One hundred stores. How many people? Macy’s Inc. (NYSE: M) did not say how many it will lay off when it shuts the locations. The number could be 200 employees a store or, by another calculation, a percentage drop of Macy’s total employee pool of just over 150,000 workers. Either way, the figure has to be close to 20,000 people, which would be one of the largest job cuts by any American publicly held company in the past year. (As an aside, CEO Terry J. Lundgren made $11 million last year).
Macy’s shares rose 16% on the news to $40. The earnings news was negative but trumped by the restructuring announcement:
Sales in the second quarter of 2016 totaled $5.866 billion, a decrease of 3.9 percent, compared with sales of $6.104 billion in the same period last year. Comparable sales on an owned plus licensed basis were down by 2.0 percent in the second quarter. On an owned basis, second quarter comparable sales declined by 2.6 percent. The difference between the year-over-year change in total and comparable sales largely resulted from the closing of 41 underperforming Macy’s stores in fiscal 2015.
Net income for the period was $9 million, compared to $217 million last year.
Another clue about how many people will lose their jobs was the description of the write-off involved in closing of the 100 stores:
Non-cash asset impairment and other charges of $249 million being booked in the second quarter include a preliminary estimate of upcoming store closings in fiscal 2016 and beyond. As individual store decisions are made and asset sales completed, we will update the amount to reflect the expected impact on financial results in 2017 and beyond.
The “update” could be brutal.