Macy’s to Cut 7,000 Jobs, Centralize Operations

Cincinnati Macy's Inc. announced Monday that it will cut 7,000 jobs (almost 4% of its work force), reduce its contributions to its employees' retirement funds, and slash its dividend to preserve cash amid the pullback in consumer spending.

Macy's said the cuts, which include some unfilled jobs and 1,900 positions being eliminated in a restructuring now under way nationwide, will come to corporate offices, stores and other locations. Under the restructuring, Macy’s is integrating all its regional divisions into a single unit.

“With our new structure, Macy’s now will have one unified buying organization, one unified merchandise planning organization, one unified stores organization, one unified marketing organization and one unified organization for each corporate function such as finance, logistics, information technology and human resources — instead of four of each operating divisionally,” said Terry J. Lundgren, chairman, president and CEO, Macy’s. “By reducing duplication, we will be able to react faster to market trends, simplify our relationship with vendors and ensure that our expense dollars are devoted to activities that will drive the business most effectively.”

Macy’s said it expects the reorganization to be complete beginning in the second quarter. As part of the restructuring, the chain’s central buying, planning and senior management and marketing functions will be located primarily in New York. Corporate-related business functions such as finance, human resources, legal, property development and company purchases will be located primarily in Cincinnati.

Under the reorganization, Macy’s Home Store and Macy’s corporate marketing divisions will no longer exist as separate entities. Existing Home Store functions will be integrated into the Macy’s national merchandising, merchandise planning, stores and marketing organizations. Macy’s corporate marketing will be integrated into the new unified marketing organization. The New York-based Macy’s Merchandising Group will be refocused solely on the design, development and marketing of Macy’s highly successful family of private brands.

The job reductions will account for a high percentage in the central office functions being centralized, Macy’s said. In some cases, the reduction involves positions that currently are unfilled. The reduction in store staff averages five to six positions per location and is designed to minimize any impact on customer service.

The elimination of the existing divisional central office organizations will primarily affect approximately 1,400 positions at the Macy’s West headquarters offices in San Francisco; 850 positions at the Macy’s Central headquarters offices in Atlanta; and 600 positions at the Macy’s Florida headquarters offices in Miami.

Macy’s Bloomingdale’s division will remain a separate brand and organization and is not affected by the restructuring.

In related news, Macy's announced the national rollout of a plan to localize merchandising to specific markets. The company’s “My Macy’s” customer-centric localization initiative, piloted in 20 selected geographic markets in spring 2008, will be expanded across the country in an effort to drive sales with stores and merchandise assortments focused on local customer needs and preferences.

Under the plan, Macy’s stores nationwide will be grouped into 69 geographic districts that will average 10 to 12 stores each, effective in the second quarter. Of those, 49 will be newly created districts. The other 20 districts (in the Midwest, Upper Midwest and Pacific Northwest) were created as pilots in spring 2008 and will remain in place.