Macy's (M) Plans 2,500 Job Cuts
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Price: $19.04 +0.16%
EPS Growth %: -75.0%
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Today's EPS Names:
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EPS Growth %: -75.0%
Financial Fact:
Federal, state and local income tax expense: -11M
Today's EPS Names:
ESCA, LICT, NKSH, More
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Macy’s, Inc. (NYSE: M) 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 officer.
“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 175,000 associates.
Store Openings/Closings
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 sale).
* Fiesta Mall, Mesa, AZ (159,000 square feet; opened in 1979; 98 associates);
* 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; 88 associates);
* Medley Centre, Irondequoit, NY (129,000 square feet; opened in 1990; 96 associates);
* Fashion Place Mall, Murray, UT (26,000 square feet; opened in 1988; 42 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 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 and Guam.
(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 officer.
“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 175,000 associates.
Store Openings/Closings
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 sale).
* Fiesta Mall, Mesa, AZ (159,000 square feet; opened in 1979; 98 associates);
* 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; 88 associates);
* Medley Centre, Irondequoit, NY (129,000 square feet; opened in 1990; 96 associates);
* Fashion Place Mall, Murray, UT (26,000 square feet; opened in 1988; 42 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 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 and Guam.
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