Analysts See Plus In Macy's Inc. Restructuring

Macy's Inc.'s

plan to reinvest $140 million in annual savings from a restructuring unveiled Thursday may have disappointed investors, who preferred to see it flow to the bottom line. Macy's, which also announced December sales results in line with expectations Thursday, was off more than 3 percent Friday afternoon at $65.54. But a couple of analysts with positive ratings on Macy's said its restructuring showcases the company's ability to invest in growth. Deutsche Bank's Paul Trussell said the plan will enable Macy's to "reallocate resources" rather than boosting expense, while Credit Suisse's Michael Exstein said the company is "proactive" in dealing with a changing retail environment. Macy's plans a fourth-quarter charge of $100 million to $110 million to close 14 stores by the spring of 2015, leaving it with a total of 830 stores. About 2,500 of its roughly 175,200 employees will lose jobs in the restructuring, although the company also plans to hire 1,500 people for order fulfillment. Macy's also announced two new stores in addition to plans for seven previously announced. Savings from the restructuring will be invested in e-commerce and order fulfillment capacity, as well as to offset higher health care and retirement costs, the company said. Separately, Macy's same-store sales for November and December grew 2.1 percent, in line with expectations. The company also maintained its full-year earnings outlook of $4.25 to $4.35 a share. Investors may have hoped for more, in light of J C Penney Co.

recently announced 3.7 percent gain in December comps, analysts said. J.C. Penny also said this week it will close 40 stores and eliminate 2,250 jobs.