Macy’s Plans to Cut 7,000 Jobs

The retailer will also slash its dividend and will try to buy back debt to reduce its interest payments.
Stephen TaubFebruary 2, 2009

Along with a hefty dividend cut and plans to redeem debt, Macy’s, Inc. announced today that it would eliminate about 7,000 positions, or about 4 percent of the company’s total current workforce. Nearly 40 percent of executive jobs are being eliminated. The retailer also reported that some of the reduction involves currently unfilled posts that currently are unfilled.

Macy’s is also slashing its quarterly dividend to 5 cents per share from the current 13.25 cents. Further, the company is offering to redeem $950 million in debt that’s maturing later this year. The moves will reduce previously planned expenses by about $400 million per year beginning in 2010 and $250 million in the partial year of 2009, according to the company.

Under the debt-redemption program, Macy’s Retail Holdings, Inc., a wholly owned subsidiary of Macy’s, Inc., has launched a cash tender offer for all of its outstanding $950 million in debt that is maturing later in 2009. This includes $350 million in 6.30 percent Senior Notes due April 1, 2009, and $600 million in 4.80 percent Senior Notes due July 15, 2009.

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Macy’s also announced that it would use cash on hand to repurchase and retire the notes via a tender offer. By retiring the notes early, the company expects to reduce interest expense in 2009. The amount of interest expense reduction will depend on the amount of notes tendered and repurchased, according to the company. 



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