Macy’s to slash 2,300 jobs Retail strategy will cut management positions, consolidate divisions

CINCINNATI – Macy’s Inc. said Wednesday it will cut about 2,300 management jobs as the department store operator consolidates three regional divisions and decentralizes buying in a bid to reduce costs and boost sales.

The announcement came as Macy’s announced separately that it had a steeper-than-expected drop in sales in January at established stores and that earnings in its fiscal year would be below Wall Street estimates. Shares fell almost 5 percent on the news.

The Cincinnati-based retailer has been struggling with disappointing sales and resistance from shoppers in some markets where the Macy’s name replaced local favorites it absorbed as part of its acquisition of May Department Stores Co. in 2005 amid efforts to build a national brand.

Macy’s said it will immediately begin consolidating its Minneapolis-based Macy’s North headquarters into its New York-based Macy’s East, its St. Louis-based Macy’s Midwest organization into its Atlanta-based Macy’s South, and its Seattle-based Macy’s Northwest headquarters into its San Francisco-based Macy’s West.

The consolidation of the office organizations expected to be completed in the second quarter of 2008 will affect 950 positions at Macy’s North, 850 positions at Macy’s Midwest and 750 positions at Macy’s Northwest in Seattle.

The company said executives currently in those offices will be considered for positions in the new local market organization or for open positions elsewhere, and laid-off employees will receive severance benefits and outplacement assistance. At the same time, Macy’s said it also will be adding 250 new management positions at its stores to better tailor its product offerings to specific regions.

The net effect would be a reduction of 2,300 jobs in Macy’s current work force of about 188,000.

Macy’s Chief Executive Terry Lundgren told The Associated Press on Wednesday that the new localization and regionalization efforts don’t contradict Macy’s focus on building its national brand, which he said remains critically important.

“But we have to be sure we are totally tuned into the customer and individual stores while carrying the national brand,” Lundgren, also chairman and president, said.

As part of its new strategy, Macy’s locations will be grouped into 20 newly formed districts of about 10 stores compared with an average of 16 to 18 currently overseen by each regional manager. Districts will be based in cities including Chicago, Cincinnati, Salt Lake City and Seattle. The district-based executives will be empowered to make more local decisions in such areas as service and visual merchandising, which the company believes will help improve execution. More resources also will be provided to local markets for special events and to ensure customer service.