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Macy's pivots smaller with major job cuts

Jun. 25, 2020 8:19 AM ETMacy's, Inc. (M)By: Clark Schultz, SA News Editor31 Comments
  • Macy's (NYSE:M) expects to create cost savings of about $630M per year with a major restructuring initiative.
  • The restructuring will include the elimination of 3.9K corporate and management roles. Additionally, Macy's has reduced staffing across its stores portfolio, supply chain and customer support network, which it will adjust as sales recover.
  • "We know that we will be a smaller company for the foreseeable future, and our cost base will continue to reflect that moving forward. Our lower cost base combined with the approximately $4.5 billion in new financing will also make us a more stable, flexible company," says CEO Jeffrey Gennette.
  • The $630M in annualized savings for the company will be additive to the anticipated $1.5B in annual expense savings announced in February, which Macy's expects to fully realize by year-end 2022.
  • M -2.95% premarket to $6.58. Shares are down 60% YTD.
  • Source: Press Release

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Comments (31)

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Cost saving for Macy's right now, sounds like a good idea.
Remember, Macy's is one of the top 10 ecommerce businesses in the USA.
(the in stores job cuts is not so bad)
Still a dying dinosaur. Will test 4s next week. The Czech billionaire pump n dump made every long look foolish
I have no position so haven't followed it as closely. Did he actually dump, or is this your speculation?
he sold a portion so he is no longer a 5% shareholder...
Long M. Covid has made everyone's recovery, or mere survival, tougher.
ckarabin profile picture
This move simply "squares up" with them closing the low performing stores. Macy's is really several pieces now. They closed the stores that were in low end malls. Their high end mall properties with revamped stores are doing quite well, on line in booming, Blue Mercury and Backstage doing well. They just had to adjust corp expenses for their pulling out fo low end pedestrian malls.
don't forget the 450 million dollars savings from the dividend elimination plus the tax loss carryover from the first few quarters of losses realized
Benjamin Graham Cracker profile picture
Pivoting is something you do on your own volition.

This doesn't feel like "pivoting". It feels like...."collapsing inward like a dying star"
GR Value profile picture
Macy's could survive as a smaller entity, but I don't know if all these moves including high yield debt and borrowing pledging inventories will salvage anything for shareholders. It depends on lots of unknowns. I don't even know the fine print of selling off those pledged inventories and buying new ones, while pledged vs new yielding debt.

The virus, the margin to move inventories, costs including breaking leases and ultimately future consumer action. Highly unpredictable in my mind.
@GR Value And that uncertainty you feel is why I and many other investors will be tripling our money on it, while others what for it to double before they get in, the. They make only 50% instead of 200%.

I’m in since $4.60

I love when people feel uncertainty about a solid investment that’s WAY undervalued...
GR Value profile picture

In my opinion there is uncertainty backed by probability of one way or the other then there's mostly pure gambles. I think things like Macy's are just pure gambles on various things, including common stock being worth something even if the company survives as a smaller entity etc.
No company in history ever "saved" and "cost cut" their way to prosperity.
This is like watching a replay of the JCP slow death spiral.
metalhead profile picture
Smaller and more leveraged ... let us know how that works out for ya, Mr. CEO!

(Well, it will work out fine for him, I'm sure, but not so much for his employees or investors.)
foodman profile picture
A good question is ; what is the Average productivity per employee hour?
The number would indicate wether additional reductions are needed, immediately?
billrla profile picture
"pivot" is the new "fouled up."
Dividend Seeker profile picture
With stimulus checks, unemployment, and loan forbearance programs, they may be better off.
GR Value profile picture
@Dividend Seeker

Well, unemployment tapers off in 30 days, the $1200 didn't last a single week for most families, and we are 3 months+ into backed up expenses, and I agree that forbearance and hardship programs both mask results and help families greatly. Problem is they don't last forever and i'm worried companies won't extend them.

I'm extremely concerned about consumers in general. Even if we go back to the post 2009 ignorant party days, the structural problems remain in earnest and it becomes the spenders vs the savers before serfdom.
Hammer823 profile picture
The 15-20 million job retail sector is about to be put out of work. It’s happening slowly, then all at once. I guess there are going to be a lot more “disabled” people soon collecting government benefits. It’s really a great gig. My neighbor is “disabled” and does quite well with over 2k per month in cash and free health care. Add in his little unreported side work and it’s no wonder so many Americans are “disabled”.

$600 benefits will be expired in July..

Those unemployed workers will get into serious financial troubles..
Jorel Boston profile picture
@Miracle Maker hopefully(if they dont have 2 baby daddys) they put some of it away or thought for long term
Hammer823 profile picture
@miracle Maker all they have to be is become “disabled”. They still get about $600 per week for life with free medical care, and our inept government never follows up with health checks to see if they get “better”. We already have Universal Basic Income, it’s just called Disability. 3 out of 4 people I know on disability are 100% fit for work. Scamming the American system is a way of life for tens of millions of American citizens. Disability and Unemployment are 2 different things.
That's Bankruptcy signal..

disastrous Q2 and Q3 results are coming.
good move
LifeScienceInvesting profile picture
M has one of the most bloated C suites in all of corporate America. Does this re-org consolidate any of the duplicative C suite positions? or eliminate any of the clearly negative ROI C suite divisions/ positions? ie. story?
@LifeScienceInvestingI guess both. A good crisis is not to be missed.
@LifeScienceInvesting Totally agree! This is the quintessential cases study of what happens when MBAs and NYC "fashionistas" take over a company. It's not about running a group of regional department stores any longer; they tried to turn the company into a 2nd rate Saks or Neimus Marcus. Running a boring old department store chain just isn't "cool" for these people.

It all started when they consolidated all of the local brands and re-branded everything as "Macy's." The non-investment is "non-premier" locations was another mistake. Moving the headquarters from Cincinnati to NYC was the final straw.

Billions and billions of dollars in value was destroyed by this management team, but it only the employees and customers will be hurt, not that they are much of those left.
Change this Jeffrey for THE other Jeffrey
Timothy Stabosz profile picture
Well, now they are talking turkey.
Cut your salary Gennette!
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