Macy’s Inc. (M.N) jumped as the department-store chain expressed optimism that its turnaround plan is making progress and announced a strategic plan to streamline decision making and reinvest in the business -- including headcount cuts at the top levels.

-While the company said it can achieve growth in comparable-store sales, a closely-watched measure, it won’t come immediately. The metric will be in a range of flat to up 1 percent this year, according to company guidance, while overall revenue is projected as flat.

Key Insights

-Macy’s, slower to adapt to new retail trends than some of its upstart rivals, is taking some steps in that direction. It said it will focus on new economic models this year, including doubling the number of in-store pop-up market locations and building out its virtual reality furniture capabilities.

-The retailer said it will slim down the upper management ranks at the company to help it increase the speed of decision making and trim costs. Beginning this year, the company expects the restructuring efforts to generate annual savings of US$100 million, though that comes after a related US$80 million charge in 2018.

-Macy’s had already warned that its holiday sales might disappoint, and they did. On Jan. 10, the company cut its annual earnings forecast, saying that sales momentum slowed in mid-December. CEO Jeff Gennette reiterated that on Tuesday, calling the Christmas period “lower than our expectations,” but highlighting double-digit growth in online sales.

Market Reaction

-The shares rose as much as 5.5 per cent to US$25.70 in early trading. Macy’s stock has declined 18 per cent so far this year through Monday’s close.