Macy’s Inc., in a sweeping announcement on Wednesday, unveiled steps to close 14 Macy’s stores this spring, restructure its merchandising and marketing teams to reflect omnichannel priorities and consider Macy’s outlets for the first time.
The company also disclosed two new stores, on top of the seven previously revealed, and said it is making a string of adjustments to its field and store operations to increase productivity and efficiency.
Officials couched the changes as a redeployment of certain resources to where there are the best opportunities for growth and serving customers, noting both job losses across a range of areas — from stores to district offices to central merchandising and marketing — as well as hiring plans, principally for upcoming stores and the dot-com operation in San Francisco. On balance, the workforce is expected to remain at about 175,000 associates, Macy’s said.
“Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed — to prepare for what’s next,” said Terry J. Lundgren, Macy’s chairman and chief executive officer.
The two new stores planned are a 150,000-square-foot Bloomingdale’s, which will open in San Jose, Calif., in fall 2017, and a 155,000-square-foot Macy’s replacement store opening in Westfield Century City in Los Angeles in November 2016. The existing Macy’s there will be closed in January 2016 and razed to accommodate a redevelopment of the mall. Macy’s previously stated that its first international store will open in 2018 at Al Maryah Central, a “super-regional shopping destination” under development on Al Maryah Island in Abu Dhabi.
Lundgren said Monday that the company is sticking to its “M.O.M.” strategy involving the My Macy’s localization efforts, omnichannel integration and “magic selling” program for associates, which is designed to help them approach and connect better with customers.
“We are moving quickly,” said Lundgren in describing the wave of changes across the $28 billion Macy’s Inc. enterprise, which will have 830 stores after the 14 closings. “In many ways, this is a race to remain best-in-class — and to win with the customer,” he said.
Macy’s and Bloomingdale’s are restructuring their central merchandising and marketing functions in an effort to present assortments “seamlessly” across channels and provide “a single omnichannel view” in all categories. Instead of each division having separate marketing teams for stores and online, and separate merchandising teams for stores and online, they will each have one marketing team and one merchandising team covering both channels. That will lead to a loss of 115 positions at Macy’s and Bloomingdale’s together.
“Going forward, Macy’s and Bloomingdale’s will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops,” Lundgren said. “Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions.”
An average of two to three associates will be affected in each of Macy’s and Bloomingdale’s location, out of an average workforce of about 150 associates in each store, making for a total of about 2,200 affected associates nationwide.
At the district-level offices, planners are being eliminated so the planning will be done at regional and national levels. District offices also include merchants and managers for human resources, loss prevention and operations, for a total of 15 to 20 people supporting a group of stores.
Two district offices are being eliminated: in Salt Lake City, which will be covered by those in Colorado and Oregon, and in upstate New York, where two district offices will be merged to form one for New York North. That brings the count down to 58 district offices. There are 150 people across the country at the district level who will lose their jobs.
Macy’s said it is working to place as many employees affected by the cutbacks as possible.
The 14 stores being closed account for about $130 million in annual sales, some of which is expected to be retained in nearby stores and with online/mobile sales. Final clearance sales will begin Monday and run for eight to 12 weeks.
The changes should generate savings of about $140 million a year, beginning in 2015, which will be reinvested in technology and growth initiatives, the company said. Due to the merchandising and marketing restructuring, and store and field adjustments, as well as store closings and asset impairment charges, an estimated $100 million to $110 million of charges, of which about $80 million to $90 million are expected to be cash, will be booked in the fourth quarter of 2014.
On the hiring side, at Macy’s seven regional offices, teams will be strengthened to pump up thematic merchandising involving warm-weather strategies in southern states and traditional customers in northern climate zones, among other strategies.
Also, Macy’s said it will be adding 150 people at its dot-com operation in San Francisco and at its new fulfillment center in Tulsa, which is expected to begin operations in April, there will be 1,500 year-round hired and another 1,000 brought on for the holiday season.
Macy’s is also forming a team to explore the possibility of a Macy’s off-price business, and increasing fulfillment capacity in every full-line Macy’s and Bloomingdale’s store and at the five fulfillment centers located in Arizona, California, Connecticut, Tennessee and West Virginia. Last year, about $1 billion of Macy’s and Bloomingdale’s direct-to-customer shipments originated from Macy’s and Bloomingdale’s stores.
While Bloomingdale’s has been opening outlets, Macy’s has resisted, partly due to other priorities and partly because it has many locations around the country and is among the most aggressive promoters nationwide, frequently staging major price-cutting events.
Separately, Macy’s said that comparable sales, owned and licensed, rose by 2.7 percent in the combined November-December period, consistent with the company’s guidance for an increase of 1.8 percent to 2.8 percent in the full fourth quarter. “We feel very good about our performance in the November-December period as we reversed trend from a soft third quarter and set the stage for continued progress going forward,” Lundgren said.
Macy’s 14 store closings:
Metro Center, Phoenix, Arizona (107,000 square feet; opened in 1973; 88 associates)
Cupertino Square Mall, Cupertino, Calif. (177,000 square feet; opened in 1997; 111 associates)
Promenade, Woodland Hills, Calif. (192,000 square feet; opened in 1993; 112 associates)
Promenade furniture gallery, Woodland Hills, Calif. (81,000 square feet; opened in 1993; 19 associates)
Gulf View Square, Port Richey, Fla. (84,000 square feet; opened in 1981; 78 associates)
Northland Center, Southfield, Mich. (504,000 square feet; opened in 1954; 170 associates)
Wendover, Greensboro, N.C. (141,000 square feet; opened in 2002; 83 associates)
Ledgewood Mall, Ledgewood, N.J. (73,000 square feet; opened in 1994; 79 associates)
ShoppingTown Mall, DeWitt, N.Y. (120,000 square feet; opened in 1993; 94 associates)
Rotterdam Square, Schenectady, N.Y. (120,000 square feet; opened in 1995; 98 associates)
Kingsdale Shopping Center, Columbus, Ohio (108,000 square feet; opened in 1970; 115 associates)
Richmond Town Square, Richmond Heights, Ohio (165,000 square feet; opened in 1998; 105 associates)
Upper Valley Mall, Springfield, Ohio (156,000 square feet; opened in 1971; 79 associates)
Southland Mall, Memphis, Tenn. (150,000 square feet; opened in 1966; 112 associates)