Annual cost savings of approximately $100 million per year are
expected, beginning in 2014;
Company also details
normal-course store openings and closings
CINCINNATI--(BUSINESS WIRE)--Jan. 8, 2014--
Macy’s, Inc. (NYSE:M) today announced it will implement focused cost
reductions, including organizational changes, as it prepares to sustain
profitable sales growth in the years ahead.
(Editor’s Note: Macy’s, Inc. this afternoon also issued a separate
news release announcing sales results for the 2013 holiday season and
initial sales and earnings guidance for FY2014.)
“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. 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,” said
Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive
“The actions being announced today reinforce our focus on continuous
improvement in our M.O.M. strategies (My Macy’s localization,
Omnichannel integration and Magic Selling customer engagement) and will
help us to maximize the impact of the exceptional talent we enjoy at
every level of our organization,” Lundgren said.
Changes being announced today are estimated to generate savings of
approximately $100 million per year, beginning in 2014. These savings
are incorporated in the company’s 2014 earnings guidance (announced
today in a separate news release).
In conjunction with the implementation of these cost reductions, as well
as of store closings and asset impairment charges, an estimated $120
million to $135 million of charges, of which $50 million to $55 million
is expected to be non-cash, will be booked in the fourth quarter of
2013. These charges were not previously included in earnings guidance
provided by the company.
Operating Cost Reductions
Cost reductions and organizational changes reflect learnings from the
implementation of business strategies and new technologies at Macy’s in
recent years. Changes include:
Within the Macy’s stores organizational structure, combining the
Midwest Region with the North Region – thus creating a new North
Central Region and reducing the ongoing number of regions to seven
from the current eight. Nine existing stores districts also are being
combined with nearby districts – thus reducing the ongoing number of
districts to 60 from the current 69. In some cases, Macy’s stores are
being reallocated within the seven regions and 60 districts to
equalize workloads and spans of control;
In the Merchandise Planning organization, eliminating the district
planner role for soft home categories. Experience has shown that home
assortments, unlike apparel and accessories, change less often, are
more congruent across the country and less subject to localization.
Going forward, responsibility for soft home planning will be shifted
to the regional and national level.
Realigning, combining and reducing some positions in Macy’s stores in
a manner that improves productivity and efficiency while also
fostering high standards for customer engagement and service.
Trimming certain central office, administrative and back-of-the-house
expenses across the company. This involves reductions in workforce, as
well as in non-payroll costs.
Approximately 2,500 employees are expected to be laid off and are
eligible for severance as a result of these organizational changes.
Other associates are being reassigned with new duties or transferred;
some open positions will not be filled. Meanwhile, the company continues
to add positions in other parts of the company – such as in online
operations, direct-to-consumer fulfillment and new stores. In total, the
Macy’s, Inc. workforce is expected to remain at a level of approximately
Macy’s, Inc. today also detailed a series of normal-course adjustments
to its portfolio of Macy’s and Bloomingdale’s stores across the country.
“Our stores remain a very important component of our omnichannel
strategy for both the Macy’s and Bloomingdale’s brands. We continue to
maintain a very strong nationwide network of stores through an ongoing
process of selectively adding new locations while also trimming those
that no longer meet our performance requirements or where our leases
were not renewed,” Lundgren said.
The company is announcing today that it will close the following five
Macy’s stores in early spring 2014. Final clearance sales will begin on
Monday, Jan. 13 and run for between 10 and 11 weeks (except for Fashion
Place Mall, which will close on Sunday, Jan. 12 with no final clearance
Fiesta Mall, Mesa, AZ (159,000 square feet; opened in 1979; 98
Metcalf South Shopping Center, Overland Park, KS (216,000 square feet;
opened in 1967; 88 associates);
Jamestown Mall, Florissant, MO (200,000 square feet; opened in 1994;
Medley Centre, Irondequoit, NY (129,000 square feet; opened in 1990;
Fashion Place Mall, Murray, UT (26,000 square feet; opened in 1988; 42
The company is committed to treating associates affected by store
closings with respect and openness. Associates displaced by store
closings may be offered positions in nearby stores where possible.
Eligible full-time and part-time associates who are laid off due to the
store closing will be offered severance benefits.
Eight new and replacement Macy’s and Bloomingdale’s stores are currently
planned and/or under construction, as previously announced.
New Macy’s stores will be opening in:
University Town Center, Sarasota, FL (160,000 square feet; to open
in fall 2014; approximately 175 associates);
Shops at Summerlin, Las Vegas, NV (180,000 square feet; to open in
fall 2014; approximately 160 associates);
Mall at Bay Plaza, The Bronx, NY (160,000 square feet; to open in
fall 2014; approximately 225 associates);
Plaza Del Caribe, Ponce, PR (150,000 square feet; to open in fall
2015; approximately 275 associates);
Mall at Miami Worldcenter, Miami, FL (195,000 square feet; to open
in fall 2016; approximately 150 associates).
New Bloomingdale’s stores will be opening in:
Stanford Shopping Center in Palo Alto, CA (120,000 square feet; to
open in fall 2014). It will be an all-new store to replace an
older store in the same shopping center;
Ala Moana, Honolulu, HI (167,000 square feet; to open in fall
2015; approximately 250 associates);
Mall at Miami Worldcenter, Miami, FL (120,000 square feet; to open
in fall 2016; approximately 225 associates).
Once all of these changes have been implemented, Macy’s, Inc. will
operate 844 stores in 45 states, the District of Columbia, Puerto Rico
Macy’s, Inc., with corporate offices in Cincinnati and New York, is one
of the nation’s premier retailers, with fiscal 2012 sales of $27.7
billion. The company operates about 840 department stores in 45 states,
the District of Columbia, Guam and Puerto Rico under the names of Macy’s
and Bloomingdale’s, as well as the macys.com and bloomingdales.com
websites. The company also operates 13 Bloomingdale’s Outlet stores.
Bloomingdale’s in Dubai is operated by Al Tayer Group LLC under a
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are
based upon the current beliefs and expectations of Macy’s management and
are subject to significant risks and uncertainties. Actual results could
differ materially from those expressed in or implied by the
forward-looking statements contained in this release because of a
variety of factors, including conditions to, or changes in the timing
of, proposed transactions, prevailing interest rates and non-recurring
charges, competitive pressures from specialty stores, general
merchandise stores, off-price and discount stores, manufacturers’
outlets, the Internet, mail-order catalogs and television shopping and
general consumer spending levels, including the impact of the
availability and level of consumer debt, the effect of weather and other
factors identified in documents filed by the company with the Securities
and Exchange Commission.
(Note: additional information on Macy’s, Inc., including past news
releases, is available at www.macysinc.com/pressroom)
Source: Macy’s, Inc.
Jim Sluzewski, 513-579-7764