Macy's announces 5,000 job cuts, 7 new store closures

Nathan Bomey | USA TODAY

Show Caption Hide Caption Macy's announces job cuts, new store closures Despite having “solid’ holiday sales, about 5-thousand Macy’s workers will be getting pink slips. Veuer's Chandra Lanier has the story.

Macy's is planning 5,000 job cuts, including closure of seven previously unidentified stores and other cuts at remaining locations, as it seeks stability in a tumultuous climate for physical retail.

The retailer's cost reductions come after its holiday sales in stores open at least a year rose 1.1%.

Although the company described its holiday sales as "solid," the performance trailed fellow department-store chain J.C. Penney, which posted a 3.4% increase Thursday.

Macy's stock fell 7.1% in early trading to $23.54.

Macy's will shutter seven new locations it had previously not identified for closure:

Miami (Downtown), Miami, Fla.

The Oaks, Gainesville, Fla.

Novato (Furniture), Novato, Calif.

Honey Creek Mall, Terre Haute, Ind.

Birchwood Mall, Fort Gratiot Township, Mich.

Fountain Place, Cincinnati, Ohio

Burlington Town Center, Burlington, Vt.

The retailer also said Thursday that it is moving ahead with four other store closures previously announced:

Laguna Hills Mall, Laguna Hills, Calif.

Westside Pavilion, Los Angeles, Calif.

Stonestown Galleria, San Francisco, Calif.

Magic Valley Mall, Twin Falls, Idaho

The moves are part of a plan announced in August 2016 to close 100 stores. Altogether, the company has now revealed 81 of the 100 locations.

Net job cuts, including the closures and reductions at remaining locations, will total about 5,000, Macy's spokesman Blair Rosenberg said in an email.

The company also said it would add jobs in certain locations to properly staff stores.

Macy's needs more technology, Jim Cramer says TheStreet's Action Alerts PLUS Portfolio Manager Jim Cramer said Macy's hiring of an eBay executive is "terrific" and that the retailer needs more technology. Cramer also doesn't think Macy's will be as promotional with its product pricing for Christmas. Video provided by TheStreet

Liquidation sales are likely to begin Jan. 8 and continue for eight to 12 weeks.

“Looking ahead to 2018, we are focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth," Macy's CEO Jeff Gennette said in a statement.

The company has been struggling with its massive real estate footprint and traditional retail model, as Amazon.com soars and physical competitors such as treasure-hunt retailers T.J. Maxx and Marshall's offer alternatives.

More: Macy's announces more store closures: see the list

More: Santa's in town? At Macy's, you need an appointment this year

More: Macy's captures holiday magic with its NYC store window displays

Despite the challenges, Macy's reported strong performances for active apparel, beauty products, shoes, dresses, coats, fine jewelry and some other items.

The company also said its digital sales jumped by double digits.

Analysts credited Macy's with incremental improvements, though the sales increase may have been largely attributable to the strong economy, GlobalData Retail analyst Neil Saunders said.

"We recognize that changes have been made and are starting to have a slight positive impact on performance," Saunders said in an analytical note. "However, these results are simply not strong enough to suggest that Macy's has transformed the business nor that future success is guaranteed."

The cuts, Saunders said, "underscore the need for more surgery to restore the business to health. While we believe these actions are necessary, we maintain that the focus should be on growing the top-line through improvements to stores, ranges and the general proposition."

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.