NEW YORK — Seventy is the magic number at Macy’s Inc.
The retailer is trying nudge some of its older executives toward the door with buyout packages.
To qualify for the offer, the employee must be at least 55 years old with enough years at the company that their tenure and age add up to at least 70. So, a 55-year-old would need at least 15 years of service to qualify, a 60-year-old would need 10 years and so on.
A spokesman for the retailer said the buyouts are a “voluntary separation opportunity to certain senior executives in central stores, office and support functions” in order to “reduce ongoing expense and streamline management.”
About 360 executives qualify for the offer, a small slice of the company’s 20,000-strong executive ranks.
“The terms of separation will vary depending on each individual’s situation,” the spokesman said. “The company will not know how many executives are interested in accepting the offer until later in the year. For those who accept, exit dates are expected in spring 2016.”
The end result of decades of consolidation in the department store channel, Macy’s now finds itself rapidly evolving to keep up with an increasingly fickle and digital consumer under the guidance of Terry J. Lundgren, chairman and chief executive officer (who, for the record, would qualify for the buyout if it were offered to him).
Lower expenses are clearly part of the plan and it would seem a leaner management structure is also becoming important.
Macy’s, which has sales of more than $28 billion, said in September that it would shutter up to 40 underperforming stores as it repositions to an omnichannel stance. The closures came on top of 14 other stores that went dark earlier in the year for the chain, which now has about 775 doors.
The retailer is also following Saks Fifth Avenue and Nordstrom into the outlet business and is bringing in more outside retail concepts, such as LensCrafters, which will be added to as many as 500 Macy’s stores over the next three years.
The company has been under the scrutiny of activist investor Jeffrey Smith of Starboard Value, who said in July that Macy’s could be worth as much as $125 a share if it unlocked the value of its real estate.
But the company last week issued weaker than expected third-quarter results and revised its outlook for the year down sharply, hurting the stock, which closed up 0.2 percent to $38.70 Monday.
The company said it had considered forming a real estate investment trust, or REIT, but decided against it, saying it “does not offer sufficient upside potential for value creation.”