Department-store operator Macy's Inc. said Thursday it will close 11 underperforming stores in nine states -- affecting 960 employees -- and lowered its forecast for the fourth quarter after one of the weakest holiday seasons in years.
Stores slated to close include locations in Los Angeles, West Palm Beach, Fla., Nashville, Tenn., and St. Louis, among others. Cincinnati-based Macy's Inc. says the closures will cost about $65 million, most of which will be booked in the 2008 fourth quarter.
Clearance sales at the stores begin next week.
"These closings are part of our normal-course process to prune underperforming locations each year in order to maintain a healthy portfolio of stores," said Macy's Chief Executive Terry J. Lundgren in a statement.
Employees at the stores that are closing may be considered for open positions at other Macy's stores, the company said.
Department-store operators have been among the harder-hit in the retail sector as consumers cut back amid the recession, hunting for bargains and trading down to discounters.
Macy's reported Thursday that its December sales at stores open at least a year, or same-store sales, fell 4 percent -- still not as bad as the 5.3 percent drop analysts surveyed by Thomson Reuters were expecting.
Total sales for the five-week period ended Jan. 3 fell 5 percent to $4.4 billion from $4.61 billion last year.
Same-store sales fell 7.5 percent during the combined November and December holiday period. Macy's said the holiday season ended with improving sales in the fourth and fifth weeks of December but that sales were sluggish before that.
The company said it marked items down sharply in the fourth quarter to gain sales and reduce its inventories, but that hurt its margins and led it to lower its profit forecast for the fourth quarter and full year.
Macy's now expects earnings of 90 cents to $1 per share in the fourth quarter, down from its previous guidance of $1.10 to $1.30 per share. Analysts expect earnings of $1.11 per share.
For the full year, the company now expects to earn $1.10 to $1.20 per share, down from its previous forecast of $1.30 to $1.50 per share. Analysts expect a profit of $1.35 per share.
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