NEW YORK — Macy’s, Inc., the nation’s largest department store chain, says it’s fighting for survival due to store closures and the coronavirus pandemic. The company announced details of a restructuring that will trim its costs with lower sales as the business recovers from the closure of stores from March 18 through May 4, 2020 and gradual re-opening.
The company plans to eliminate 3,900 jobs in corporate and management. Additionally, Macy’s, Inc. has reduced staffing across its stores, supply chain and customer support network, which it will adjust as sales recover.
Macy’s reopened its flagship store on 34th Street in Manhattan last Monday.
“COVID-19 has significantly impacted our business. While the re-opening of our stores is going well, we do anticipate a gradual recovery of business, and we are taking action to align our cost base with our anticipated lower sales,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “These were hard decisions as they impact many of our colleagues. I want to thank all of our colleagues – those who have been active and those on furlough – for helping us get through this difficult time, and I want to express my deep gratitude to the colleagues who are departing for their service and contributions. We look forward to welcoming back many of our furloughed colleagues the first week of July.”
“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,” Gennette continued.
Macy’s raised $4.5 billion in financing this month which should give it enough capital through 2021 to operate and pay debts. The company announced preliminary sales of $3.0 billion for the first quarter, down from $5.5 billion last year. The company’s projected net loss for the quarter is $652 million. As of May 2, Macy’s reported $1.5 billion in cash on hand and $5.6 billion in total debt.
Financial Impact
The company expects the actions announced to generate savings of approximately $365 million in fiscal 2020 and approximately $630 million on an annualized basis. These savings will be additive to the anticipated $1.5 billion in annual expense savings announced in February, which the company expects to fully realize by year-end 2022.
For fiscal 2020, the company expects pre-tax costs of approximately $180 million for these restructuring activities, the majority of which will be recorded in the second quarter and all of which will be in cash.
