Macy’s to Eliminate 10,000 Jobs in Restructure, Store Closings
January 5, 2017,
CINCINNATI—Macy’s Inc. plans to restructure its central organization, which combined with the closure of 68 stores will eliminate more than 10,000 jobs early this year.
The restructuring will eliminate layers of management to reduce costs and affect 6,200 employees, the company said in a statement. Macy’s did not elaborate on the specific management changes. In addition, the retailer plans to reduce non-payroll costs through lower pricing and reduced consumption.
The company also said it would close 68 stores—part of the approximately 100 closings announced last August—and reorganize its field structure to better support its remaining stores. Of the 68 stores, three closed midyear, 63 will be closed in early spring 2017 and two will be closed in mid-2017. Those closures will displace 3,900 employees, although some may be offered positions in nearby stores, the company said.
“Over the past year, we have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time,” said Terry J. Lundgren, chairman and CEO. “While we are pleased with the strong performance of our highly developed online business, as well as the progress we have made on selling and visual presentation programs and expense reduction initiatives in 2016, we continue to experience declining traffic in our stores where the majority of our business is still transacted.”
Citing the challenges facing Macy’s and the broader retail industry, Lundgren said he expects the 2017 change in comp-store sales to be consistent with its November/December sales trend, which was down. In a separate statement, Macy’s said its comparable sales on an owned plus licensed basis declined 2.1 percent in November and December combined, compared to the prior year period. On an owned basis, comparable sales declined 2.7 percent. It revised its 2016 guidance as a result.
The company maintains its previously provided full-year sales guidance of a 2.5 percent to 3 percent decrease in comparable sales on an owned plus licensed basis, and expects to come in at the lower end of that guidance, with comparable sales on an owned basis to be approximately 50 basis points lower. Earnings per share are now expected to be in a range of $2.95 to $3.10, compared with previous guidance of $3.15 to $3.40.
“While our sales trend is consistent with the lower end of our guidance, we had anticipated sales would be stronger,” Lundgren said. “We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry. We are pleased with the performance of our digital business, with double-digit gains at both macys.com and bloomingdales.com; however, store sales continued to be impacted by changing customer behavior.”
Sales were strong in furniture and bedding, in addition to sports apparel and jewelry, Lundgren said, but handbags and watches were weak.
Going forward, Lundgren said the company’s omnichannel strategies continue to evolve based on changes in its customers’ shopping behaviors, including a focus on buy online, pickup in store and mobile-enabled shopping.
“In addition, we have invested in and enlarged our customer data and analytics team, which will help drive our new marketing strategies for 2017. Whether it is improving corporate agility, enhancing our customer engagement strategies, or continuing to capitalize on the potential value of our real estate assets, we remain focused on the actions that will ultimately improve our financial results and provide the greatest return for our shareholders.”
Four new Macy’s and Bloomingdale’s stores are currently planned or are already under construction, as previously announced. In addition, new Macy’s and Bloomingdale’s stores are planned to open in Abu Dhabi, and one Bloomingdale’s store is planned in Kuwait, all under license agreements with Al Tayer Group.
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