Macy’s Inc (NYSE:M) stock was down 10% in Thursday’s premarket trade — Wall Street’s reaction to dismal holiday sales data and the likelihood of massive job cuts in Macy’s future. Shares were pacing to open at lows last seen in August.
Macy’s says comparable-store sales (on an owned plus licensed basis) dipped 2.1% year-over-year in the combined period of November and December. On a merely owned bases, comps dove 2.7%.
Macy’s CEO Terry Lundgren said that while comps did meet the lower end of guidance, “we had anticipated sales would be stronger.”
While M stock was rocked by the news, it wasn’t the only retailer suffering on Thursday. Kohl’s Corporation (NYSE:KSS) was off more than 14% on a 2.1% decrease in comps over the same period, and J C Penney Company Inc (NYSE:JCP) was down about 6%, seemingly just on sympathy.
Macy’s Job Cuts, Store Closures and More
Macy’s sent out a second release in response in which the company detailed efforts to “streamline its store portfolio, intensify cost efficiency efforts and execute its real estate strategy” to save an estimated $550 million annually for M stock.
On the store front, Macy’s announced 68 of the 100 store closures it previously announced in August 2016, with 63 of those closing in early spring 2017. The move is expected to negatively impact revenues by about $575 million.
The closures also will lead to about 3,900 in job “displacements,” and Macy’s plans to augment that with 6,200 job cuts by trimming management and making other changes.
Lastly, the company said it will be moving ahead with its real estate strategy, which not only includes closing 00 stores, but also selling off stores, including a Stonestown store in San Francisco to General Growth Properties Inc (NYSE:GGP).
Macy’s Stock Going Forward
Macy’s said it would maintain its previously provided full-year guidance of a 2.5% to 3% drop in comps on an owned plus licensed basis. Meanwhile, it expects full-year 2016 diluted earnings per share to come in between $2.95 to $3.10 per share, lowered from previous guidance of $3.15 to $3.40 per share.
Meanwhile, today’s expected dip will represent a serious bounce off the company’s 200-day long-term moving average. Shares managed to break through the 200-day MA in November, followed shortly thereafter by a golden cross that helped send shares to 52-week highs around $45 per share.
Since then, however, Macy’s stock failed to participate in the post-election “Trump Bump,” and shares crossed back below the 200-day before the end of the year. The stock’s Relative Strength Index was already reading low, and should dip into oversold territory when the market opens today.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.