Macy's restructuring: 14 store closures, thousands of layoffs, perhaps an off-price focus
Cincinnati -- In response to changes in “where the customer is headed,” Macy’s chief announced on Thursday a sweeping reorganization plan that will close 14 under-performing stores, lay off thousands of workers and, most far-reaching, ready the retailer to respond to an omnichannel shopping environment.
According to a statement by Terry Lundgren, Macy’s chairman and CEO, the department store retailer will close 14 stores, while opening two new locations, and generate an annual savings of $140 million – which will then be reinvested into the business. In tandem with the closures, Macy’s and sister company Bloomingdale’s will restructure their currently separate merchandising and marketing into one unified organization, and lay off thousands of workers – although its workforce of 175,000 reportedly will remain stable as additional staffers are added in other areas.
“Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones,” said Lundgren. “We must continue to invest in our business to focus on where the customer is headed – to prepare for what’s next.”
“Going forward, Macy’s and Bloomingdale’s will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops. Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions,” Lundgren said.
About 2,200 jobs will be lost when Macy’s and Bloomingdale’s contract both store and field operations personnel. However, key growth initiatives for 2015 include creating a team to explore opportunities for a Macy’s off-price business; growing its digital business, namely, macys.com and bloomingdales.com; and expanding its San Francisco-based digital technology organization by hiring more than 150 people.
Macy’s announced the changes along with its holiday sales results, which saw sales at existing stores climbing 2.7% during November and December, in line with expectations.