Macy's announced Tuesday that it had adopted a three-year plan designed to stabilize profits and continue company growth. The new plan calls for a radical $1.5 billion cost-cutting program that will axe upwards of 2,000 jobs and shutter 125 stores across the US.
The retailer, which operates 680 stores under the Macy's and Bloomingdale's brands, said the closure represents an 18% reduction in its brick and mortar footprint. The layoffs of about 2,000 corporate jobs will account for 9% of its workforce. There's also a plan to close several offices.
Macy's said the cost savings would generate about $600 million in 2020 and $1.5 billion annually by 2022.
"We are taking the organization through significant structural change to lower costs, bring teams closer together, and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile, and better fit to compete in today's retail environment," Macy's CEO Jeff Gennette said in a statement.
Gennette said the company's "least productive" stores would be cut first. There are already 30 stores in the process of closing, he added.
Under the consolidation program, Macy's NYC will become the company's sole corporate headquarters. Offices in San Francisco, Cincinnati, and Lorain, Ohio, will be closed within the next three years.
"We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams," Gennette said. "Over the past three years, we have shown we can grow the top-line; however, we have significant work to do to improve the bottom-line. We are confident the strategy we are announcing today will allow us to stabilize the margin in 2020 and set the foundation for sustainable, profitable growth."
The retailer will be testing smaller storefronts called Market by Macy's and concentrate more on e-commerce.
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