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Macy's Same-Store Sales +4%, Lays Off 2,500 Employees

Jan 9, 2014 10:59 AM   By Jeff Miller
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RAPAPORT... Macy's Inc. reported that its same-store sales rose by 3.6 percent year on year for the Christmas 2013 season, which included the months of November and December. When sales from departments that were licensed to third parties were factored into the mix, comparable-store sales reflected an increase of 4.3 percent. Macy's narrowed the range of its guidance for comparable-sales growth in the second half of 2013 to between 2.8 percent and 2.9 percent, compared with a previously wider range of 2.5 percent to 4 percent.

Macy's also announced a corporate restructuring program and stated that it will close five underperforming stores this quarter, with  clearance sales beginning on January 13. The stores that are set to close include Fiesta Mall in Mesa, Arizona;  Metcalf South Shopping Center in Overland Park, Kansas; Jamestown Mall in Florissant, Missouri; Medley Centre in Irondequoit, New York and Fashion Place Mall in Murray, Utah. Displaced associates may be offered positions in nearby stores and eligible full-time and part-time associates who are laid off due to the store closings will be offered severance benefits, according to the company.

Additionally, Macy's will eliminate some district and store roles as well as administrative and corporate positions. Approximately 2,500 employees are expected to be laid off and are eligible for severance as a result of these organizational changes. Meanwhile, Macy's  continues to add positions for online operations, direct-to-consumer fulfillment and new stores. In total, Macy's workforce is expected to remain at a level of approximately 175,000 associates.

Under a new organizational structure, Macy's reduced the number of regions to seven by combining the Midwest Region with the North Region to create a new North Central Region. Nine existing operating districts are being combined with nearby districts, reducing the ongoing number of districts to 60.

"Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy's Inc. We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these 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," said Terry J. Lundgren, Macy's CEO.

He added that the restructuring reinforces Macy's focus on driving the ''My Macy's'' localization, omnichannel integration strategy and the ''Magic Selling'' customer engagement program. Overall, Macy's anticipates saving $100 million from the reorganization, beginning in 2014, and  estimated that charges of between $120 million to $135 million,  $50 million to $55 million of which is expected to be non-cash, will be booked in the current fiscal quarter.

The retailer has eight new and replacement Macy's and Bloomingdale's stores under construction that are expected to open between mid-2014 and late 2015, including University Town Center in Sarasota, Florida; Shops at Summerlin in Las Vegas, Nevada; Mall at Bay Plaza in the Bronx, New York; Plaza Del Caribe in  Ponce, Puerto Rico; Mall at Miami Worldcenter in Miami, Florida; Stanford Shopping Center in Palo Alto, California and Ala Moana in Honolulu, Hawaii.

Lundgren said, "Our stores remain a very important component of our omnichannel strategy for both the Macy's and Bloomingdale's brands. We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations while also trimming those that no longer meet our performance requirements or where our leases were not renewed."

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Tags: charges, closures, Jeff Miller, layoffs, macy's, restructuring, retail, stores
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