Rumors prompt Macy's to reassure employees

December 06, 1990|By Cindy Harper-Evans

It seems everyone has a Macy's rumor to share.

There's the woman whose son-in-law's brother-in-law used to be a buyer and said the retailer is going to close a store in Maryland. And there's the hairdresser whose client said a friend at Macy's was warned of layoffs at a staff meeting.

The widespread and increasing speculation about the debt-laden retailer's financial health and ability to survive if it has a poor Christmas selling season moved Edward S. Finkelstein, R. H. Macy & Co.'s chairman and chief executive, to send a letter to the company's 76,000 employees Tuesday, including the roughly 1,600 at the four Macy's stores in Maryland.

The three-page letter, a copy of which was obtained by The Sun, began:

"Dear Friends, It has become fashionable of late to speculate about Macy's status and future. Frankly, we have been amazed by some of the unfounded rumors and misinformation, which serve no one. . . .

"We have no need and no plans to close stores or sell divisions."

Employees at area Macy's stores, who spoke yesterday on condition of anonymity, said the letter was handed to them when they walked into the building for work Tuesday morning.

Some believed the letter's assertions, and some didn't.

A few who worked at the Hutzler's department store chain said the letter reminded them of one Hutzler's sent out saying it was not going out business. That was shortly before it shut down in 1989.

"I think it's too little too late," said one longtime Macy's employee at Hunt Valley. "Morale has been hampered because we've had to read about Macy's losses and other problems from the newspapers. We don'tthink the stores are going to shut down, but we kind of took the letter as a joke."

The four Macy's in Maryland are in the White Marsh, Hunt Valley,Owings Mills and Marley Station malls.

Macy's recently posted a sharp increase in its losses, which rose to $66 million in the first fiscal quarter, which ended Oct. 31. Several industry observers have been comparing the retailer to debt-laden Federated Stores, which filed for Chapter 11 bankruptcy protection in January.

Last Thursday, Standard & Poor's Corp. said it was reviewing the possibility of downgrading the speculative-grade rating for Macy's subordinated debt. The rating agency said the action reflected Macy's continuing weak retail sales in the context of the company's highly leveraged capital structure. Mr. Finkelstein's letter rejected the comparison of Macy's and Federated Stores and said that Macy's has prepared itself for a slow Christmas season by slashing the value of its inventory by $650 million from last year's level.

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