Life sure is hard these days for a multibillion-dollar retail store chain.
Sure, some stores have been around F-O-R-E-V-E-R and their brands are as well-known as Coca-Cola or Google, but they’re seeing less and less foot traffic. After all, when you can buy everything and anything online and have it shipped to your front door, why would you ever go to an actual store.
This logic is what’s unfortunately causing retail giants Sears and Macy’s to rethink their strategies. Yet even after closing some stores, revamping their online shops, and trying to woo shoppers away from the Amazons and eBays of the world, these two American retail mainstays can’t seem to get customers in their stores. This is causing them to lose millions each year, along with a decline in their stock value.
So how are they responding now? By closing more stores, of course.
Macy’s relies a lot on holiday sales and revenue to meet their revenue projections. Their holiday sales were bad this year.
The company hasn’t specified how much they made at the end of the year versus how much they expected to make, but given the company’s next actions, it wasn’t good.
Due to less-than-stellar sales, Macy’s will close 100 stores and cut 10,000 jobs.
Macy’s will cut jobs, close over 100 stores (something they already planned on doing), restructure its business, and sell their property. The company expects to save $550 million annually by doing this.
Store closures and job cuts are not a long-term solution for the company’s success.
Since the company’s future is fairly grim — even after laying off 10,000 workers in the near future — their stock went down by nearly 14% today. Investors are not particularly positive about the stock’s future performance, either.
Sears, facing a similar problem will close 150 Sears and Kmart locations.
The company is also selling their Craftsman tool brand name to Black & Decker, a competing tool company. Longtime Craftsman customers are concerned that the Craftsman brand will be devalued in the process.
Investors, however, are more positive about Sears’ stock.
After the closure announcement, the company’s stock ($SHLD) increased by .29% for the day. The company still pulls in billions in revenue, and analysts believe the company can return to profitability by focusing on its best performing stores.
The retail sector isn’t doing particularly well right now, especially if retail ETFs are any indication. If Sears and Macy’s want to stay afloat, they have to focus on their stores that actually make money. They also have to incentivize use of their website over Amazon and other competitors. If they can do that, we could see an interesting comeback story. If they can’t, we might see more stores close in the near future.