To the surprise of few retail industry experts, the Macy’s department store chain said Jan. 4 it’s shuttering 68 stores – including the Paseo Nuevo store in Santa Barbara — and cutting more than 10,000 jobs, with the State Street shedding almost 80 employees.
Macy’s still is operating a larger store in La Cumbre Plaza. It’s was not immediately clear when the Paseo Nuevo store would close or if its employees could transfer locally. It’s also uncertain as to what might replace the closing, three-level store.
The store closures are part of the approximately 100 store closings that the company had announced last August.
Since the recent recession, industry analysts have questioned the notion that brick-and-mortar retail stores could keep up with changing buyer habit, which are increasingly leading to making most purchases online.
The store closures announcement came in the wake of a terrible earnings report, showing comparable store sales sank 2.1 percent last quarter. Macy’s dropped about 10 percent during after-hours trading Wednesday.
As it shutters locations this year, Macy’s said it expects to layoff about 3,900 workers as a result of the upcoming store closures, and another 6,200 jobs will be cut as the company works to streamline its management team, a company press release said.
“The actions announced today are estimated to generate annual expense savings of approximately $550 million, beginning in 2017, enabling the company to invest an additional $250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage and China,” Macy’s officials said.
Macy’s operates some 730 stores around the United States. Of the 68 store closures, 63 stores will close in early spring and two more will be closed in mid-
Mark Cohen, a professor at Columbia Business School, said Macy’s and its competitors in the brick-and-mortar retail industry have been “unwilling to fully acknowledge the reality of their business performance,” and he expects job cuts and store closures to be an ongoing trend in 2017.
This is the second consecutive year the company has announced plans to close stores and cut jobs following poor holiday sales. Last January, Macy’s said it would lay off approximately 4,350 employees and close more than 40 stores nationwide.