Macy’s Inc. (NYSE: M) CEO Terry Lundgren was supposed to be a retail genius who reinvented the company to the point where it was considered among the nation’s premier retailers. Instead, as he retires from the CEO job this year, he leaves Macy’s in ruins, which has cost investors and lost thousands of employees their jobs.
Macy’s most recent debacle was a 2.7% drop in same-store sales over the absolutely critical holiday season, which included November and December. The result is that Macy’s will close 68 stores, and a broader restructuring will result in the cut of 6,200 jobs. They will be part of a “headcount reduction.” That is another term for people who will be fired.
Lundgren commented, “These are never easy decisions, and we are committed to treating associates affected by these closings with respect and transparency.” What “transparency” means in the case of layoffs is hard to imagine.
In exchange for the store closings and layoffs, Macy’s offered investors efforts toward mobile shopping, e-commerce, in-store pickup and a better analytics and statistics team. It is a wonder Macy’s did not do all these things several years ago when they were cutting-edge tactics.
Macy’s also lowered guidance:
The company now expects full-year 2016 diluted earnings per share (excluding asset impairment, restructuring, retirement settlement and other charges) to be in a range of $2.95 to $3.10 (compared with previous guidance of $3.15 to $3.40).
This cost stockholders a 9% sell-off to $32.58. Based on Macy’s recent track record and likely future, there is no reason to believe the shares will stage a hearty recovery anytime soon.
Macy’s still identifies itself as “one of the nation’s premier retailers.” Lundgren has made sure that is no longer true.
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