February is shaping up to be a bad month for shopping fans but an interesting one for retail recruiters, as a rash of layoffs and store closings point to weaker-than-expected January retail sales and a pessimistic outlook for the future.
William Dreher, a Deutsche Bank research analyst, wrote in a report last week that as the economy begins to improve in the second half of 2008, “we expect several of our department store shares could do very well, including Kohl’s and Macy’s, though we are not pounding the table here yet.” In fact, the report upgraded the department store and mass merchant sector to neutral from cautious.
But on Wednesday, Macy’s Inc. announced its plans to slash 2,300 management jobs across three regional divisions to reduce costs and boost sales while adding 250 in-store positions to enhance product offerings in specific regions. The company will cut approximately 950 positions at the Macy’s North headquarters offices in Minneapolis, 850 positions at the Macy’s Midwest headquarters offices in St. Louis, and 750 positions at the Macy’s Northwest headquarters offices in Seattle. It is also consolidating several divisions, though all current store locations will remain in place. The company’s Miami-based Macy’s Florida and New-York based Bloomingdale’s divisions are not affected. The Cincinnati-based retailer said the consolidation will be complete in the second quarter of 2008.
This layoff news comes on the heels of the announcement by women’s retailer Ann Taylor Stores that it will close 117 of its 921 stores over the next three years. In addition, the company is eliminating 180 jobs, or 13% of its corporate staff.
What other companies are losing their shirts? Clothing stalwart J.C. Penney is planning 200 layoffs; Talbots is laying off 800, or 5% of the company, as it exits the men’s and boys’ wear markets; Wet Seal is laying off 41 and will leave 10 other posts vacant in a cost-cutting move amid a “difficult” retail environment (49 corporate jobs, two field positions); and Goody’s Family Clothing is laying off 5% of workers.
Also this week, clothing retailer Eddie Bauer said it is laying off 123 workers at its headquarters, though no layoffs are expected at its 432 retail stores. Even Wal-Mart is fraying at the retail seams, announcing layoff plans due to closing two clothing divisions at its main offices in Arkansas.
The country’s largest retailer of plus-size women’s apparel, Charming Shoppes, Inc. says its round of store closures and layoffs is “in response to the continuing weak retail and economic environment.” The corporate parent of Lane Bryant and Catherine’s stores will close 100 stores, lay off 150 employees (13% of its management staff), and trim the amount of stores it will open in fiscal 2009.
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The use of holiday gift cards helped some retailers rebound in January, but analysts suspect post-holiday sales were slowed by a weaker economy overall.
But is it the economy or a shift in recruitment and training strategies that are hurting major retailers?
According to Karen Harvey, president of the Karen Harvey Consulting Group, an executive recruitment company, the problem is a lack of executive training programs.
“One of the major things we face in interviewing talent, if they came through the industry more recently, their training is more siloed,” said Harvey. “When we interview these people, we find they are missing the full 360-degree view of the business.”
Some “tell-tale signs” of this problem, according to Women’s Wear Daily, include an increasing number of high-level outside hires, not to mention disappointing comps and earnings.