On Thursday, Macy’s announced plans to reduce its personnel by 3.5% and eliminate five mall sites in order to reduce costs and improve sales.
According to business spokesman Chris Grams, the change will affect around 2,350 workers in its corporate offices and stores.
“As we prepare to deploy a new strategy to meet the needs of an ever-changing consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company,” the company said in a press release.
The corporation notified staff of the layoffs on Thursday, and the last day for affected employees will be January 26.
Stores in Arlington, Virginia, San Leandro, California, Lihue, Hawaii, Simi Valley, California, and Tallahassee, Florida will close. Grams stated that the stores would close in early 2024.
Macy’s is in the process of transforming the roughly 166-year-old department store into a brand that resonates with consumers who shop online, seek value, and prefer to shop at competitors such as e-commerce retailers such as Amazon and Shein, big-box players such as Target, and off-price names such as TJX-owned T.J. Maxx rather than in its stores.
As part of that effort, Macy’s is restructuring its private-label brands, creating smaller stores outside of malls, and relying on its beauty chain, Bluemercury, and higher-end department store, Bloomingdale’s, to fuel growth.
In the fall, the firm stated that it planned to add up to 30 smaller stores in strip malls over the next two years. Macy’s is better known for its massive mall locations, but the business is attempting to attract suburban shoppers who travel to nearby outdoor shopping complexes for groceries or a new outfit.
Macy’s, the parent corporation that owns its eponymous brand, Bloomingdale’s, and Bluemercury, will also have a new boss soon. Tony Spring, CEO of Bloomingdale’s, will take over as CEO of Macy’s in early February when outgoing CEO Jeff Gennette departs.
During the company’s earnings call in October, Chief Financial Officer and Chief Operating Officer Adrian Mitchell signaled that Macy’s will take another critical look at its stores. He stated that the company needed to “deliver relevant products, strong value, and a more enjoyable shopping experience,” which would include “optimizing our physical footprint.”
“We are committed to bringing more inspiration on a daily basis to our customers,” he added. “We look forward to sharing more on how that ladders to long-term profitable growth on our fourth quarter call.”
Mitchell also stated on the call that Macy’s “anticipated the closure of less than 10 locations in early 2024.”
However, Macy’s sales and stock performance have lagged. The company has not yet disclosed its holiday quarter, but stated in October that same-store sales will fall up to 7% in fiscal 2023. It is scheduled to disclose fiscal fourth-quarter results in late February.
Shares of the company closed Thursday at $17.93, down roughly 11% this year. This contrasts with the S&P 500’s roughly flat performance over the same time period.
Macy’s had 723 stores across the US as of Oct. 28, the end of the most recent reported quarter. The majority of those, over 500, are its eponymous stores, followed by 158 Bluemercury and 56 Bloomingdale’s locations.
The department store chain’s footprint has shrunk in recent years, though. About four years ago, Macy’s announced another massive layoff and a wave of shop closures. It made the announcement in February 2020, only weeks before the COVID-19 pandemic forced lockdowns and the temporary closure of several malls and retail establishments across the country.
At the time, Macy’s said that it would eliminate 125 stores over the next three years and lay off around 2,000 corporate employees, as well as close its Cincinnati headquarters and tech offices in San Francisco.
The corporation is evaluating its store count again.
In March 2023, Gennette stated that the business was “evaluating the right number and mix of on- and off-mall locations,” adding that the customer and retail environment had evolved since the February 2020 announcement. He stated that since the 2020 announcement, Macy’s had closed approximately 80 namesake sites and planned to close another five soon.
“We have shuttered our most significant underperformers, exited dying centers, and improved the existing store experience while delaying closures of others that are cash flow positive,” he stated during the earnings conference call in March. “Today, roughly 99% of our mall base is profitable on a four-wall basis.”