Macy’s has announced that it will lay off 2,500 employees and close five stores by the early Spring of 2014, while also announcing that it will open eight stores in other locations. The company is refocusing hiring in different areas of the company, including online and direct-to-consumer fulfillment. The layoffs and store closings are expected to save the company $100 million.
The creation of new jobs within the online channel highlights Macy’s efforts to improve its M.O.M. strategy, which stands for My Macy’s localization, Omnichannel integration and Magic Selling customer engagement). The move, as a result, is expected to help the retailer maintain overall revenue, according to Terry J. Lundgren, Chairman, President and CEO of Macy’s.
“We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope,” Lundgren said. “As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers.”
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Macy’s layoffs do not reflect a struggling business. The company reported a 3.6% rise in comparable store sales for the 2013 holiday season, versus the same time period in 2012. Macy’s expected earnings for 2014 are estimated between $4.40 and $4.50 per share.
“The 2013 holiday season was successful for Macy’s and Bloomingdale’s as we delivered great value to the customer and provided a robust omnichannel shopping experience which served our customers whenever, however and wherever they chose to shop and to buy,” Lundgren said. “Even in a questionable macroeconomic environment…the positive response from our customers during the holiday season is yet another vote of confidence that our well-established strategies continue to work for us.”
Lundgren added: “Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy’s, Inc.”
The Macy’s announcement comes during a time when the industry is seeing a shift is shopping behavior, from in-store to online. Department stores saw a 62.8% increase in online sales in Q4 2013 over the previous year, according to the latest IBM Digital Analytics Benchmark.
A full Macy’s Q4 sales and earnings report is scheduled to be released on February 25, 2014.
