Department-store chain Macy’s Inc. plans to cut 2,350 jobs and close five stores, the Wall Street Journal reported on Thursday, as the company tries to curb expenses, embrace more technology and meet the demands of what it said was “an everchanging consumer and marketplace.”
The cuts, which amount to around 13% of Macy’s
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corporate staff and 3.5% of its staff overall, are part of an effort to shed costs, eliminate management layers and redirect spending toward improving customers’ shopping experience, the Journal said. The dismissals will begin on Jan. 26, according to a memo sent to employees cited by the publication.
“As we prepare to deploy a new strategy to meet the needs of an everchanging consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company,” a Macy’s spokesperson said in a statement to MarketWatch.
Some analysts have expected businesses more broadly to turn toward technology amid cost cuts this year to protect profit margins, as those margins fall collectively from highs reached in 2021. To that end, retailers in particular have leaned on technology — via online shopping and digital advertising — and store closures as pandemic-era inflation has upended consumer demand for discretionary goods.
Macy’s is also facing a nearly $6 billion takeover bid by an investor group that’s looking to take the retailer private. Meanwhile, company President Tony Spring is preparing to succeed Jeff Gennette as chief executive next month.
The job cuts were announced as the landscape for retailers remains uneven, as higher prices for groceries and other basics have hindered what inflation-hit shoppers can spend elsewhere. In turn, retailers have had to cut prices to sell unwanted items.
“Despite our strong and tangible progress over the last few years, we remain under pressure,” the Macy’s memo cited by the Journal said.
The publication reported that Macy’s plans to develop a more automated supply chain and would outsource some jobs. Citing a person familiar with the matter, the Journal said the company would be “investing in areas that impact consumers,” such as adding more visual-display managers to improve the look of its stores and upgrading digital functions for a more seamless online-shopping experience.
The Macy’s spokesperson told MarketWatch that the store closures were part of an effort to “reposition our store portfolio and evaluate the right mix of on- and off-mall locations,” adding that the five stores would close this year. As of Oct. 28, Macy’s had 784 stores, including its namesake locations as well as those of Bloomingdales, which Macy’s owns.
The spokesperson declined to discuss additional details reported by the Journal.
Nike Inc.
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last month said it was looking to cut up to $2 billion in costs over the next three years. Similar to Macy’s, Nike, which runs its own stores and sells athletic gear online, said it would focus on cutting management layers, boosting automation and “improving supply-chain efficiency.”
Elsewhere, CVS last week said it would close some pharmacies in Target Corp.
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stores, as part the drugstore and health-services company’s “plan to realign our national retail footprint.” Target, meanwhile, said in September that it would close nine stores across four states, citing organized theft and retail safety. However, some observers have suspected retailers of using theft as an excuse to hide deeper financial struggles and other issues.
Shares of Macy’s were up 0.2% after hours on Thursday, after gaining 0.4% in the day’s trading.