Macy’s is restructuring to align its cost base with anticipated near-term sales as the business recovers from the impact of the COVID-19 pandemic, including the closure of stores from March 18 through May 4, 2020 and gradual reopening.
The company will reduce corporate and management headcount by approximately 3,900. Additionally, Macy’s has reduced staffing across its stores portfolio, supply chain and customer support network, which it will adjust as sales recover.
“COVID-19 has significantly impacted our business. While the reopening of our stores is going well, we do anticipate a gradual recovery of business, and we are taking action to align our cost base with our anticipated lower sales,” said Jeff Gennette, chairman and CEO of Macy’s, Inc. “These were hard decisions as they impact many of our colleagues. I want to thank all of our colleagues, those who have been active and those on furlough, for helping us get through this difficult time, and I want to express my deep gratitude to the colleagues who are departing for their service and contributions. We look forward to welcoming back many of our furloughed colleagues the first week of July.”
“We know that we will be a smaller company for the foreseeable future, and our cost base will continue to reflect that moving forward. Our lower cost base combined with the approximately $4.5 billion in new financing will also make us a more stable, flexible company,” Gennette added.
The company expects the actions to generate expense savings of approximately $365 million in fiscal 2020 and approximately $630 million on an annualized basis. These savings will be additive to the anticipated $1.5 billion in annual expense savings announced in February, which the company expects to fully realize by year-end 2022.
For fiscal 2020, the company expects pre-tax costs of approximately $180 million for these restructuring activities, the majority of which will be recorded in the second quarter and all of which will be in cash.