Financial Performance

Macy’s to Cut Top Jobs as Part of Savings Plan

The layoffs of about 100 senior-level staff will allow the retailer to move faster, reduce costs, and be more responsive to changing customer expec...
Matthew HellerFebruary 26, 2019
Macy’s to Cut Top Jobs as Part of Savings Plan

Macy’s said Tuesday it will eliminate about 100 management jobs as it seeks to cut costs amid stagnant sales.

The job cuts are part of a restructuring plan that the department-store chain expects will generate annual savings of $100 million, starting in 2019.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs, and be more responsive to changing customer expectations,” CEO Jeff Gennette said in a quarterly earnings release.

Macy’s said the restructuring will enable it to channel additional resources into three areas — improving supply chain efficiency, innovating and enhancing inventory management, and building a larger and healthier customer base.

“2019, like 2018, will be a year of investment,” CFO Paula Price told analysts.

So far, Macy’s investments have included adding pop-up shops for online brands in its stores, rolling out a mobile checkout option, and growing its off-price business, Macy’s Backstage. In 2019, it plans to double the number of pop-ups, open 45 more Backstage locations, and invest in categories where it believes it can gain market share.

But according to CNBC, “Analysts and investors have been skeptical Macy’s investments to grow sales will ultimately pay off.”

“While Macy’s has made enormous strides in the last two years to return to growth, it is contending with headwinds such as declining traffic at the malls it occupies … and the growth of new rivals” such as Amazon, Fortune said.

Macy’s reported Tuesday that it earned $2.73 per share on revenue of $8.46 billion, beating analysts’ estimates of earnings of $2.53 per share and revenue of $8.45 billion. But comparable store sales on an owned-plus-licensed basis rose only 0.7%, below expectations of 0.9% amid weak holiday season sales.

“While we delivered positive comparable sales against what was a strong holiday season in 2017, results were lower than our expectations,” Gennette said.

Fortune noted that despite Macy’s efforts to hold less inventory in stores and improve its overall inventory management, gross profit margins on merchandise fell more than one percentage point to 37.5% of sales.

4 Powerful Communication Strategies for Your Next Board Meeting