Macy’s Trims Costs Amid Slowing Sales, Closes Five Stores and Cut More Than 2,300 Jobs

By Moon Harper

Jan 18, 2024 11:31 PM EST

Macy's, a legacy department store, announced on Thursday its workforce reduction and the closure of five of its namesake mall locations to cut costs and address slowing sales, which, according to company spokesman Chris Grams, will impact around 2,350 positions in both Macy's corporate office and stores.

Streamlining The Company

Macy's cuts 3.5% of its workforce to become a more streamlined company, preparing to deploy strategies to address the ever-changing consumer and marketplace. According to a statement, employees have been informed about the layoffs on Thursday, which are reported to last until January 26.

Macy's aims for its 166-year-old department store's transformation into a value-seeking brand that appeals to online shoppers, as it competes with e-commerce giants like Amazon and Shein, big-box stores like Target, and off-price retailers like T.J.Maxx. As part of this effort, Macy'sMacy's is revamping its private label brands, establishing smaller shops outside of malls, and relying on its beauty chain, Bluemercury, and higher-end department store, Bloomingdale'sBloomingdale's, to fuel growth.

In the fall, the company announced plans to open around 30 smaller stores in strip malls within the next two years. Although Macy's has traditionally been associated with large mall stores, the company now aims to attract suburban consumers visiting nearby outdoor shopping centers for groceries or clothing.

Restructuring and Optimizing Footprint

Macy's will have Tony Spring, CEO of Bloomingdale's, take over as the CEO of Macy's in early February, succeeding the retiring CEO Jeff Gennette.

Chief Financial Officer and Chief Operating Officer Adrian Mitchell hinted at Macy's reassessment of its stores during the company's earnings call in October, emphasizing the need to provide relevant products, firm value, and an enjoyable shopping experience that would include "optimizing our physical footprint," leading to fewer than 10 locations closure in early 2024.

Dropping Stock Performance

Macy's predicted a same-store decline in October sales of up to 7% for its fiscal 2023. Shares closed at $17.93 on Thursday, marking a nearly 11% decrease for the year, which contrasts with the relatively stable performance of the S&P 500 over the same period. As of October 28, Macy's has 723 locations nationwide. The majority, about 500, are Macy's stores, followed by 158 Bluemercury stores and 56 Bloomingdale stores. The company still needs to report its holiday quarter, which is anticipated in late February.

Significant Layoffs to Reduce Size

The department store chain has been reducing its size in recent years. In February 2020, shortly before the COVID-19 pandemic resulted in lockdowns and temporary closures of numerous malls and retail stores nationwide, Macy's announced a significant layoff and a series of store closures, including plans to close 125 stores over the next three years and 2,000 corporate job cuts along with its Cincinnati and San Francisco tech headquarters' shut down.

In March 2023, Gennette mentioned that the company was assessing the suitable number and types of on- and off-mall locations, noting changes in the customer and retail environment since the February 2020 announcement, where Macy's has closed approximately 80 namesake locations, with plans to shut down five more soon.

"We have shuttered our most significant underperformers, exited dying centers, and improved the existing store experience while delaying closures of others that are cash flow positive; today, roughly 99% of our mall base is profitable on a four-wall basis," he said on the March call.