Macy’s Inc on Tuesday said it is closing 125 of its least productive stores and cutting 2,000 corporate jobs, as the struggling department store tries to reinvent itself in the age of online shopping.
The store closures represent about one-fifth of Macy’s current total. They include about 30 that are in the process of closing and account for US$1.4 billion in annual sales.
Macy’s did not specify how many jobs would be lost at the shuttered stores.
The corporate jobs would be shed as Macy’s closes its offices in Cincinnati and San Francisco, leaving New York as its sole corporate headquarters.
Macy’s said that the 2,000 jobs to be lost account for about 9 percent of its corporate workforce.
It currently employs about 130,000 people.
Macy’s is also testing a new smaller-store format that is located at a strip center, instead of a mall. The store would feature a mixture of Macy’s merchandise and local goods, as well as food and beverage options.
It is to open its first so-called Market by Macy’s in Dallas today. The company also plans to build four US$1 billion brands.
STRATEGIZING
Macy’s has pursued a number of strategies to lure consumers back. Those include teaming up with resale site ThredUp.
The company’s Bloomingdale’s division launched a rental service last year, and it has been expanding its off-price concept called Backstage in many of its stores.
The company has also been upgrading the look of its top 150 stores in healthy malls and it said on Tuesday that it plans to upgrade an additional 100 stores this year.
It has also been closing stores over the past few years and has reduced layers of management as it tries to be more agile.
Still, that has not been enough.
Macy’s reported a steeper-than-expected 3.5 percent drop in sales at stores opened at least a year in its fiscal third quarter, which ended on Nov. 2. That marked Macy’s first quarterly comparable store sales decline in almost two years.
The company is set to report final fourth-quarter results later this month.
“We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams,” Macy’s CEO Jeff Gennette said.
Macy’s said the moves are expected to generate annual gross savings of about US$1.5 billion, which would be fully realized by the end of 2022.
For this year, Macy’s anticipates gross savings of about US$600 million.
RESTRUCTURING
The announcement of the steps came ahead of Macy’s annual investor meeting yesterday in New York, where Gennette was expected to unveil a three-year reinvention plan.
Macy’s shares rose about 1 percent to US$16.64 in after-hours trading following the company’s announcement.
Over the past year, they have declined nearly 36 percent.
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