Macy's to cut 2,300 jobs

February 6, 2008 1:31:26 PM PST
Macy's Inc. said Wednesday it will cut about 2,300 management jobs as the department store operator consolidates three regional divisions and decentralizes buying in a bid to reduce costs and boost sales.The announcement came as Macy's announced separately that it had a steeper-than-expected drop in sales in January at established stores. Shares fell almost 5 percent on the news.

The Cincinnati-based retailer said it will immediately begin consolidating its Minneapolis-based Macy's North headquarters into its New York-based Macy's East, its St. Louis-based Macy's Midwest organization into its Atlanta-based Macy's South and its Seattle-based Macy's Northwest headquarters into its San Francisco-based Macy's West.

The consolidation of the office organizations expected to be completed in the second quarter of 2008 will affect 950 positions at Macy's North, 850 positions at Macy's Midwest and 750 positions at Macy's Northwest in Seattle.

The company said executives currently in the those offices will be considered for positions in the new local market organization or for open positions elsewhere, Macy's said. Laid-off employees will receive severance benefits and outplacement assistance, Macy's said.

At the same time, it said it will add 250 new management positions at its stores to better tailor its product offerings to specific regions.

The net effect would be a reduction of 2,300 jobs in Macy's current work force of about 188,000.

Macy's also says it expects to reduce expenses by about $60 million this year and by about $100 million a year starting in 2009.

The company plans to take a one-time charge of $150 million dollars this year for expenses related to the consolidation.

"Improving sales and earnings performance requires innovation in engaging our customer more effectively in every store, as well as reducing total costs," said Terry Lundgren, Macy's chairman, president and chief executive officer. "We believe the right answer is to reallocate our resources to place more emphasis and talent at the local market level to differentiate Macy's stores, serve customers and drive business."

Macy's said that same-store sales, which are sales at stores open at least a year and are a key barometer of a retailer's health, fell 7.1 percent. Analysts surveyed by Thomson Financial had expected a 5.9 percent drop.

Shares of Macy's fell $1.19, or 4.7 percent, to $23.91 in late afternoon trading.


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