Retail giant Macy's to let go of 3.5% of its employees; to shutter 5 department store anchors at struggling malls.
Macy's has made the tough call to chop its workforce by 3.5%, as confirmed in an email statement sent on Thursday. The company is also preparing to shutter five of its full-line stores.
In an informal email, a representative of Macy's stated, "As we gear up to deploy a fresh strategy to cater to the evolving consumer and marketplace demands, we took the hard decision to downsize our workforce by 3.5% to morph into a leaner organization."
Macy's previously faced interest from activist investors eager to monetize their properties, with the incoming CEO Tony Spring set to take over in the new year. A shrinking workforce and store count are common practices in the retail industry, as companies must win over investors to some extent, according to GlobalData Managing Director Neil Saunders.
However, Saunders warned, "This strategy has a sell-by date; at the end of the day, no retailer can shrink itself to success."
In the past, outgoing CEO Jeff Gennette declared that closures a year ago signaled "the final stretch" of a fleet reduction that has seen the closure of 170 locations since 2016. However, some analysts predict even more closures are on the horizon.
Macy's is planning to open more smaller-format locations away from the mall, which could result in additional full-line closures. The company said this move is related to finding the ideal combination of on- and off-mall stores.
Saunders described these moves as potentially being a one-time rebalancing rather than a pattern for the year.
"Under the incoming leadership of Tony Spring, Macy's urgently needs to focus on enhancing the retail experience and beefing up sales," he said. "This path may be difficult, but in the long term, it's far more sustainable than persistent cost-cutting."
The Wall Street Journal reported the news, citing an internal memo to employees that indicated around 2,350 corporate positions would be chopped later this month. The reasons for the cuts reportedly include supply chain automation, some outsourcing, and faster decision-making.
In addition to the mall closures in California, Florida, Hawaii, and Virginia, Macy's will sell and relocate two furniture stores, according to the Journal's report.
Editor's note: This story has been updated with analyst comments.
As Macy's continues its store closure strategy, aiming to shutter 150 full-line stores nationwide by 2026, it joins other traditional department stores in their efforts to prioritize profitable locations and e-commerce growth. The changes reflect broader challenges facing the sector, including shifting consumer habits and heightened digital competition, pushing companies to streamline their physical footprints.
- Macy's, in an effort to adapt to the changing consumer and marketplace demands, is downsizing its workforce by 3.5% to transform into a leaner organization, as stated in an informal email.
- The retail giant is also closing five full-line stores and planning to open more smaller-format stores away from the mall, which could lead to further full-line closures.
- According to GlobalData Managing Director Neil Saunders, this strategy, including store count reductions, is necessary for companies to win over investors, but it comes with a 'sell-by date'.
- Saunders warns that no retailer can shrink itself to success and urges Macy's to focus on enhancing the retail experience and boosting sales under the new leadership of Tony Spring.
- The Wall Street Journal reported that the company will eliminate around 2,350 corporate positions later this month due to supply chain automation, outsourcing, and faster decision-making.
- In addition to closing stores in California, Florida, Hawaii, and Virginia, Macy's will sell and relocate two furniture stores, as per the Journal's report, reflecting the broader challenges in the retail industry, including shifting consumer habits and heightened digital competition.
