Macy’s Inc. will lay off approximately 2,500 employees as a result of cost reductions and organizational changes, the company announced. The employees will be eligible for severance.
Within the Macy’s store organizational structure, the company will combine its Midwest and North region, creating a new North Central Region, which will reduce its ongoing number of regions to seven from the current eight. The number of store districts is also being reduced, as nine districts are being combined with nearby districts, reducing the number of districts to 60 from the current 69. Macy’s stores are being reallocated within the seven regions and 60 districts to “equalize workloads and spans of control,” according to the company.
Organizational changes under Merchandise Planning include the elimination of the district planner role for soft home categories; responsibility for soft home will be shifted to the regional and national level. The company reasoned that home assortments, unlike other categories such as apparel and accessories, change less often and are less subject to localization.
“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,” the company stated.
The company will also “trim” central office, administrative, and back-of-the house expenses across the company. This involves non-payroll costs as well as reductions in workforce.
According to the retailer, these corporate changes are expected to generate savings of approximately $100 million per year, beginning this year.
“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,” said Macy’s Inc.’s chairman, president and CEO Terry Lundgren.
“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,” he added.
Macy’s Inc. also announced that it is closing five Macy’s stores in early spring, in Mesa, AZ; Overland Park, KS; Florissant, MO; Irondequoit, NY; and Murray, UT, affecting a total of 412 associates. “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 laid off due to the store closings will be offered severance benefits.
“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.
Eight new Macy’s and Bloomingdale’s stores are currently planned. New Macy’s stores will open in Sarasota, FL; Las Vegas; The Bronz, NY, Ponce, PR; and Miami, FL; new Bloomingdale’s stores will open in Palo Alto, CA; Honolulu, HI; and Miami, FL.
With the announcement of the above layoffs, the company will continue to add positions in certain parts of the company, including 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 175,000 associates, according to the company.