Macy’s Inc. announced a reorganization of its operating structure that would combine two of its regions, dissolve nine districts into neighboring ones and lay off about 2,500 people. The company expects to save $100 million a year from the moves, starting with 2014.
“Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy’s, Inc.,” said CEO Terry Lundgren in a statement. “We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers.”
Macy’s Inc. will combine its Midwest Region with the North Region to create what it will call the North Central Region, leaving a total of seven regions.
The elimination of nine districts will bring the total number of districts nationwide to 60. The company said, “In some cases, Macy’s stores are being reallocated within the seven regions and 60 districts to equalize workloads and spans of control.”
With regard to the lay-offs, the company said it will be “Trimming certain central office, administrative and back-of-the-house expenses across the company,” and added that in some departments—online operations, direct-to-consumer fulfillment and new stores—they will actually make new hires. After the lay-offs and new hires, Macy’s Inc. says its workforce will total about 175,000 associates.
Finally, five existing Macy’s stores in Mesa, Arizona; Overland Park, Kansas; Florissant, Missouri; Irondequoit, NY; and Murray, Utah will close.
However, new Macy’s stores are scheduled to open in Sarasota and Miami, Florida; Las Vegas, Nevada; The Bronx, NY; and Ponce, Puerto Rico. New Bloomingdale’s stores will open in Palo Alto, California; Honolulu, Hawaii; and Miami, Florida. This will bring the total store count across the Macy’s and Bloomingdale’s nameplates to 844 stores in 45 states, the District of Columbia, Puerto Rico and Guam.
Macy’s announced separately that November and December same-store sales rose 3.6 percent—4.3 percent including licensed departments—and reaffirmed its FY guidance of $3.80 to $3.90 per diluted share, excluding the effects of the reorganization. Those effects are estimated to be in the range of $120 million to $135 million in charges.