Macy's On Thursday it said it will cut about 3.5% of its workforce and close five of its namesake shopping centers as the legacy department stores move to cut costs and reverse slowing sales.
The move will affect approximately 2,350 positions at its corporate offices and stores, company spokesman Chris Grams said.
“As we prepare to implement a new strategy to meet the needs of an ever-changing consumer and market, we made the difficult decision to reduce our workforce by 3.5% to become a more agile company,” the company said. it's a statement.
The company notified employees of the layoffs on Thursday and the last day for affected employees will be January 26.
The stores that will close are located in Arlington, Virginia; San Leandro, California; Lihue, Hawaii; Simi Valley, California and Tallahassee, Florida. The stores will close in early 2024, Grams added.
Macy's is the center of an effort to turn the roughly 166-year-old department store into a brand that resonates with consumers who shop online, look for value and turn to competitors, including e-commerce retailers such as Amazon and Shein, department stores . players like Target and discount names like TJMaxx, owned by TJX, rather than its stores. As part of that push, Macy's is revamping its private brands, opening smaller stores outside the mall and turning to its beauty chain, Bluemercury, and its high-end department store, Bloomingdale's, to drive growth.
In the fall, the company said it would open up to 30 smaller stores in shopping centers over the next two years. Macy's has been best known for its giant stores in malls, but the company is trying to chase suburban consumers who go to outdoor malls a short drive away to buy groceries or buy new clothes.
Macy's, the parent company that includes its namesake brand, Bloomingdale's and Bluemercury, will also have a new leader soon. Bloomingdale's CEO Tony Spring will take over as CEO of Macy's in early February when outgoing CEO Jeff Gennette retires.
On the company's October earnings conference call, Chief Financial Officer and Chief Operating Officer Adrian Mitchell hinted that Macy's would take a hard look at its stores again. He said the company had to “deliver relevant products, strong value and a more enjoyable shopping experience,” and some of that would include “optimizing our physical footprint.”
“We are committed to bringing more inspiration to our customers every day,” he said. “We look forward to sharing more about how that leads to long-term profitable growth on our fourth-quarter call.”
Mitchell also told investors on the call that Macy's “anticipated closing fewer than 10 locations in early 2024.”
However, Macy's sales and stock performance have lagged. The company has not yet reported its holiday quarter, but said in October that it expected same-store sales to decline as much as 7% for its fiscal 2023. It is expected to report fiscal fourth-quarter earnings in late February.
The company's shares closed Thursday at $17.93, down nearly 11% so far this year. That compares with the roughly flat performance of the S&P 500 over the same period.
Macy's has 723 locations nationwide, as of Oct. 28, the end of the most recently reported quarter. The majority of them (approximately 500) are stores of the same name, followed by 158 Bluemercury stores and 56 Bloomingdale's stores.
However, the department store chain's footprint has shrunk in recent years. About four years ago, Macy's announced another major layoff and a wave of store closings. It made the announcement in February 2020, just weeks before the Covid pandemic led to closures and temporary closures of many shopping centers and retail stores across the country.
At the time, Macy's said it would close 125 stores over the next three years and eliminate about 2,000 corporate jobs, just as it closed its headquarters in Cincinnati and its technology offices in San Francisco.
The company is again reconsidering its number of stores.
In March 2023, Gennette said the company was “evaluating the right number and mix of on- and off-mall locations,” adding that the customer and retail context had changed since the February 2020 announcement. He said that since that 2020 announcement, Macy's had closed about 80 namesake locations and had plans to close another five soon.
“We have closed our largest underperforming stores, exited moribund centers and improved the experience of existing stores, while delaying the closure of others that are cash flow positive,” he said on the company's conference call. March. “Today, approximately 99% of our shopping center base is profitable on a four-wall basis.”
Thursday's news was first reported by The Wall Street Journal.
