Macy’s Inc. is said to be looking at downsizing to two divisions from the current four.

This story first appeared in the November 14, 2008 issue of WWD. Subscribe Today.

Sources said the plan would fold Macy’s Florida in Miami and Macy’s Central in Atlanta into the New York-based Macy’s East and San Francisco-based Macy’s West divisions.

A Macy’s spokesman declined to comment directly on the speculation, which surfaced Thursday, a day after the retailer reported a net loss of $44 million for the third quarter. “We can’t comment on rumors, but we are fully focused on running the business for holiday,” said spokesman Jim Sluzewski.

A consolidation would affect hundreds of employees, save the corporation millions of dollars, and take it one step closer to being totally centralized like most of its competition, including Kohl’s Corp., J.C. Penney Co. Inc. and Sears Holdings Corp.

Earlier this year, Macy’s shrank from seven to four divisions, eliminating 2,550 positions from buyers to back-office workers and senior officials. Macy’s North, Midwest and Northwest divisions were folded into the Macy’s East, Central and West divisions, respectively. The Bloomingdale’s division of Macy’s Inc. is not affected by the regional consolidations.

Sources said any further streamlining wouldn’t happen until next year.

Typically, the consolidations affect back-office functions, such as payroll, accounts payable, security, personnel, advertising and credit. Although the cutbacks are dramatic, many employees get reassigned and those at the surviving divisional headquarters assume greater workloads.

“If Macy’s does come out with a lousy Christmas, this consolidation is something they can show Wall Street and say that they haven’t been sitting still in this difficult economy,” said one source. “The hard part of all of this is telling people they’re leaving. It’s hard.”

On Wednesday, Macy’s said it was cutting capital expenditures plans for 2009 almost in half to $550 million to $600 million from around $1 billion. Another source said an $8 million plan to renovate the 151 West 34th Street entrance to the Macy’s Herald Square flagship was scrapped.

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