Macy’s to Shutter 125 Stores As It Seeks to Rebound Amid Department Store Woes
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Big changes are afoot at Macy’s.
The department store chain has announced plans to shutter 125 outposts over the next three years — which account for about $1.4 billion in annual sales — as well as consolidate its headquarters in New York City in an effort to streamline its business.
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As part of the move, roughly 2,000 corporate jobs (or 9% of its workforce) will be lost, and Macy’s also plans to close its offices in San Francisco, downtown Cincinnati and Lorain, Ohio.
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends,” said chairman and CEO Jeff Gennette. “The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment.”
Macy’s will maintain operations at about 400 stores across the country and upgrade an additional 100 outposts in its portfolio, as well as test out a new small-format store dubbed Market by Macy’s. It will also increase the employee headcount at its Mason, Ohio, and Springdale, Ohio, corporate offices.
Additionally, the company announced several changes to its senior management team: Former chief stores officer John Harper has assumed the role of chief operations officer, while Marc Mastronardi has been promoted to chief stores officer and Danielle Kirgan to chief transformation and human resources officer.
“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,” Gennette added. “Over the past three years, we have shown we can grow the top line; however, we have significant work to do to improve the bottom line. We are confident the strategy we are announcing today will allow us to stabilize margin in 2020 and set the foundation for sustainable, profitable growth.”
The announcement comes two months after the firm posted its third-quarter earnings report ended Nov. 2, logging its first same-store sales decline in two years and slashing its guidance for the full year. Macy’s execs blamed the disappointing results on the warmer fall season, coupled with slowing foot traffic, amid a broader shift from brick-and-mortar to online retail.
To aid its ongoing efforts to turnaround generally sluggish business trends, Macy’s has spent the past few months investing more resources in its e-commerce mobile app, which it said is on track to exceed the goal of $1.5 billion in sales, as well as enhancing its website to promote online sales and drive in-store visits.
Although Gennette said on Nov. 21 that the retailer has “confidence in our holiday strategies,” Macy’s had lowered its outlook, expecting adjusted earnings per share in the range of $2.57 to $2.77, below the previous guidance of $2.85 to $3.05. It also said it expects sales to be down 2.5% to 2.0%, versus the previous reading of approximately flat sales.
The firm is expected to provide more information at its investor day tomorrow.
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