macy's is done. there's no coming back from this. the sooner y'all figure that out the better.
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Can Macy's convert inventory to cash?
As of Feb. 1, Macy's inventory had a carrying value of $5.2 billion. The indefinite closure of all Macy's stores obviously represents a huge impediment to converting this inventory into cash. However, converting inventory to cash will be critical to Macy's efforts to avoid a major cash crunch.
Macy's online business remains open, and the company typically gets a quarter of its sales from e-commerce. Based on the company's Q1 2019 sales of $5.5 billion, that would imply quarterly online revenue of approximately $1.4 billion, all else equal. That said, consumers have been focused on basic needs over the past few weeks, not discretionary purchases. Many apparel retailers have been suffering double-digit year-over-year declines in online sales in recent weeks, according to McKinsey.
During the 2008 recession, workforce participation rate in the US fell from a high of about 67% to 63% and stayed there even though GDP recovered (the so-called jobless recovery — nominal employment bounced back, but participation rate did not). The difference was people who either gave up looking, or ended up in the gig economy in undocumented ways. That was a relatively modest structural shift. The shift that will follow this time will be much more radical, but it is unclear what form it will take.
Unemployment claims are something like Covid-19 tests: they cover only a fraction of the infected, and disproportionately reflect those ill enough to go to a hospital, and procedurally enabled to do so. In other words, 10 million is a very conservative ceiling. I would estimate that perhaps 10x as many are actually “infected” by the economic contagion and will end up experiencing some form of mild to severe economic distress before we’re done. That’s 100 million, or 2/3 of the American work force.
The last three weeks have marked one of the most devastating periods in history for the American job market, as first-time claims for unemployment benefits have surged more than 3,000% since early March. Post Corona (2021) USA will vigorously embrave German frugality and savings mentality. That is because in USA for large population there is no social safety net.
Macy’s will Survive and come out of this, but it will most likely fast track closings and cost savings cuts. It will most definitely be a tough 6-12 months after reopening.
I'm telling folks to polish up the ol' resume and start the process. I'm betting 20-30% of these stores don't reopen. And if they do, it's with a far more sparse and cheaper staff.
As someone who has been fortunate enough to be employed in a G50/G150 store, I recognize that I may be in a better position than others, but then maybe not.
Let's face facts: none of us know what happens next. We are in uncharted waters. Yes, people should be proactive and do what they need to do in order to survive. If that means moving on from Macy's, then that's what will happen.
Don't sit here though and tell people to despair. That's cheap. Grow up.