Macy's Will Cut 100 Senior Jobs in Restructuring to Save $100M Annually

Macy's Inc. on Tuesday said it would eliminate 100 senior executive positions in a restructuring designed to cut costs and improve profitability, in the face of competition from Amazon.com Inc. and other online sellers.

The multi-year program would also help the Cincinnati-based department store operator improve its supply chain and more tightly control its inventory, it said.

The job cuts, at the vice presidential level and higher, combined with its supply chain and inventory actions, are expected to yield annual savings of $100 million, starting in the current fiscal year, 2019.

"The steps ... will allow us to move faster, reduce costs and be more responsive to changing customer expectations," Chief Executive Jeff Gennette said.

Last month, Macy's tempered expectations for the holiday season by slashing its fiscal 2018 revenue and profit forecast on weak demand for women's sportswear, seasonal sleepwear, fashion jewelry, fashion watches and cosmetics. Its shares plunged 18 percent.

Department stores in recent quarters had shown signs they were finding ways to cope with declining mall traffic and tough competition Amazon, helped by a robust economy and strong consumer spending in 2018.

"We missed an opportunity to engage them more fully with our great values," Gennette, referring to the latter half of the holiday season, said on a post-earnings call. "We have adjusted our promotional calendar for 2019 to address this."

In 2019, Macy's said, it would invest in categories where the company already has strong market share such as dresses, fine jewelry, women's shoes and beauty, as well as revamp 100 stores, up from the 50 stores it remodeled last year. It also plans to build out its off-price Backstage business to another 45 store locations.

"A very mixed bag of results from Macy's provides equal doses of optimism and gloom about the future prospects for the storied retailer," said GlobalData Retail Managing Director Neil Saunders.

Macy's, which has closed more than 100 locations and cut thousands of jobs since 2015, reported a smaller-than-expected 0.7 percent rise in holiday quarter same-store sales on Tuesday, below the company's own expectations.

"Core EPS guidance came in a bit lighter than we were expecting, but no worse than buy-side fears," said Gordon Haskett analyst Chuck Grom.

"Inventory levels are heavier than normal for Macy's, but the company appears to have done a good job clearing through excess levels following a softer holiday period," he said.

The company now forecasts adjusted profits for fiscal 2019 between $3.05 to $3.25 per share, below analysts estimates of $3.29.

Shares of the company (M) were 2 percent higher near midday Wednesday, trading near  $25.19.