Retailer Announces Other Personnel and Real Estate Efficiencies Targeting $400 Million in Cost Savings
Macy's Inc. launched a series of cost-efficiency measures following same store sales declines of 5.2% in November and December. Among the cost-reduction actions the department store chain is implementing include closing 40 stores and a call center and laying off up to 4,800 employees.
Four of the 40 stores marked for closure have already been shuttered. The remaining 36 will close in early spring.
Macy's said the measures will reduce expenses by approximately $400 million.
"In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations," said Terry J. Lundgren, chairman and CEO of Macy's. "Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share in our core Macy's and Bloomingdale's omnichannel businesses faster and with more intensity.”
The holiday-selling season was challenging for the Cincinnati-based retailer. On an owned basis, comparable sales declined by 5.2% in the combined November/December sales period.
Macy’s attributed the sales drop to historically warm weather in northern climate zones where both Macy's and Bloomingdale's have a heavy retail presence. About 80 percent of the company's year-over-year declines in comparable sales can be attributed to sales shortfalls of cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves, the company said.
Macy's said it plans to cut an average of three to four positions in each of its 770 stores (out of an average workforce of approximately 150 associates in each store), for a total of about 3,000 positions nationwide. Half of those whose positions are being eliminated are expected to be placed in other positions.
The retailer said it will also offer voluntary buy-outs to about 165 senior executives in Macy's and Bloomingdale's who meet certain age and service requirements and agree to leave the company beginning in spring 2016. The company said it will not replace approximately 35 percent of these executive positions.
Another 600 positions will be eliminated in back-office organizations, with about 150 of these associates reassigned to other positions.
Macy's plans to close its call center in St. Louis in spring 2016, affecting approximately 750 employees. Work currently performed in St. Louis will be divided among existing credit and customer services centers in Tempe, AZ, Clearwater, FL, and Mason, OH, where the retailer plans to add a total of about 640 positions.
The company added it plans to pursue other real estate initiatives to trim costs. It has hired Eastdil Secured to pitch partnerships or joint ventures for the company's mall-based properties, as well as Macy's flagship real estate assets in Manhattan, San Francisco, Chicago and Minneapolis.
The retailer said it is looking to hire a senior-level real estate executive to oversee and manage its real estate, including any partnerships or joint ventures it forms with outside investors.
Macy's Store Closings
• Irvine Spectrum, Irvine, CA (140,000 square feet; opened in 2002; 112 associates);
• Country Club Plaza, Sacramento, CA (165,000 square feet; opened in 1961; 111 associates);
• Westfield Century City, Los Angeles, CA (136,000 square feet; opened in 1976; 108 associates). Note that this store will be closed in January 2016 and replaced with a new, larger store to open in this same shopping center in spring 2017;
• Enfield Square main store, Enfield, CT (166,000 square feet; opened in 1971; 84 associates);
• Enfield Square furniture/home/men's store, Enfield, CT (76,000 square feet; opened in 1971; 20 associates);
• North DeKalb Mall, Decatur, GA (190,000 square feet; opened in 1965; 89 associates);
• Kailua, HI (59,000 square feet; opened in 1946; 57 associates);
• Palouse Mall, Moscow, ID (41,000 square feet; opened in 1979; 47 associates);
• Northwoods Mall, Peoria, IL (165,000 square feet; opened in 1985; 62 associates);
• Cortana Mall, Baton Rouge, LA (243,000 square feet; opened in 1976; 108 associates);
• Valley Mall, Hagerstown, MD (120,000 square feet; opened in 1999; 59 associates);
• Berkshire Mall, Lanesborough, MA (111,000 square feet; opened in 1994; 58 associates);
• Eastfield Mall, Springfield, MA (127,000 square feet; opened in 1994; 71 associates);
• The Shoppes at Stadium, Columbia, MO (140,000 square feet; opened in 2003; 81 associates);
• Middlesex Mall, South Plainfield, NJ (81,000 square feet; opened in 1976; 69 associates);
• McKinley Mall main store, Buffalo, NY (88,000 square feet; opened in 1989; 65 associates);
• McKinley Mall home store, Buffalo, NY (31,000 Square feet; opened in 1989; 10 associates);
• Arnot Mall, Horsehead, NY (120,000 square feet; opened in 1995; 79 associates);
• Hudson Valley Mall, Kingston, NY (121,000 square feet; opened in 1995; 72 associates);
• Eastern Hills Mall, Williamsville, NY (127,000 square feet; opened in 1971; 80 associates);
• Cary Towne Center, Cary, NC (107,000 square feet; opened in 1991; 63 associates);
• Chapel Hill Mall, Akron, OH (169,000 square feet; opened in 1967; 91 associates);
• Midway Mall, Elyria, OH (105,000 square feet; opened in 1990; 64 associates);
• Quail Springs Mall, Oklahoma City, OK (146,000 square feet; opened in 1986; 87 associates);
• Pony Village Mall, North Bend, OR (41,000 square feet; opened in 1980; 54 associates);
• Roseburg Valley Mall, Roseburg, OR (40,000 square feet; opened in 1980; 59 associates);
• Suburban Square, Ardmore, PA (102,000 square feet; opened in 1930; 74 associates);
• Century III Mall, West Mifflin, PA (173,000 square feet; opened in 1979; 101 associates);
• Ridgmar Mall, Ft. Worth, TX (181,000 square feet; opened in 1998; 92 associates);
• Chesapeake Square, Chesapeake, VA (95,000 square feet; opened in 1999; 69 associates);
• Virginia Center Commons, Glen Allen, VA (110,000 square feet; opened in 1993; 81 associates);
• Peninsula Town Center, Hampton, VA (173,000 square feet; opened in 1977; 109 associates);
• Military Circle Mall, Norfolk, VA (153,000 square feet; opened in 1976; 95 associates);
• Regency Square main store, Richmond, VA (100,000 square feet; opened in 1990; 100 associates);
• Regency Square furniture/home/men's store, Richmond, VA (124,000 square feet; opened in 1990; 35 associates);
• Downtown Spokane, Spokane, WA (374,000 square feet; opened in 1947; 94 associates).
Macy's stores closed in the final three quarters of 2015 (previously announced):
• Owings Mills Mall, Owings Mills, MD (164,000 square feet; opened in 1986; 90 associates);
• Bedford, NH (180,000 square feet; opened in 1966; 105 associates);
• Essex Green Shopping Center, West Orange, NJ (93,000 square feet; opened in 1975; 101 associates). Note that this location was converted to a Macy's Backstage store.
• Downtown Pittsburgh, PA (1,158,000 square feet; opened in 1946; 170 associates).
Macy’s Store Openings
Five new Macy's and Bloomingdale's stores are currently planned or under construction.
New Macy's stores will be opening in:
• Ka Makana Ali'i, Kapolei, HI (103,000 square feet; to open in fall 2016; approximately 180 associates).
• Westfield Century City, Los Angeles, CA (a 155,000 square-foot store to open in spring 2017 to replace an older and smaller Macy's store in this very successful shopping center).
• Fashion Place, Murray, UT (160,000 square feet; to open in spring 2017; approximately 150 associates).
New Bloomingdale's stores will be opening in:
• Westfield Valley Fair Shopping Center, San Jose, CA (150,000 square feet; to open in fall 2017; approximately 250 associates).
• The SoNo Collection, Norwalk, CT (150,000 square feet; to open in fall 2018; approximately 200 associates).
In addition, Macy's said it is still planning to open about 50 additional Macy's Backstage off-price locations over the next two years, most of which are planned inside existing Macy's stores. It also said it will continue with plasn to open about 40 freestanding Bluemercury specialty beauty stores.