Should Macy's Fire Its Customers?
Last month, Macy's (NYSE: M) released another disappointing earnings report. Comparable-store sales inched up 0.3% in the second quarter, but that included a big tailwind from online sales, which continued to rise at a double-digit rate. Clearly, in-store sales are declining -- with some stores experiencing severe revenue declines. Meanwhile, profitability plunged.
Nevertheless, CEO Jeff Gennette has said that Macy's doesn't plan another big round of store closures. Gennette has argued repeatedly that closing stores is equivalent to "firing" customers, because the loss of visibility hurts online sales in the market where a store is closed. As a result, Macy's has focused on cutting costs, so that it can keep as many stores open as possible.
However, if Macy's current turnaround plan doesn't succeed, "firing" customers may be the best way for the department store giant to improve its profitability and boost shareholder value.
Source Fool.com
