CINCINNATI–Confirming whispers, Macy’s is consolidating three divisions, cutting approximately 2,300 positions in a bid to accelerate same-store sales growth and slash expenses.
Macy’s North, Macy’s Midwest and Macy’s Northwest will be consolidated into Macy’s East, Macy’s South and Macy’s West, respectively.
Effective immediately, the company will begin consolidating its Minneapolis-based Macy’s North organization into New York-based Macy’s East, resulting in about 950 job cuts at Macy’s North headquarters in Minneapolis.
It will fold the Macy’s Midwest organization into Atlanta-based Macy’s South, resulting in 850 job cuts at Macy’s Midwest’s offices in St. Louis. And it will roll the Seattle-based Macy’s Northwest headquarters into San Francisco-based Macy’s West, resulting in 750 job cuts at the Macy’s Northwest headquarters in Seattle. The Atlanta-based division will be renamed Macy’s Central. Store locations will remain in place, the retailer said.
Macy’s North included the former Marshall Field’s division.
Macy’s Miami-based Macy’s Florida and New-York based Bloomingdale’s divisions are not affected by the announcement.
With these consolidations, the operating model of the department store giant would be more akin to national chains such as J.C. Penney, Kohl’s and Wal-Mart, which do not operate regional divisions.
At the same time, the retailer will add 250 positions to give it a regional edge in local markets.
Jeffrey Gennette, currently chairman and chief executive officer of Macy’s Northwest, will relocate to San Francisco as chairman and CEO of Macy’s West. He will succeed Robert Mettler, who will postpone his planned July retirement and will remain with Macy’s Inc. as president for special projects, reporting to Vice Chair Susan Kronick. Mettler will focus initially on strategic development of the retailer’s cosmetics business.
Gennette will lead the Macy’s West principal team that will continue to include Daniel Edelman, president and chief operating officer, and Rudolph Borneo, vice chairman and director of stores. The new Macy’s West division will incorporate 257 Macy’s stores in 13 Western states and Guam, with 2007 sales of approximately $7.0 billion.
Robert Harrison, currently Macy’s Northwest president and chief operating officer, will remain in Seattle to supervise the transition and later will be reassigned to a senior post within the company.
At Macy’s North, Frank Guzzetta, chairman and CEO, and Robert Soroka, president and chief operating officer, will both retire as planned, in the spring. Amy Hanson, Macy’s North vice chairman and director of stores, will remain in Minneapolis to supervise the transition and later will be reassigned to a senior position within the company.
Macy’s East will continue to be led by Ronald Klein, chairman and CEO, and Mark Cosby, president and chief operating officer. The consolidated Macy’s East division will include 252 stores in 20 Eastern and Midwestern states and Washington, D.C., with 2007 sales of approximately $9.0 billion.
William McNamara, Macy’s Midwest chairman and CEO, will remain with Macy’s in a new role leading development of Macy’s reinvent strategies, reporting to Terry Lundgren, president, chairman and CEO of Macy’s Inc. Brian Keck, president and chief operating officer of Macy’s Midwest, will remain in St. Louis to help with the transition.
Macy’s Central will continue to be led by Edwin Holman, chairman and CEO, and Andrew Pickman, president and chief merchandising officer. The consolidated Macy’s Central division will include 240 stores in 18 states with 2007 sales of approximately $5.3 billion.
Macy’s expects to reap about $100 million in selling, general and administrative expense savings from the consolidations in 2009.
It will incur a pretax charge of approximately $150 million in 2008 for expenses related to the division consolidations.
All retail division chairmen, including Klein, Holman and Gennette, will continue to report to Kronick.
Macy’s consolidation of divisional central office organizations is slated for completion in the second quarter this year. Employees laid off in this process will be provided severance benefits and outplacement assistance.
Macy’s locations in these markets 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 manger). Districts will be based in cities including Chicago; Cincinnati; Cleveland; Columbus, Ohio; Detroit; Indianapolis; Kansas City, Mo.; Minneapolis; Pittsburgh; Portland, Ore.; St. Louis; Salt Lake City; and Seattle. Each new district will have a manager and a staff of store merchandisers and planners. These districts will report into their divisions through new regional offices being established in Chicago, Cincinnati, St. Louis and Seattle.
