Macy’s announced today a three-year plan that includes shuttering 125 stores and its corporate headquarters in Cincinnati, as well as cutting 2,000 jobs.
The moves will cost the company between $450 million and $490 million, the majority of which will be recorded in fiscal 2019. Macy’s said it expects the moves to save the company about $600 million this year and ultimately $1.5 billion on an annual basis by the end of 2022.
In addition to Cincinnati, the department store operator will also close its San Francisco and Lorain, Ohio, offices and its customer contact center in Tempe, Ariz. New York, meanwhile, will become Macy’s sole corporate headquarters. The 125 stores, 30 of which are currently being mothballed, account for $1.4 billion in sales, Macy’s noted.
“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,” said Jeff Gennette, Macy’s CEO, in a statement.
“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,” Gennette said.
While the company closes offices and stores and cuts jobs, it is reshuffling its management team.
John Harper, formerly chief stores officer, became COO and is in charge of stores, technology, supply chain and brand experience.
Marc Mastronardi, previously svp of store operations and customer experience, is now chief stores officer, while Danielle Kirgan saw her role expanded from head of human resources to chief transformation and human resources officer.
The management changes take effect Jan. 31.
It’s not all bad news.
Macy’s plans to upgrade 100 stores this year, with improvements not only to the physical stores, but also in merchandising strategy, technology, talent and local marketing. Thus far, 150 stores accounting for 50% of total stores’ sales have been upgraded, the company said.
As part of the expansion of its off-price business, Macy’s said it will open 50 Backstage store-within-store locations and seven freestanding, off-mall stores under the same name this year.
In addition, the company is testing a new store format, Market by Macy’s, which is smaller than an average Macy’s store and will be located in off-mall lifestyle centers. The first store will open in Dallas on Feb. 6.
The retailer will expand its Macy’s Star Rewards Loyalty program and increase its focus on higher-margin private label business, with plans to build four $1 billion bands and accelerate the growth of its $6 billion-plus digital business.