Macy's, the country's largest department store operator, told employees Thursday that the company would lay off 13 percent of its workforce. The move comes as the company prepares to unveil a new strategy, which the new chief executive will oversee.
The cuts amount to about 2,350 jobs, or about 3.5 percent of the company's total workforce, which includes employees of its Bloomingdale's and Bluemercury subsidiaries. The layoffs will be accomplished by eliminating some positions and consolidating teams, according to memos obtained by The New York Times.
The company also announced it would close five of its more than 560 Macy's stores.
The memos said the decisions were based on consumer research and were intended to make the retailer more competitive by improving its cost structure and making decisions faster.
The Wall Street Journal previously reported on the cuts.
Tony Spring will take over the role of Macy's CEO next month from Jeff Gennette, a company veteran who is retiring after holding the post since 2017. Mr. Spring, who ran Bloomingdale's, was named to the top job in March and has been conducting research alongside Adrian Mitchell, the chief financial officer and chief operating officer at Macy's.
The company said it would unveil its broader strategy in the near future.
“As we prepare to implement a new strategy to meet the needs of an ever-changing consumer and market, we have made the difficult decision to reduce our workforce by 3.5 percent to become a leaner company” said a Macy's spokesperson in an emailed statement.
In a memo to employees, the company said it would “move certain business areas overseas” but gave no details.
As consumers spent less on clothing and necessities last year, Macy's struggled to increase sales and was under pressure to improve its business. In December, a group of investors made an offer to take the company private for $5.8 billion, more than $1 billion above its market value at the time.
The share price has risen more than 50 percent in the past two months, but remains lower than it was a year ago or at the start of the pandemic.
“Macy's clearly needs to keep investors happy, and its focus on profits has achieved this at a time when sales performance has been extremely weak,” said Neil Saunders, managing director of research and advisory firm GlobalData Retail, on Thursday E-mail. “However, this strategy has an expiration date; Ultimately, no retailer can limit themselves to success.”