Cincinnati -- Macy’s on Wednesday said that it plans to close five underperforming stores in early spring 2014 and cut 2,500 jobs in “organizational changes” to sustain its profitability. The cost-reduction initiatives are expected to save the retailer about $100 million annually, beginning in 2014.
“We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and CEO.
Separately, Macy's reported that its holiday same-store sales, together with comparable sales from departments licensed to third parties, rose 4.3%. The chain narrowed the range of its guidance for same-store sales growth in the second half of 2013 to a range of 2.8% to 2.9% (from previous guidance of between 2.5% and 4%), and maintained its full-year 2013 earnings guidance. Macy’s also forecast profit for its next fiscal year that is higher than analysts estimate.
The retailer described the store shutterings as a series of “normal-course adjustments” to its portfolio of Macy’s and Bloomingdale’s locations nationwide.
“Our stores remain a very important component of our omnichannel strategy for both the Macy’s and Bloomingdale’s brands,’ Lundgren said. “We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations while also trimming those that no longer meet our performance requirements or where our leases were not renewed.”
The stores to be closed are in Fiesta Mall, Mesa, Ariz. (opened in 1979); Metcalf South Shopping Center, Overland Park, Kan, (opened in 1967); Jamestown Mall, Florissant, Mo. (opened in 1994); Medley Centre, Irondequoit, N.Y. (opened in 1990); and Fashion Place Mall, Murray, Utah (opened in 1988).
In organizational changes:
- The Midwest Region of Macy’s stores is being combined with the North Region, creating a new North Central Region and reducing the ongoing number of regions to seven from the current eight. Nine existing stores districts also are being combined with nearby districts – thus reducing the ongoing number of districts to 60 from the current 69.
- In the merchandise planning organization, the district planner role is being eliminated for soft home categories. Going forward, responsibility for soft home planning will be shifted to the regional and national level.
- Some positions in Macy’s stores will be realigned, combined and reduced in a manner that “improves productivity and efficiency while also fostering high standards for customer engagement and service,” Macy’s said.
- Certain central office, administrative and back-of-the-house expenses across the company will be trimmed, which involves reductions in workforce, as well as in non-payroll costs.
- Macy’s stressed that it continues to add positions in other parts of the company – such as in online operations, direct-to-consumer fulfillment and new stores. In total, the Macy’s, workforce is expected to remain at a level of approximately 175,000 associates.