Macy’s Slashes 7,000 Jobs, Adopts New Structure, Expands Localization
Macy's Inc. announced today (Mon.) that it is eliminating a net of some 7,000 jobs (about 4% of its workforce), unifying all its divisions into one unit, and reducing its quarterly dividend (to 5 cents a share from 13.25)--as well as discretionary spending,
Reuters reports.
The company said intends to reduce planned expenses by some $250 million in the remainder of its 2009 fiscal year and $400 million annually starting in 2010. The reduction in dividend is expected to conserve $138 million in cash in fiscal 2009.
Earlier this month, the company announced
the closing of 11 underperforming Macy's stores and lowered its fourth-quarter guidance
Macy's now expects to earn 40-55 cents a share for the current fiscal year, excluding restructuring costs, while same-store sales are expected to decline 6-8%.
The job reductions will account for a high percentage in the central office functions being centralized, with nearly 40% of executive positions being eliminated, Macy's said. In some cases, the reduction involves positions that currently are unfilled.
The reduction in store staffs averages 5-6 positions per location and is designed to minimize any impact on customer service, Macy's said.
The elimination of existing divisional central office organizations will primarily affect approximately 1,400 positions at the Macy's West headquarters offices in San Francisco, 850 positions at the Macy's Central headquarters offices in Atlanta, and 600 positions at the Macy's Florida headquarters offices in Miami.
Localization effort
The net total of 7,000 jobs eliminated includes some 1,200 positions being added to new "My Macy's" districts and regions.
"My Macy's," a customer-centric localization initiative piloted in 20 selected geographic markets since spring 2008, will be expanded across the US, Macy's said, in an effort to drive sales with stores and merchandise assortments focused on local customer needs and preferences.
Macy's stores nationwide will be grouped into 69 geographic districts that will average 10-12 stores each, effective in the second quarter. Of those, 49 will be newly created districts. The other 20 districts (in the Midwest, Upper Midwest and Pacific Northwest) were created as pilots in spring 2008 and will remain in place.
Terry J. Lundgren, chairman, president, and CEO, said "of the top 15 best-performing geographic markets in December, 13 were My Macy's pilot districts."
New structure
Macy's, Inc. will be re-formed into a unified operating structure to support the Macy's business--reducing central office and administrative expense, eliminating duplication, sharpening execution, and helping the company to partner more effectively with its suppliers and business partners, it said.
The new organization will be in place beginning in the second quarter of 2009
Bloomingdale's will remain a separate brand and organization and is not affected by the restructuring.
A new Macy's, Inc. executive management team will lead the corporation going forward under the continued direction of Lundgren.
Early Retirement of Debt
Separately,
Macy's announced that wholly owned subsidiary Macy's Retail Holdings, Inc. has commenced a cash tender offer to purchase any and all of its outstanding 6.30% Senior Notes due April 1, 2009 ($350 million aggregate amount outstanding; CUSIP Nos. 31410H AP6, 31410H AM3), and 4.80% Senior Notes due July 15, 2009 ($600 million aggregate amount outstanding; CUSIP Nos. 577778 BW2, 577778 BV4).
By using cash on hand to repurchase and retire that debt early, the company is expected to reduce interest expense in 2009.
