Macy’s Inc. is getting rid of several middle management positions as part of the department store chain’s dramatic restructuring aimed at surviving in an altered retail landscape.
Macy’s Chief Operations Officer John Harper is cutting the positions throughout the organization as well as removing a team at district level, he said in a memo sent to employees and viewed by Bloomberg News.
Macy’s said on Tuesday that it would shut 125 department stores -- amounting to about a quarter of its locations -- in one of its biggest moves yet to improve its business. The closures, including 30 already being shuttered, account for about US$1.4 billion in annual sales and will lead to about 2,000 job losses, about 9 per cent of its workforce. Macy’s will also consolidate its headquarters by closing one in downtown Cincinnati.
“Our business is evolving, and in order to stay competitive we need to think differently about how we operate,” Harper said in the note. “To support this transformation, we took a hard look at the structure of our organization, and made some changes to help set us up for future success.”
A representative for Macy’s didn’t have immediate comment.
Painful Changes
Macy’s is also closing a call center in Tempe, Arizona, and moving its technology operations to New York and Atlanta from San Francisco. The company will transfer its corporate and support teams and its off-price offering Backstage to Long Island City starting in March. The merchandising teams will stay in Herald Square, the location of a flagship store.
The retailer is also moving from a district to regional structure, with store managers reporting straight to regional directors or their deputies. The retailer’s district merchant team has been eliminated entirely. The positions of district directors of operations, regional logistics directors and regional directors of selling support services and district facilities managers have all been eliminated. Assistant store manager positions will no longer exist in almost all stores.
“We are making deep cuts in almost every area of the business,” Chief Executive Officer Jeff Gennette said in a separate internal memo described to Bloomberg News.
Increase Simplicity
Macy’s had spent decades acquiring local department store chains, adding geographic reach and stores to its portfolio. In recent years, it has struggled with its large stores in underperforming malls and excess inventory.
The structural changes, which include giving store managers more authority, “reduces layers to increase simplicity, the speed in which we operate, and provides a pathway for clear decision making,” Harper said in the note.
“These changes are painful, but they are necessary,” Gennette said during an investor day at the New York Stock Exchange on Wednesday. “The retail environment is moving faster than we are.”
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