Macy’s on Thursday said it’ll cut about 3.5% of its workforce and shut five of its namesake mall locations because the legacy department store moves to trim costs and turn around slowing sales.
The move will affect roughly 2,350 positions across its corporate office and stores, company spokesman Chris Grams said.
“As we prepare to deploy a recent strategy to satisfy the needs of an everchanging consumer and marketplace, we made the difficult decision to scale back our workforce by 3.5% to turn into a more streamlined company,” the corporate said in a press release.
The corporate notified employees in regards to the layoffs on Thursday and the last day for impacted employees will probably be Jan. 26.
Stores that will probably be shuttered are situated in Arlington, Va.; San Leandro, Calif.; Lihue, Hawaii; Simi Valley, Calif. and Tallahassee, Fla. The stores will close in early 2024, Grams added.
Macy’s is the center of an effort to show the roughly 166-year-old department store right into a brand that resonates with consumers who’re shopping online, on the lookout for value and turning to competitors including e-commerce retailers like Amazon and Shein, big-box players like Goal and off-price names like TJX-owned T.J.Maxx as a substitute of its stores. As a part of that push, Macy’s is overhauling its private label brands, opening smaller shops outside of the mall and looking out to its beauty chain, Bluemercury, and higher-end department store, Bloomingdale’s, to drive growth.
In the autumn, the corporate said it could confide in 30 smaller stores in strip malls over the following two years. Macy’s has been higher known for large mall stores, but the corporate is attempting to chase consumers within the suburbs who’re going to outdoor shopping centers a brief drive away for groceries or a recent outfit.
Macy’s, the parent company that features its namesake brand, Bloomingdale’s and Bluemercury, may even get a recent leader soon. Tony Spring, CEO of Bloomingdale’s, will step into the CEO role for Macy’s in early February as outgoing CEO Jeff Gennette retires.
On the corporate’s earnings call in October, Chief Financial Officer and Chief Operating Officer Adrian Mitchell hinted that Macy’s would take one other hard have a look at its stores. He said the corporate needed to “deliver relevant products, strong value and a more enjoyable shopping experience,” and a few of that will include “optimizing our physical footprint.”
“We are committed to bringing more inspiration on a every day basis to our customers,” he said. “We look ahead to sharing more on how that ladders to long-term profitable growth on our fourth quarter call.”
Mitchell also told investors on the decision that Macy’s “anticipated closure of lower than 10 locations in early 2024.”
Yet Macy’s sales and stock performance have lagged. The corporate has not yet reported its holiday quarter, but said in October that it expected same-store sales to say no by as much as 7% for its fiscal 2023. It’s expected to report fiscal fourth-quarter earnings in late February.
Shares of the corporate closed on Thursday at $17.93, down nearly 11% to date this 12 months. That compares to the roughly flat performance of the S&P 500 in the course of the same period.
Macy’s has 723 locations across the country, as of Oct. 28, the tip of probably the most recently reported quarter. Nearly all of those — roughly 500 —are its namesake stores, followed by 158 Bluemercury stores and 56 Bloomingdale’s stores.
The department store chain’s footprint has shrunk lately, nevertheless. About 4 years ago, Macy’s announced one other major layoff and wave of store closures. It made the announcement in February 2020, just weeks before the Covid pandemic led to lockdowns and the temporary shuttering of many malls and retail stores across the country.
On the time, Macy’s said it could shut 125 stores over the next three years and slash about 2,000 corporate jobs, because it closed its Cincinnati headquarters and tech offices in San Francisco.
The corporate is reconsidering its store count again.
In March 2023, Gennette said the corporate was “evaluating the proper number and mixture of on- and off-mall locations,” and added that the shopper and retail backdrop had modified for the reason that February 2020 announcement. He said since that 2020 announcement, Macy’s had closed about 80 namesake locations and had plans to soon close one other five.
“We’ve shuttered our most vital underperformers, exited dying centers and improved the prevailing store experience, while delaying closures of others which might be money flow positive,” he said on the March call. “Today, roughly 99% of our mall base is profitable on a four-wall basis.”
The news on Thursday was first reported by The Wall Street Journal.
