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In its first major layoff round since just before the pandemic, Macy’s announced plans to reduce 3.5% of its workforce — including 13% of its corporate staff — in moves designed to reduce costs and speed decision-making.
The layoffs of more than 2,300 employees, first reported by The Wall Street Journal, come as activist investors in December launched a $5.8 billion buyout bid for the nation’s largest department store chain, which also owns Bloomingdale’s and Bluemercury. On Sunday, Macy’s board rejected the offer. Tony Spring, Bloomingdale’s CEO, is also set to succeed Jeff Gennette as Macy’s CEO next month.
“Despite our strong and tangible progress over the last few years, we remain under pressure,” Gennette and Spring wrote last week in an employee memo. The changes are a response to nearly a year of consumer research “to both better meet their expectations and to generate consistent growth.”
The layoffs will be achieved by adding automation to its supply chain, eliminating and outsourcing roles, and consolidating teams. Investments will be made in consumer-facing areas, including adding more visual display managers to upgrade the look of stores and enhancing digital functions to support a more seamless online experience, sources told the WSJ.
Macy’s has continually reinvented itself to combat emerging competition from online players, fast-fashion chains, and off-price sellers. Recent repositioning steps have included resetting its private-label portfolio, opening smaller shops outside of the mall, and simplifying pricing and promotions. Inventory management has also been a focus.
Progress over the last year has been undermined by broader weakness in the apparel category tied to inflationary pressures. Macy’s sales declined 7% in the third quarter of 2023.
Macy’s also announced the closure of five stores. In February 2020, Macy’s disclosed plans to shutter 125 department stores over the following three years and reduce about 2,000 corporate jobs.
Macy’s has promised to soon provide more details on updated strategies under Spring’s leadership.
On Macy’s third-quarter call in October, Adrian Mitchell, COO and CFO, said the retailer had to “deliver relevant products, strong value, and a more enjoyable shopping experience,” and some of that would include “optimizing our physical footprint.”
“We are committed to bringing more inspiration on a daily basis to our customers,” he said.