Macy’s announced this week it will lay off 2500 people and close five of its 800 stores. The decision, estimated to save $100 million per year, was made amidst forecasting a profit higher than what analysts predicted for 2014. Analysts estimated profits of $4.36 per share; the company raised it to between $4.40 and $4.50.
Our 2013 Digital IQ Index: Department Stores report found Macy’s to be one of the bright spots in a declining area. Department stores’ share of retail has been halved in the past 10 years. Named ‘Genius’ and ranked second of 40 brands in our report, Macy’s has successfully used its resources (store locations and recognizable brand) to create a successful business that merges digital and brick-and-mortar strategy. Its spread-out locations allow for expedited delivery, returns and a flexible inventory.
Macy’s attracted attention with its American Icons campaign, which offered customers a three-dollar coupon or the coupon and a “Got Your 6” logo pin for six dollars. Proceeds supported homeless veterans and exceeded the $3 million goal. Macy’s sponsored drive-in movies to add publicity to the campaign.
Macy’s will close stores in Arizona, Kansas, Missouri, New York and Utah, but it will open five others to replace them. As of now, e-commerce accounts for 11% of Macy’s sales, and physical locations will be critical for the foreseeable future.