Last week was a big one for Macy’s.
Macy’s Inc. issued its results for 2018, projected modest sales gains for the year ahead, and laid off 100 executives at the vice president level and above.
But there’s another side to the streamlining. Hundreds of Macy’s executives were given new titles, and not necessarily elevated ones, WWD learned.
Macy’s eliminated two vice president levels — group vice president, then the title of chief vice president, a rather unusual one in retailing.
“As part of the reorganization we announced last week, we also did a title reset,” Cheryl Heinonen, Macy’s senior vice president of corporate communications, told WWD.
“Over the years as Macy’s acquired nameplates and merged internal divisions, we ended up with a patchwork of titling systems,” Heinonen explained. “The steps we took this week reduced the number of vice president levels and reset titles with consistency across the entire company. There was no negative compensation impact. The structural changes we made moved common activities under single leaders, which will reduce the complexity of decision-making and allow us to move faster. The title reset helps us reduce hierarchy in our culture.
“Most of the chiefs are now executive vice presidents and group vice presidents are either vice presidents or senior directors. It’s been a real patchwork here,” said Heinonen.
The Macy’s executive added that the tapestry of titles proved to be “a stumbling block as you tried to move people into different roles.” There could have been a vice president in one group with a different set of responsibilities and different compensation from another vice president in another group.
“There have been parity issues,” Heinonen acknowledged. “It’s never been consistent, but this change brings consistency across the organization. There are less layers, more consistency across the organization and it’s now easier for us to move someone into another part of the organization.”
Macy’s Inc., which operates the Macy’s and Bloomingdale’s department stores as well as the Blue Mercury beauty chain, expects to save $100 million annually through the 100 layoffs and through other cost-cutting measures like not filling some vacated positions, and vendor consolidation where Macy’s has been buying similar products from two vendors and shifts to one, for economies of scale.
While a title change could demoralize a worker, Macy’s apparently made the effort to communicate that no one was getting a pay cut and that most people’s responsibilities weren’t getting trimmed.
“We had really good conversations with the entire organization,” Heinonen said. “It wasn’t easy going through it, but we were really clear that compensation isn’t being reduced and that most actual roles weren’t reduced. We had lots of good, long conversations over the course of the week.”
Last week, Macy’s chief executive officer Jeff Gennette said 100 executives departing represent “a big chunk” of the management team, though he wouldn’t specify the percentage.
Gennette said the company continues to be “well-managed” and that it is preserving “customer-facing colleagues.”
With the streamlining and title shifts, some individuals are being shifted to expanded roles to support growth strategies, though some others might see the reverse.
As reported, for the fourth quarter and year, Macy’s results were mixed.
In the quarter, net income dropped to $740 million from $1.34 billion, but adjusted earnings per share came in at $2.73, above the $2.53 expected.
Total revenues reached $8.46 billion, down from last year’s $8.67 billion, but slightly above the $8.45 billion expected. Comparable sales rose 0.7 percent.
For the year, net income dropped to $1.1 billion from $1.56 billion, while net sales were up slightly to $24.97 billion from $24.94 billion in 2017. Comparable sales rose 2 percent.