Merchandising and marketing to be
restructured for single omnichannel view of business;Store
and field organization adjustments supporting M.O.M.
strategies;$140 million in savings to be reinvested
primarily in technology, talent and business development
Macy’s, Inc. (NYSE:M) today announced a series of initiatives to
evolve its business model and invest in continued growth
opportunities as consumers change the way they shop. Actions
include a restructuring of merchandising and marketing functions at
Macy’s and Bloomingdale’s consistent with the company’s omnichannel
approach to retailing, as well as a series of adjustments to its
field and store operations to increase productivity and
efficiency.
(Editor’s Note: Macy’s, Inc. this afternoon also issued a
separate news release announcing sales results for the
November/December 2014 period and updating guidance.)
“Our business is rapidly evolving in response to changes in the
way customers are shopping across stores, desktops, tablets and
smartphones. We must continue to invest in our business to focus on
where the customer is headed – to prepare for what’s next,” said
Terry J. Lundgren, Macy’s chairman and chief executive officer.
“Macy’s, Inc. has benefited in recent years by having invested
early and aggressively in our M.O.M. strategies (My Macy’s
localization, Omnichannel integration and Magic Selling customer
engagement). This has included talent, technology, omnichannel
infrastructure and fulfillment capability.
“We remain committed to M.O.M. as our strategic roadmap. We are
continuing to learn from our experiences and to mold our business
model and M.O.M. strategies around what our customers are telling
us and how they are behaving so that we can continue to succeed in
this environment. We are moving quickly. In many ways, this is a
race to remain best-in-class – and to win with the customer. We
fully expect to remain an industry leader and innovator,” Lundgren
said.
With changes being announced today, Macy’s, Inc. will be
increasing its workforce in some functions and locations while
decreasing in others so all of the company’s resources can be
deployed for maximum results. In total, the Macy’s, Inc. workforce
is expected to remain at a level of approximately 175,000
associates.
Restructuring in
Merchandising/Marketing
Both Macy’s and Bloomingdale’s are restructuring their
respective central merchandising and marketing functions so each
brand can develop and present its assortments seamlessly across
channels and provide a single omnichannel view in all product
categories. Going forward, one unified merchandising and marketing
organization – a hybrid of store and online buying – will support
the entire Macy’s business to encourage both store and digital
growth. The same is true at Bloomingdale’s. Previously, store and
online assortments were bought and marketed by separate
organizations at Macy’s and at Bloomingdale’s. These changes
support continued growth and an enhanced shopping experience online
and via mobile, as well as in stores.
“Going forward, Macy’s and Bloomingdale’s will be better able to
move more quickly and nimbly to select merchandise, assort
inventories and serve total customer demand, no matter how, when or
where the customer shops. Some redundant activity also can be
avoided to accelerate speed to market, partner more effectively
with vendor resources and ensure the merchandising organizations
are more responsive to the marketplace in making and implementing
decisions,” Lundgren said.
Simultaneously, Macy’s will make selected changes to its
merchandising-related functions in local districts (administrative
grouping of Macy’s stores) around the country as it continues to
improve its ability to localize assortments by size, color, fabric
weight, style, fit, category and brand. The company will
discontinue district planner positions and reinvest in new regional
teams devoted to specific themes of merchandise localization. These
teams will intensify Macy’s successful warm-weather strategies, as
well as address topics such as meeting the needs of more
traditional customers who live in northern climate zones, and
better understand and support the diverse needs of multicultural
customers. Macy’s field team will continue to represent a
significant competitive advantage in reacting quickly to changes in
customer demand and in gaining market share.
These changes in merchandising and marketing are expected to
affect approximately 115 associates in Macy’s and Bloomingdale’s
central offices in New York City, as well as about 150 associates
in local markets nationwide. The company is working to place as
many affected associates as possible in other open positions.
Adjustments in
Stores/Field
Macy’s and Bloomingdale’s are adjusting certain aspects of store
and field operations and refocusing the staffing in each store
location to facilitate growth, increase productivity and improve
efficiency. Selling service and support is being modified to match
business opportunity in each department. An average of two to three
associates will be affected in each of Macy’s and Bloomingdale’s
approximately 830 stores (out of an average workforce of
approximately 150 associates in each store), for a total of about
2,200 affected associates nationwide. The company is working to
place as many affected associates as possible in other open
positions.
Also, two existing Macy’s stores districts are being merged into
nearby districts – thus reducing the ongoing number of stores
districts to 58 from the current 60.
Growth Investments Planned for
2015
The company will reinvest savings from merchandising, marketing,
store and field initiatives so it can continue to invest for growth
as it focuses its resources and molds its business model around
emerging customer preferences. Plans for 2015 include:
- Creating a team within the company to
explore potential opportunities for a Macy’s off-price business.
While this exploration is in its early stages, the company believes
that Macy’s omnichannel infrastructure and insight could lead to
innovative ways to deliver value to additional segments of the
customer marketplace.
- Continued progress in digital
retailing, including further developing the technology, speed and
customer experience of macys.com and bloomingdales.com as they are
accessed via desktop, smartphones, tablets and apps. In 2015,
Macy’s is expected to grow its San Francisco-based digital
technology organization by hiring more than 150 people.
- Advancements in business systems and
information technology, including security infrastructure, to
deliver the information and functionality required to support a
growing Omnichannel business.
- Increasing direct-to-consumer
fulfillment capacity in every full-line Macy’s and Bloomingdale’s
store and at the five existing dedicated fulfillment centers
located in Arizona, California, Connecticut, Tennessee and West
Virginia. In addition, as many as 1,500 new year-round and seasonal
associates will be hired this year at a new 1.3 million-square-foot
direct-to-consumer fulfillment center now being built in Tulsa
County, OK. Initial operations at the Tulsa facility are expected
to begin in April 2015, with a total workforce of more than 2,500
associates (1,500 year-round associates and more than 1,000 holiday
seasonal associates) expected in future years as the fulfillment
center reaches full capacity.
- Opening new Macy’s, Bloomingdale’s and
Bloomingdale’s Outlet stores as opportunities arise in new and
existing markets. New stores to be opened in fall 2015, as
previously announced, include a Macy’s in Ponce, PR, which will
employ about 275 associates, as well as a new Bloomingdale’s in
Honolulu, with an expected workforce of 250 associates.
Store Closings/Openings
Macy’s, Inc. today also detailed a series of adjustments to its
portfolio of stores across the country.
“Our omnichannel strategy depends on great Macy’s and
Bloomingdale’s stores that not only welcome shoppers through the
door and deliver an outstanding shopping experience, but that also
fulfill orders that are shipped directly to customers around the
country. In 2014, about $1 billion of Macy’s and Bloomingdale’s
direct-to-customer shipments originated from Macy’s and
Bloomingdale’s stores. Moreover, our process for Buy Online Pickup
in Store has established a new dimension in customer access and
convenience,” Lundgren said. “We continue to maintain a very strong
nationwide network of stores through an ongoing process of
selectively adding new locations while also trimming those that no
longer meet our performance requirements, where the real estate can
be redeployed to more productive uses, or where our leases were not
renewed.”
The company today is announcing two new stores:
- A three-story Bloomingdale’s of 150,000
square feet will be added in an expansion of Westfield Valley Fair
Shopping Center in San Jose, CA. The all-new Bloomingdale’s store
is expected to open in fall 2017 and employ an estimated 250
associates. Westfield Valley Fair’s current anchors include a
Macy’s women’s store, a Macy’s men’s/home store and a Nordstrom.
This will be Bloomingdale’s third store in northern California,
joining Westfield San Francisco Centre in downtown San Francisco
(opened in 2006) and Stanford Shopping Center in Palo Alto
(originally opened in 1996 with a new replacement store opened in
October 2014).
- Macy’s will build a new
155,000-square-foot store on two levels to replace its existing
136,000-square-foot Westfield Century City location in Los Angeles,
CA, which was opened in 1976. The existing Macy’s will be closed in
January 2016 and razed to accommodate new development in the mall.
The all-new Macy’s, expected to open in November 2016, will be
built in a highly visible location along Santa Monica Boulevard.
Westfield Century City also includes an existing Bloomingdale’s
store which will be completely remodeled in 2016 and connected to
new development in the mall.
Seven other new Macy’s and Bloomingdale’s stores are currently
planned and/or under construction, as previously announced.
- New Macy’s stores will be opening in:
- Plaza Del Caribe, Ponce, PR (150,000
square feet; to open in fall 2015; approximately 275
associates);
- Ka Makana Ali’i, Kapolei, HI (103,000
square feet; to open in fall 2016; approximately 180
associates).
- Mall at Miami Worldcenter, Miami, FL
(195,000 square feet; to open in fall 2017; approximately 150
associates).
- New Bloomingdale’s stores will be
opening in:
- Ala Moana, Honolulu, HI (167,000 square
feet; to open in fall 2015; approximately 250 associates);
- Mall at Miami Worldcenter, Miami, FL
(120,000 square feet; to open in fall 2017; approximately 225
associates).
In addition, new Macy’s and Bloomingdale’s stores are planned to
open in Al Maryah Central in Abu Dhabi, United Arab Emirates, in
2018 under license agreements with Al Tayer Group.
The company also is announcing today that it will close the
following 14 Macy’s stores (out of a current total of about 790
Macy’s stores) in early spring 2015. Final clearance sales will
begin on Monday, Jan. 12 and run for between eight to 12 weeks.
- Metro Center, Phoenix, AZ (107,000
square feet; opened in 1973; 88 associates);
- Cupertino Square Mall, Cupertino, CA
(177,000 square feet; opened in 1997; 111 associates);
- Promenade (main store), Woodland Hills,
CA (192,000 square feet; opened in 1993; 112 associates);
- Promenade (furniture gallery), Woodland
Hills, CA (81,000 square feet; opened in 1993; 19 associates);
- Gulf View Square, Port Richey, FL
(84,000 square feet; opened in 1981; 78 associates);
- Northland Center, Southfield, MI
(504,000 square feet; opened in 1954; 170 associates);
- Wendover, Greensboro, NC (141,000
square feet; opened in 2002; 83 associates);
- Ledgewood Mall, Ledgewood, NJ (73,000
square feet; opened in 1994; 79 associates);
- ShoppingTown Mall, DeWitt, NY (120,000
square feet; opened in 1993; 94 associates);
- Rotterdam Square, Schenectady, NY
(120,000 square feet; opened in 1995; 98 associates);
- Kingsdale Shopping Center, Columbus, OH
(108,000 square feet; opened in 1970; 115 associates);
- Richmond Town Square, Richmond Heights,
OH (165,000 square feet; opened in 1998; 105 associates);
- Upper Valley Mall, Springfield, OH
(156,000 square feet; opened in 1971; 79 associates);
- Southland Mall, Memphis, TN (150,000
square feet; opened in 1966; 112 associates).
Together, the 14 stores being closed account for approximately
$130 million in annual sales, some of which is expected to be
retained in nearby stores and with online/mobile sales.
The company is committed to treating associates affected by
store closings with respect and openness. Associates displaced by
store closings may be offered positions in nearby stores where
possible. Eligible full-time and part-time associates who are laid
off due to the store closing will be offered severance
benefits.
Once all of these changes have been implemented, Macy’s, Inc.
will operate about 830 stores in 45 states, the District of
Columbia, Puerto Rico and Guam.
Financial Impact
Changes being announced today are estimated to generate savings
of approximately $140 million per year, beginning in 2015. The
company expects to reinvest savings into technology and growth
initiatives, including those described above, as well as to offset
higher expense expected in health care and retirement plans.
In conjunction with the implementation of the merchandising and
marketing restructuring and store and field adjustments, as well as
store closings and asset impairment charges, an estimated $100
million to $110 million of charges, of which approximately $80
million to $90 million is expected to be cash, will be booked in
the fourth quarter of 2014. These charges were not previously
included in earnings guidance provided by the company.
Macy’s, Inc., with corporate offices in Cincinnati and New York,
is one of the nation’s premier retailers, with fiscal 2013 sales of
$27.931 billion. The company operates about 840 stores in 45
states, the District of Columbia, Guam and Puerto Rico under the
names of Macy’s and Bloomingdale’s, as well as the macys.com and
bloomingdales.com websites. The company also operates 13
Bloomingdale’s Outlet stores. Bloomingdale’s in Dubai is operated
by Al Tayer Group LLC under a license agreement.
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Macy’s management and are subject to significant risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including
conditions to, or changes in the timing of, proposed transactions,
prevailing interest rates and non-recurring charges, competitive
pressures from specialty stores, general merchandise stores,
off-price and discount stores, manufacturers’ outlets, the
Internet, mail-order catalogs and television shopping and general
consumer spending levels, including the impact of the availability
and level of consumer debt, the effect of weather and other factors
identified in documents filed by the company with the Securities
and Exchange Commission.
(Note: additional information on Macy’s, Inc., including past
news releases, is available at www.macysinc.com/pressroom)
Macy’s, Inc.Media - Jim Sluzewski, 5130579-7764orInvestor - Matt
Stautberg, 513-579-7780
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