Department store operator Macy's Inc is to axe 2,300 management jobs as part of a restructuring that will see it consolidate into three divisions in an attempt to reduce costs and offset falling sales.
 
By merging Minneapolis-based Macy's North into New York-based Macy's East, its St. Louis-based Macy's Midwest division into Atlanta-based Macy's South, and its Seattle-based Macy's Northwest into San Francisco-based Macy's West, the company hopes to focus more effectively on local markets.
 
The Atlanta-based division will be renamed Macy's Central and all current store locations will remain in place.
 
"Improving sales and earnings performance requires innovation in engaging our customer more effectively in every store, as well as reducing total costs," said Terry J Lundgren, Macy's chairman, president and chief executive officer.
 
He added that the company intends to "drive sales growth by improving our knowledge at the local level and then acting quickly on that knowledge."
 
The plan follows on from the success of an initiative, called 'My Macy's,' trialled over the past year, to make sure customers near each Macy's store could find merchandise and size ranges tailored to their needs.
 
Under the new set-up, Macy's locations will now be grouped into 20 'districts' of about 10 stores - compared with an average of 16 to 18 currently overseen by each regional manger.
 
Districts will be based in cities including Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Kansas City, Minneapolis, Pittsburgh, Portland, St Louis, Salt Lake City and Seattle.
 
Each new district will have a manager and a small staff of store merchandisers and planners. These districts will report into their divisions through new regional offices being established in Chicago, Cincinnati, St. Louis and Seattle.
 
New systems and technology are also being rolled out in 2008 for store-level assortment planning, allowing merchants to stock each Macy's store with items, brands, garment sizes and colours tailored to local customers.
 
The company said its Miami-based Macy's Florida and New-York based Bloomingdale's divisions are not affected by the changes.

The job losses were unveiled as Macy's reported a 7.1% fall in same-store January sales, which it blamed on a lower number of trading days compared with the same period last year.

The consolidation process is expected to reduce Macy's SG&A (selling, general and administrative) expenses by approximately $100m, beginning in 2009. The partial-year reduction in SG&A for 2008 is estimated at $60m.

However, the changes will also incur one-time pre-tax charges of $150m in 2008.

Macy's Inc expects same-store sales for fiscal 2008 to be down 1.0% to up 1.5% and earnings per share of $1.85 to $2.15, excluding costs.

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