Macy’s is reducing its workforce by 3.5%, a company spokesperson confirmed by email on Thursday. The company also plans to close five Macy’s full-line stores.
“As we prepare to deploy a new strategy to meet the needs of an everchanging consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company,” a spokesperson said in an emailed statement.
Macy’s last month was reportedly fielding an offer from activist investors interested in monetizing its property, with incoming CEO Tony Spring poised to take over early in the new year.
Workforce and footprint reductions are part of running a retail business, and Macy’s must please investors to some extent, according to GlobalData Managing Director Neil Saunders.
“However, this strategy comes with an expiry date; ultimately no retailer can shrink itself to success,” he said in emailed comments.
Outgoing chief executive Jeff Gennette had previously declared that a handful of closures a year ago signaled “the final stretch” of a fleet reduction that since 2016 had entailed shuttering some 170 locations. However, some analysts have predicted many more closures to come.
The department store has accelerated plans to open more smaller format locations away from the mall, and executives have said that could mean more full-line closures. The decision to close five full-line locations this year is related to that project of finding the ideal mix of on- and off-mall stores, the company said Thursday.
Ideally the moves reflect “a one-off rebalancing” rather than a pattern for the year, Saunders said.
“Under the incoming leadership of Tony Spring, Macy’s desperately needs to focus on improving the retail experience and bolstering its trading,” he said. “This path is admittedly challenging but, in the long term, it is far more sustainable than constant cost-cutting.”
The Wall Street Journal first reported the news, citing an internal memo to employees indicating that some 2,350 corporate positions would be cut later this month. Supply chain automation, some outsourcing and faster decision-making were reportedly among the reasons for the cuts.
In addition to the closures of anchors of five malls in California, Florida, Hawaii and Virginia, Macy’s will sell and relocate two furniture stores, per the Journal’s report.
Editor's note: This story has been updated with analyst comments.
