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Macy’s laying off 2,550 workers

Part of a series of moves to drive growth and cut expenses

By Furniture Today Staff -- Furniture Today, February 7, 2008

CINCINNATI — Macy’s said Wednesday it will consolidate three of its divisions into other offices, laying off about 2,550 workers as part of a series of moves aimed at driving same-store sales growth and reducing expenses.

The company, which Furniture/Today ranks as one of the Top 25 U.S. furniture and bedding retailers, also said it will push more decision-making down to district executives in many of its markets, adding some 250 positions in those offices.

“In essence, we plan to drive sales growth by improving our knowledge at the local level and then acting quickly on that knowledge. These moves will benefit our customers as well as our shareholders,” said Terry Lundgren, Macy’s chairman, president and CEO.

Meanwhile, Macy’s reported a 7.1% decline in same-store sales in January, weaker than the 4% to 6% decline the company had projected. Total sales were $1.275 billion for the four weeks ended Feb. 2, compared with $1.782 billion in the longer, five-week reporting period ended Feb. 3, 2007.

Macy’s, which ranked 16th on Furniture/Today’s list of the largest U.S. furniture and bedding retailers with estimated fiscal 2006 sales in the categories of $910 million, said it will begin the consolidation of its division offices immediately.

Minneapolis-based Macy’s North will be consolidated into New York-based Macy’s East, Seattle-based Macy’s Northwest will be merged into San Francisco-based Macy’s West, and St. Louis-based Macy’s Midwest will become part of Atlanta-based Macy’s South, which will be renamed Macy’s Central. All current store locations will remain in place, the company said.

Those moves will affect about 950 positions in Minneapolis, 850 in St. Louis and 750 in Seattle, Macy’s said.

The company said it will adopt a localization plan it calls “My Macy’s” in the North, Midwest and Northwest markets as they are consolidated into the other divisions. About 20 newly formed districts of 10 stores each will have a manager and a staff of store merchandisers and planners, who will make local decisions about space allocation, service levels and visual merchandising.

Miami-based Macy’s Florida and the company’s New York-based Bloomingdale’s divisions are not affected.

Macy’s estimates the moves will reduce expenses by $60 million in 2008 and $100 million a year starting in 2009. The company said it will take a $150 million charge this year related to the division consolidations.

For fiscal 2008, the company issued guidance for same-store sales in the range of a 1% decline to a 1.5% gain. It said it expects to report earnings per share, excluding one-time costs, of $1.85 to $2.15.

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Macy's consolidating 3 divisions

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