Macy’s layoffs cuts 3900 corporate jobs: How is Macy’s doing in 2024?

Macy's Layoffs

There are rumours that Macy’s will stop operations. However, the business is going through other factors that might speed up its downfall.

The company has been closing stores and laying off employees to stay alive. The company had previously declared its intention to close 125 outlets while laying off countless employees. According to Macy’s CEO Jeff Gennette, they are intended to cut costs, promote teamwork, and eliminate unnecessary chores.

There have been issues with Macy’s before. The business lost in 2015 due to decreased sales at traditional brick-and-mortar retailers. The fact that many people are now purchasing their items online has also reduced sales.

The closure of many Macy’s sites started in 2020 and continued in 2021 and 2022. Macy’s has previously declared bankruptcy, so they are no strangers to financial difficulties. They declared themselves bankrupt under Chapter 11 in 2003 and paid off $1 billion of their debt. They also closed 36 underperforming locations across the country. Let us read briefly about the layoffs at Macy’s in this article.

Overview of Macy’s

With more than 500 locations nationwide, Macy’s is the largest department store in the world. It’s also among the best clothing companies in the US. The development of retail may be seen throughout Macy’s history. When Macy’s was first established in 1858, it was known as the R. H. Macy Company, or just “Macy.” Rowland Hussey Macy, the founder of the corporation that bears his name, opened a tiny shop selling women’s apparel in Manhattan, New York.

Rowland Hussey Macy passed away in 1875, and his son-in-law took over business management. The business changed its name to “R.H. Macy & Co.” in 1896. R. H. Macy & Co. didn’t branch out outside department stores until it bought a group of Los Angeles department stores known as “Bullock’s” in 1924.

One of the most well-known brands in the world is Macy’s. They are presently the eighth-largest retailer in the US, with 39 locations. In 45 states, Guam, Puerto Rico, and China, the company offers a broad selection of trendy products for the entire family.

On January 20, 2023, Macy’s shuttered four locations in California, Colorado, Maryland, and Hawaii as part of its growth strategy. By reducing its most minor profitable locations, the company hopes to lower costs. It aims to transition to establishing new privately owned shops across the country.

Macy’s cuts 3,900 workers

Macy’s was laying off about a quarter of its employees and 3,900 white-collar positions in a massive effort to save expenses during the coronavirus epidemic. On June 25, 2020, the struggling business stated it would close 125 stores or about a quarter of its total. It planned to cut 2,000 jobs due to a weak holiday season.

Macy’s Inc. revealed plans to cut thousands of back-office employees, signalling that the struggling retail sector is unlikely to recover anytime soon.

According to a statement from the company, the restructuring included the layoffs of around 3,900 corporate and management roles. It is expected to save the business $365 million this fiscal year and about $630 million annually.

“We are aware that we are going to stay a smaller business for some time. Going forward, our cost base will continue to reflect that”, said CEO Jeff Gennette.

In New York, shares dropped as much as 4.2%. 2020 saw a 60% loss in the stock vs. a 5.6% drop in the S&P 500 Index.

The layoffs come on top of the employee reductions inside stores, throughout Macy’s supply chain, and in customer service positions. The new round of layoffs at businesses fuels concern. Thus, many of the steps used to furlough workers in the early stages of the pandemic are now becoming permanent.

Most layoffs and furloughs in the more significant retail industry have been at the store level. It’s because physical sites were shuttered for weeks or months during the start of the pandemic. However, those layoffs have also begun to spread to corporate offices and company headquarters.

Simeon Siegel is a retail analyst at BMO Capital Markets. He stated, “the reality is that everything is changing and growing. Finding out how to adapt and how to thrive on a smaller base involves figuring out how to operate more efficiently at the top.” “If a company expects to shrink, it must address its corporate makeup as well.”

Previous restructuring

As part of its turnaround plan, Macy’s began streamlining the chain in February 2020, even before the virus spread to the US. It declared that it eliminated 2,000 positions or around 9% of its staff.

“We introduced our Polaris strategy earlier this year. It includes significant structural changes throughout the whole organization. I was sure that these adjustments would set up our company for success at the moment. The COVID-19 epidemic then broke out a month later.” In an email to staff, which Bloomberg News was able to get, Gennette wrote: “And everything changed after that.”

The layoff announcement comes two weeks after the department store giant comforted investors. They did it by declaring that it had reopened 450 stores in some capacity. Also, it predicted ending the second quarter with a “clean inventory condition.” At the time, Gennette stated that newly reopened stores were performing better than expected, which initially caused shares to surge.

Share prices have fallen since then. Customers in various countries continue to shop online, patronize small businesses, or avoid purchasing non-essentials altogether, as many retailers worry. The COVID-19-related business closures were primarily to blame for the US savings rate reaching an all-time high of 33% in April 2020. Also, some of that frugalness is holding steady.

The Decimated Sales

According to Poonam Goyal, a retail analyst, “Macy’s has done corporate restructuring in the past. The pandemic has practically decimated its sales. These may have forced them to look deeper at their cost structure, reducing excess costs.” “Sales aren’t as high as they used to be, despite stores reopening. They must find ways to cut expenses because it’s the one thing they can control.

She continued, “We do expect other businesses to examine their cost structure more carefully during the pandemic.”

Macy’s had already begun to leverage more debt to improve its ability to raise funds. The business issued a $3.15 billion credit line in May 2020, secured by its inventories. The department store operator claimed to have obtained $4.5 billion in total new financing, including a prior bond offering.

The nation’s largest department store chain’s 125,000 employees were sent on leave in mid-March 2020. This was after coronavirus-related closures caused a sharp drop in sales. As the firm reopened stores nationwide in July 2020, many employees are expected to start working again. The retailer faced more difficulties despite what was already a challenging period.

The firm will make a pre-tax cash charge of around $180 million in connection with the reorganization, primarily in the second quarter of 2020. Additionally, Macy’s stated that 

Employees returning from leave will start doing so starting the week of July 5, 2020. According to a filing, the business had 123,000 employees at the end of 2019.

Facts about employees

The fact that Macy’s has been firing staff members is the most obvious sign that the company is dissolving. By the end of 2017, Macy’s planned to remove 10,000 positions, according to a 2016 announcement.

These layoffs primarily affect their Cincinnati headquarters and other central office sites. The online department at Macy’s is also affected by the changes. They have started consolidating all their store websites under a single Macys.com.

Would retailers suffer if Macy’s went out of business? If so, it could also hurt other retailers. Macy’s has been the biggest department store globally for a long time. It ranks among the top five clothing companies in the United States. Considering everything, they might be leaving shortly.

However, the business promised to expand its storefronts and hire more staff. There are many rumours and speculative claims about Macy’s, but no solid proof exists to support them.

Conclusion

“By minimizing its footprint, Macy’s has so far been able to manage a gentle restructuring. The bulk of the dead wood in closings has been removed during the previous couple of years.” This is according to Neil Saunders, managing director of the data analytics and consulting firm GlobalData.

Yet, despite his claim that the most recent closures are “more opportunistic and gentle pruning,” there may be worse to come. Macy’s still has many underperforming stores. These will likely perform poorly as the consumer market tightens. He continued, “I am certain there will be more closures this year and in the years ahead.”

Other experts believe there are specific indicators that things may soon become difficult for major retailers. As finances get tighter and prices rise, customers are more likely to spend money on garments and accessories. This is according to data from a research note published by analysts at the investment bank UBS.

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