NEW YORK -- The cost-cutting continues at R.H. Macy & Co.
The company said Friday it would slash 700 jobs in its Macy's West division, which includes 31 Macy's and 20 Bullock's department stores.
The cuts are part of the bankrupt retailer's five-year business plan. They will affect various levels of management but not sales associates.
As reported, the company is negotiating with the developer of the Northridge Fashion Center in Los Angeles to rebuild the Bullock's store there. That unit was destroyed in the Jan. 17 earthquake. When the store is rebuilt, Macy's said it hopes to rehire many of its 250 employees. The Bullock's unit in Sherman Oaks was also severely damaged by the quake. Macy hopes to reopen it but did not say when. Meanwhile, the 700 people who are losing their jobs will be offered outplacement services and, in most cases, severance packages. Bullock's Northridge workers will be offered severance and health-care benefits according to seniority, plus counseling and outplacement services.
Michael Steinberg, chairman and chief executive officer of Macy's West, said the layoffs were not connected to the Los Angeles earthquake. He described business in California as "a mixed bag" with some stores rebounding and others still suffering in the tough economy.
"These staff reductions are a painful but necessary step in our efforts to remain competitive and return Macy's to profitability," he said. He added that at Macy's West, "There's still 17,000 people working."
Joseph Cicio, chairman and ceo of I. Magnin, said this wave of job cuts will not affect the specialty chain, which is a separate division of R.H. Macy. Magnin's was trimmed from 19 stores to 12 last year.
The Macy's West move is not thought to be a reaction to Federated Department Stores buying a chunk of Macy's debt at the beginning of the month or to the losses and rebuilding costs associated with the earthquake, said analysts.
Macy's is generally perceived to be progressing in its bankruptcy plans, with operating profits improving. Last month, the company said its operating net tripled for the first quarter ended Oct. 30, to $41.9 million, mainly as a result of cost cutting at corporate and store levels.
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