Macy’s, Inc. Closes 40 Stores; Announces Measures to Improve Cost-Efficiency

Jan 12, 2016

Macy’s, Inc. last week announced, as part of its “cost-efficiency and process improvement measures” that it would be closing a total of 40 Macy’s stores out of a current total of about 770 stores: 36 stores will be closed in early spring 2016; four stores were closed in the final three quarters of 2015.

“In light of our disappointing 2015 sales and earnings performance, we are making adjustments to become more efficient and productive in our operations,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.  “Moreover, we believe we can operate more effectively with an organisation that is flatter and more agile so we can pursue growth and regain market share in our core Macy’s and Bloomingdale’s omnichannel businesses faster and with more intensity. We will continue to invest in strategic initiatives that anticipate emerging customer needs and create shareholder value.”

Lundgren added: “The cost efficiencies represent more than two-thirds of our goal of annual SG&A expense reduction of $500 million, net of growth initiatives, from previously planned levels by 2018. In some cases, there will be short-term pain as we tighten our belt and realign our resources. But our eye is on a long-term vision of Macy’s, Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace.”

The plan for introducing efficiencies and increasing productivity in its operations includes consolidating Macy’s stores and scaling them down - into five regions and 47 local districts from seven regions and 58 local districts.  Also, staffing levels will   be reduced at Macy’s and Bloomingdale’s stores; and staff across the board at varying levels of seniority will be affected. 

The Company said that it continues to pursue the creation of shareholder value through real estate initiatives and is taking concrete measures towards this.

The 36 Macy’s stores being closed in early 2016, along with four others closed in the final three quarters of 2015, account for approximately $375 million in annual sales, some of which are expected to be retained in nearby stores and with online/mobile sales, the Company stated.

Against this, five new Macy’s and Bloomingdale’s stores are currently planned and/or under construction.

“Our company is committed to operating great Macy’s and Bloomingdale’s stores in the best locations – both to serve shoppers who walk through the door and to fulfill orders that are shipped directly to customers around the country,” Lundgren said. “In today’s rapidly evolving retail environment, it is essential that we maintain a portfolio of the right stores in the right places. So we will continue to add stores selectively while also being disciplined about closing stores that are unproductive or no longer robust shopping destinations because of changes in the local retail shopping landscape.”

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