Macy's plans to cut 2,350 jobs and close 5 stores

Macy's, the country's largest department store operator, told employees Thursday that it was laying off 13 per cent of its corporate workforce. The move comes as the company prepares to unveil a new strategy that will be overseen by its incoming chief executive.

The cuts amount to roughly 2,350 jobs, or about 3.5 per cent of the company's overall workforce, which includes employees at subsidiaries Bloomingdale's and Bluemercury. The layoffs will be achieved by eliminating some roles and consolidating teams, according to memos seen by The New York Times.

The company also said it would close five of its more than 560 Macy's stores.

The memos said the decisions were based on consumer research and were meant to make the retailer more competitive by improving its cost structure and driving faster decision making.

The cutbacks were first reported by The Wall Street Journal.

Tony Spring will take over as Macy's CEO next month from Jeff Gennette, a company veteran who is retiring after holding the post since 2017. Spring, who ran Bloomingdale's, was named to the top position in March and has undertaken a research effort alongside Adrian Mitchell, the chief financial officer and chief operating officer at Macy's.

The company said it would unveil its wider strategy in the near future.

"As we prepare to deploy a new strategy to meet the needs of an ever-changing consumer and marketplace, we made the difficult decision to reduce our work force by 3.5 percent to become a more streamlined company," a Macy's spokesperson said in an emailed statement.

In a memo to employees, the company said it would be "offshoring certain areas of the business," but did not provide details.

As consumers have spent less on apparel and discretionary items over the past year, Macy's has struggled to increase its sales, and it has been facing pressure to improve its business. In December, an investor group submitted a bid to take the company private at $5.8 billion, which was more than $1 billion above its market value at the time.

The share price has risen more than 50% over the last two months but remains lower than it was a year ago or early in the pandemic.

"Macy's obviously needs to keep investors satisfied, and its focus on profit has accomplished that at a time when sales performance has been extremely lackluster," Neil Saunders, managing director of the research and consulting firm GlobalData Retail, said Thursday by email. "However, this strategy comes with an expiry date; ultimately no retailer can shrink itself to success."