Macy’s on Tuesday laid out a radical $1.5-billion cost-cutting plan to revive its fortunes, calling for closing another 125 stores, axing about 2,000 corporate jobs and shutting its joint headquarters in Cincinnati.
The retailer also plans to shift its technology operations from San Francisco to Atlanta and New York. The move will involve 831 layoffs, according to the San Francisco Chronicle, citing a state labor filing.
Macy’s, which operates about 680 department stores under the Macy’s and Bloomingdale’s brands, said the sites to be closed accounted for a combined $1.4 billion in annual sales. The stores targeted were among the company’s “least productive,” it said, and about 30 were already in the process of being shut. The closures would be completed over the next three years.
Under a “campus consolidation” plan, Macy’s also said New York would become the company’s sole corporate headquarters. The group would be closing its site in downtown Cincinnati, as well as the macys.com headquarters in San Francisco and offices in Lorain, Ohio.
About 2,000 jobs are going within the company’s “corporate and support function.”
Jeff Gennette, Macy’s chief executive, said in a statement that the company had “significant work to do to improve the bottom-line” and that the plan “set the foundation for sustainable, profitable growth.”
He planned to deploy some of the savings into the “healthy parts” of the business. Macy’s would invest in its better sites, including upgrading and refurbishing another 100 stores this year, he added. The company has already refreshed about 150 stores.
The plan generated a muted reaction in after-hours trading on Tuesday, where Macy’s shares were up 0.6%.
Other initiatives included an expansion of the Macy’s loyalty program, launches of new private label products and the expansion of its “Backstage” discount concept. The retailer is also introducing a smaller store format known as Market, with the first due to open in Dallas this week. Details were expected to be presented at an investor day in New York on Tuesday.
Macy’s set out the restructuring plan as it forecast further sales declines that underline how the department store business has struggled to adapt as more consumers shop online.
Macy’s cautioned that it expected like-for-like sales to drop between 1.5% and 2.5% in the coming financial year, which it described as a period of “transition.”
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