Photo: RetailWire
Macy’s, Inc. CEO Jeff Gennette says the department store operator has a bottom line problem and now he has a new and improved three-year plan that he says will help the retailer cut billions of dollars in costs on an annual basis.
Yesterday, the retailer announced plans to cut 2,000 jobs from its corporate and regional support staff. Macy’s will also close its corporate offices in San Francisco, Cincinnati and Lorain, OH, making New York City the sole corporate headquarters for the business.
The retailer also plans to close 125 stores over the next three years, including around 30 that were previously announced, as it seeks to achieve annual savings of $1.5 billion a year by 2022. The stores targeted for closing generate about $1.4 billion in annual sales.
“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 Mr. Gennette in a statement. “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 margin in 2020 and set the foundation for sustainable, profitable growth.”
Among the new revenue streams Mr. Gennette is talking about is a new store format, Market by Macy’s. The concept, which was launched as a turnkey in-store pop-up enabling consumer and digital-native brands to sell their products and services inside Macy’s, is being rolled out as a small store standalone format in off-mall lifestyle centers.
Market by Macy’s locations will feature a product mix of local goods and other items curated for customers by location. The stores will also offer food and beverages and “a robust community events calendar.” The first Market by Macy’s will open tomorrow in Dallas.
Macy’s also plans to expand its Backstage concept. The off-price model, which has outperformed Macy’s full-price business, will be expanded to 50 more Macy’s as a store-within-the-store. The company also plans to open an additional seven standalone stores in off-mall locations.