Faced with lower sales due to the coronavirus crisis, Macy’s Inc. is downsizing and implementing thousands of layoffs.
The New York-based corporation, parent to the Macy’s, Bloomingdales and Bluemercury brands, will eliminate approximately 3,900 corporate and management positions, or about 3% of its total workforce, it announced today. In addition, the retailer has cut an unspecified number of jobs across its stores, supply chain and customer support network, with plans to make adjustments as sales bounce back.
“COVID-19 has significantly impacted our business. While the re-opening of our stores is going well, we do anticipate a gradual recovery of business, and we are taking action to align our cost base with our anticipated lower sales,” said Macy’s chairman and CEO Jeff Gennette. “These were hard decisions as they impact many of our colleagues.”
According to Gennette, Macy’s expects to be a “smaller company for the foreseeable future” and these changes will allow it to be “a more stable, flexible company.”
Watch on FN
Macy’s anticipates that these changes will save it about $365 million for the 2020 fiscal year and roughly $630 million on an annualized basis. The department store chain earlier this month announced that it raised about $4.5 billion in new financing to assist with funding operations and new inventory, resolve outstanding payments and repay debt due in fiscal 2020 and 2021. Macy’s has about $530 million in debt payable in January 2021, with $450 million due one year later, per S&P Global. The chain ended the first quarter with roughly $1.5 billion in cash.
In addition to the forecasted $630 million Macy’s expects to save from today’s announced actions, the company expects to save $1.5 billion annually as part of a three-year turnaround plan announced in February.
As it had started to chip away at the plans announced early this year, the coronavirus stifled its objectives. The retailer was forced to shut all its stores in mid-March, and it announced March 30 that it would furlough the “majority” of its workforce. At that time, Macy’s froze both hiring and spending, and suspended its quarterly dividend. In addition, Gennette announced he would forgo his salary, with senior members of the management team taking pay reductions. According to Macy’s most remaining furloughed employees will resume work this July.