 47 local districts.
• Adjusting staffing levels at each Macy’s and Bloomingdale’s store in line with current sales volume to increase productivity and improve efficiency. An average of three to four positions will be affected in each of Macy’s and Bloomingdale’s approximately 770 going-forward stores (out of an average workforce of approximately 150 associates in each store), for a total of about 3,000 affected associates nationwide. Roughly 50 percent of affected store associates are expected to be placed in other positions.
• Reducing an additional 600 positions in back-office organizations by eliminating tasks, simplifying processes and combining positions, with about 150 of these associates reassigned to other positions.
• The call center in St. Louis will be closed in spring 2016, affecting approximately 750 employees. Work currently performed in St. Louis will be divided among existing credit and customer services centers.

Shares of Macy’s closed Wednesday down 2.2% at $36.15, with a consensus analyst price target of $44.48 and a 52-week trading range of $34.05 to $73.61. Following the release, shares were up 2.1% to $36.91 in the after-hours trading session.

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