Macy's looks to improve performance

CINCINNATI After reporting a 24% decrease in total sales and 7.1% comps decline for the month of January, Macy’s Inc. announced a number of initiatives designed to improve its performance.

“Improving sales and earnings performance requires innovation in engaging our customer more effectively in every store, as well as reducing total costs,” said Terry Lundgren, Macy’s chairman, president and chief executive officer. “We believe the right answer is to reallocate our resources to place more emphasis and talent at the local market level to differentiate Macy’s stores, serve customers and drive business.

As part of its plan to improve performance, Macy’s said that it is consolidating its stores into its Macy’s East, Macy’s South and Macy’s West markets, and concentrating more management talent in those areas affected by the consolidation.

According to the company, Macy’s locations in these markets will be grouped into 20 newly formed districts of about 10 stores (compared with an average of 16 to 18 currently overseen by each regional manger). Districts will be based in cities including Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Kansas City, Minneapolis, Pittsburgh, Portland, Ore., St. Louis, Salt Lake City and Seattle. Each new district will have a manager and a small staff of store merchandisers and planners. These districts will report into their divisions through new regional offices being established in Chicago, Cincinnati, St. Louis and Seattle.

Macy’s said it expects that the consolidation will reduce its SG&A expense by approximately $100 million, beginning in 2009. The partial-year reduction in SG&A for 2008 is estimated at approximately $60 million.