Macy's Cutting 7,000 Jobs

February 2, 2009 12:00:00 AM PST
Macy's Inc. said Monday that its cutting 7,000 jobs - including 5,100 in its stores - and centralizing some its regional operations in an effort to reduce costs amid an increasingly difficult retail environment."Reducing our workforce is an unfortunate outcome of the current economic environment, and I am frustrated that so many of our people will be unable to move forward with us as we proceed into a very exciting future for Macy's and Bloomingdale's," Macy's CEO Terry Lundgren said in a statement.

Macy's (M, Fortune 500) said the job cuts include nearly 40% of executive positions in its central offices including 1,400 jobs in San Francisco, about 850 jobs positions in Atlanta and about 600 jobs in Miami.

Employees whose positions are eliminated will be able to seek other jobs within the company, the retailer said, while those that are laid off will be given severance benefits.

The retailer, which operates 840 department stores including its namesake Macy's stores and the higher-end Bloomingdale's chain, currently employs 180,000 people.

The company does not plan to close any additional Macy's or Bloomingdale's locations other than 11 Macy's stores whose shutdown was previously announced.

The retailer also said it will freeze merit salary increases for executives across the company and reduce the level of its match to employee 401(k) plan contributions in 2009. Macy's also said it will cut its quarterly dividend 62%, to 5 cents a share.

In addition, the company said it is recommending to its board a reduction in perquisites for executives, including merchandise discounts, company cars, company-paid life insurance and financial counseling.

Regarding its new "centralized" structure, Lundgren said Macy's Inc. will now have a central office overseeing buying, merchandise planning, marketing and stores operations. It will also unify operations for logistics, information technology and human resources.

"In the current challenging economy, we must operate in a responsible manner that allows us to maximize the value we offer to our customers and enhance our profitability," Lundgren said.

Looking at the rest of the year, the company expects to see "a very challenging environment" through 2009. As such, the retailer forecast same-store sales, or sales at its stores open at least a year, to fall between 6% to 8% for the year.

For its new fiscal year, Macy's expects to earn between 40 to 55 cents a share, excluding one-time items. However, the retailer said its sales and earnings "could "exceed" those forecasts "should the economic environment improve."

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