8 January 2009
The Weekly
United States

Macy's Inc revealed plans to close 11 underperforming stores in 10 states and lowered its fourth-quarter earnings forecast after same-store sales fell 7.5% in November and December. The Cincinnati based retailer, which operates 808 Macy's stores and 40 Bloomingdale's locations, said the closings were part of a normal process to prune underperforming locations. "While new store growth has slowed in the current economy, our long-term strategy is to continue to selectively add new stores while closing those that are underperforming," said Terry J Lundgren, chairman, president and chief executive officer. However, department store operators have been hit particularly hard as the economy sinks into a recession and consumers curb their spending or trade down to discount chains. In its December trading update published today, Macy's said same-store sales were down 4.0%, and dropped 7.5% for the combined November-December period. Total sales slipped 4.7% to $4.4bn for the five weeks to 3 January, from $4.6bn a year earlier. For the 48 weeks of the fiscal year to date, Macy's sales are down 5.4% to $23.7bn, while same store sales are 4.6% behind last year's levels. Costs associated with the 11 store closings will be $65m, most of which will be booked in the fourth quarter.