Key Points
- About 2,350 jobs will be eliminated by Macy’s, resulting in a 3.5% drop in employment.
- The retail shop is making an effort to cut expenses and improve slow sales.
- This action is being taken as Tony Spring, the CEO of Bloomingdale’s, gets ready to replace Jeff Gennette as CEO of Macy’s.
Workforce Reduction.
It was revealed on Thursday that Macy’s intends to close five of its mall stores and decrease its personnel by roughly 3.5% as a result of cost-cutting initiatives and to address weak sales in its Leased Department Store sector.
According to Chris Grams, a spokesman for the company, this choice will affect roughly 2,350 jobs in both corporate and retail settings. According to a statement, “As we prepare to implement a new strategy to meet evolving consumer and market needs, we have made the difficult decision to reduce our workforce by up to 3.5% to create a more streamlined organization.”
Workers were notified of the layoffs on Thursday, and January 26 is the last day for those who will be impacted.
Stores getting Closed.
- Arlington, Virginia;
- San Leandro, California;
- Lihue, Hawaii;
- Simi Valley, California;
- Tallahassee, Florida
Those mentioned above are the locations of the stores that are scheduled to close.
Nearly 166 years old, Macy’s is concentrating on repositioning its department store to become a brand that appeals to customers who are shopping online, looking for deals, and moving away from rivals like Shein and Amazon. Consumers favor discount businesses like T.J. Maxx and national brands like Target over conventional department stores. As part of this endeavor, Macy’s is concentrating on improving its Bloomeology beauty line and upmarket department shops, Bloomingdale’s, and rebranding its private-label brands. It is also opening smaller locations outside of malls.
The company declared that over the following two years, it would open thirty modest stores in strip malls, despite the current economic slowdown. When it comes to groceries or new clothes, Macy’s wants to attract customers who would rather shop at outdoor centers than big-box retailers.
New CEO Onboard.
A new CEO will take over at Macy’s, the parent company of well-known brands like Bloomingdale’s and Bloomeology. In February, Tony Spring, the CEO of Bloomingdale’s, will assume the CEO position at Macy’s, replacing retiring CEO Jeff Gennette.
Adrian Mitchell, the company’s chief financial officer and chief operating officer, alluded to Macy’s deeper examination of its locations during the company’s earnings call in October. According to him, “adjusting our physical footprint” is part of the company’s goal to offer “relevant products, strong value, and a more enjoyable shopping experience.” In the upcoming fourth-quarter earnings release, he said, “We are committed to inspiring our customers on a daily basis,” and he expressed excitement about sharing additional details about how long-term profitable growth may be achieved.
Macy’s Financials.
In the fiscal year 2023, Macy’s anticipates a fall in same-store sales of up to 7%, even though the firm has not yet released its results for the holiday quarter. It is expected that the fourth quarter’s financial results will be released at the end of February.
Macy’s shares ended the week at $17.93, down around 11% year over year. This performance is in contrast to the S&P 500’s impressive performance during the same time frame.
As of October 28, Macy’s had 723 locations nationwide in the most recent quarter that was disclosed. Of these, almost 500 are flagship locations, followed by 56 Bloomingdale locations and 158 Bloomeology locations.
Despite the previous shrinkage of the department store chain, which included the announcement of a significant round of closures almost four years ago, Macy’s is once again evaluating the number of stores it operates. The company was assessing the appropriate quantity and variety of on-and off-mall locations, according to Gennette’s March 2023 statement. The retail environment has changed since the February 2020 announcement. Macy’s has already eliminated about 80 underperforming stores, and it soon intends to close five more.
On a call in March, Gennette said, “We have closed our most poorly performing centers, exited expiring centers, and improved the experience in our remaining stores while delaying others that are cash flow positive.” “Today, nearly 99% of our mall base is profitable on a four-wall basis.”