US department store retailer Macy’s Inc is axing a further 3,900 corporate and management jobs as it tries to bring costs in line with falling sales.
The restructuring moves revealed today (25 June) are expected to save the company US$365m in fiscal 2020, and a further US$630m a year going forward.
The measures come after the company in February said it would close about 125 of its least productive stores and slash 9% jobs – roughly 2,000 positions – to save US$1.5bn a year over the next three years.
The latest cuts are in addition to staff reductions in its stores, supply chain and customer support network, which it “will adjust as sales recover.”
According to the retailer’s website, it had 125,000 employees at the end of last year, and operated 775 Macy’s, Bloomingdale’s and Bluemercury stores.
“Covid-19 has significantly impacted our business,” says Jeff Gennette, chairman and CEO. “While the re-opening 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.
“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 $4.5bn in new financing will also make us a more stable, flexible company.”
The retailer’s stores were closed from 18 March through 4 May 2020 as part of nationwide measures to try to halt the spread of the coronavirus.
For the first quarter to 2 May, Macy’s net sales almost halved, tumbling 45% to US$3.02bn, from $5.5bn a year earlier. The retailer also swung to a net loss of $652m from a net income of $136m the year before.
Revealing the results, Gennette said the company’s reopened stores were performing better than anticipated, with strong sell-through of seasonal merchandise, and putting Macy’s on track to exit the second quarter in a clean inventory position.
“The holiday season will be crucial, and the team is working now to get the right merchandise and assortment in place,” he added.
In February, before the full impact of Covid-19 became apparent, Macy’s was already embarking on major structural changes across the organisation through its new ‘Polaris strategy.’
Steps set out at the time included reshaping Macy’s supply chain and plans to build four US$1bn “power” private brands – including a new private brand sourcing strategy to reduce costs and improve speed. A focus on quality fashion and accelerated digital growth were also mentioned.
Macy’s will release its first-quarter earnings results on 1 July.