Macy's Will Lay Off 2,500, Take Other Cost-Cutting Measures

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

Company looks to save $100 million this year following cost-cutting efforts

Despite the fact Macy’s reported strong holiday financial results, the company has announced its intentions to lay off 2,500 employees in an attempt to cut costs this year. Other cost-cutting measures include closing five stores (with plans to open 8 new/replacement stores), and combining its Midwest and North regions into a new North Central area. It also plans to cut central office, administration, and back-of-house expenses. These changes are expected to save the company roughly $100 million per year, beginning this year.

Following a particularly dismal holiday season for many retailers, Macy’s reported that comparable store sales in November and December increased 3.6 percent — an impressive feat considering ShopperTrak says comparable stores sales for bricks-and-mortar stores overall only increased by 2.7 percent. Regardless of these positive results, the company has decided to engage in what Craig Johnson, Macy’s customer growth partner, describes as “good expense discipline.” CEO Terry Lundgren says, “As the success of [Macy’s] strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers.” In this case, providing customers with stores is, obviously, an important step to meeting customers’ needs. As Johnson told The New York Times, “You hate to say it, but employees are easier to let go of than physical stores, particularly if you’re an anchor tenant.” By the time the company eliminates and adds new stores, it will have a total of 844 stores.

This is not the first time Macy’s has cut down on its ranks. In 2009, in the midst of the recession, the company eliminated 7,000 jobs when it consolidated four divisions into a single organization. Now, upon announcement of this most recent lay-off, the company assures that those being let go will be eligible for severance. The company will also be reassigning or transferring some of its associates. Following the cuts, the company will have 175,000 employees, though it has said it will continue to hire workers to keep its online operations, direct-to-consumer fulfillment, and new stores running smoothly in this competitive omni-channel environment. Especially considering the company’s recent focus on its omni-channel offerings, hires in these departments will be key to keeping the company on top of omni-channel.

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