Macy’s (NYSE:M) confirmed it will close 11 stores in early 2018 and adjust staffing across its stores in order to cut costs. With these closures, the company will have completed 81 of the approximately 100 planned store closures announced in August 2016.
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Shuttering these stores is part of a multi-year effort by the company to ensure the optimal mix of brick-and-mortar stores and digital footprint. The seven newly-announced closures are located in California, Florida, Indiana, Michigan, Ohio and Vermont.
Macy’s said these cost-cutting measures will result in about $300 million in savings beginning in fiscal 2018, which it intends on reinvesting in the business.
Cost savings will see an even greater boost due to tax reform legislation passed in December. Due to the new law, and the timing of Macy’s fiscal year, federal tax reform will result in an effective annual tax rate that is one point lower than previously expected—36% rather than 37%. As a result, the company raised its full-year 2017 earnings guidance to between $3.59 and $3.69 in 2017, excluding certain items. Prior guidance was for $3.38 to $3.63.
The tax reform bill included a corporate tax rate cut from 35% to 21%, and according to Macy’s, federal tax reform will require the company to re-measure deferred tax balances in fiscal 2017. The company currently estimates the deferred tax impact of the federal tax corporate rate reduction will result in a non-cash tax benefit of approximately $550 million to $650 million.