Macy’s, the largest US department store chain, is embarking on a multi-year restructuring program that will shrink its management structure and make it more nimble in a competitive retail environment.
The decision comes as the store chain is facing sluggish same-store sales and with this aims to reduce costs and improve profitability. The plan would result in annual cost savings of US $ 100 million and includes elimination of 100 vice president positions.
The company’s results for the quarter had only managed to beat Wall Street expectations because they were lowered after the department store chain announced sluggish holiday sales last month.
“The steps we are announcing to further streamline our management structure will allow us to move faster, reduce costs and be more responsive to changing customer expectations. Importantly, these changes build the foundation we need to achieve meaningful enterprise productivity improvements. These actions impact colleagues who have made strong contributions to the company over the years, and I thank them for their service.”– Jeff Gennette, CEO, Macy’s
Macy’s is under pressure to reinvent itself as shoppers have increasingly started buying online. Macy’s has been expanding its store labels and opening more off-price backstage stores within Macy’s outlets.
The store chain has also rolled out technology that allows customers to skip the line at the register. It is also expanding virtual reality technology in furniture and cosmetics sections. The company’s revamped loyalty card program has helped keep its best customers engaged.
Macy’s earned net income of US $ 740 million, or US $ 2.37 per share, in the period ended February 2. That compares with net income of US $ 1.35 billion, or US $ 4.38 per share, in the year-earlier period. Adjusted results were US $ 2.73 per share.
