Iconic department store chain Macy’s (NYSE:M) has announced that it will be eliminating about 100 jobs in the near future. The workforce reduction is part of a plan to revamp the business by consolidating several divisions. Macy’s CEO Jeff Gennette said, “This is a key step as we look to further transform the business and work through the volatility of today’s retail landscape.”
The company is planning to consolidate its merchandising, planning and private brands operations into one department under company executive Jeff Kantor. Implementing the consolidation will mean one-time costs of approximately $20 million to $25 million. Most of those costs will be booked in the third quarter.
The company estimates that the consolidation will save the company about $30 million a year. Approximately $5 million, or 1 cent per share, in savings will be realized in the fourth quarter of 2017.
Retailers who once dominated the shopping landscape are struggling as consumers continue to opt for online shopping over traditional brick-and-mortar stores. Macy’s is facing a declining customer base, a drop in foot traffic in malls, and deeper discounts by competitors. Investors are becoming concerned that department stores aren’t likely to emerge from an industry slump anytime soon.
Macy’s is trying to turn its business around. Sales last quarter fell less than Wall Street had estimated. The company predicted total sales for the full year will be 3.2 percent to 4.3 percent lower than in 2016 after its earnings report last week. Macy’s stock rose 51 cents, or 2.6 percent, to $19.53, in pre-market trading Tuesday. However, they had lost more than 45 percent of their value through Monday’s close.
Macy’s has also named Hal Lawton, a former senior vice president at eBay North America, as its new president. He inherits the post from Gennette, who took over as chief executive officer earlier this year. According to a statement from the company, Lawton will be responsible for the Macy’s brand, including merchandising, marketing, stores, and operations. He begins in his new position on Sept. 8.
Lawton is an executive with an extensive technology background. Gennette said in the statement, “Hal Lawton has deep expertise at the intersection of retail and technology, a diverse set of business experiences that give him a unique perspective, and a track record of successfully driving a change agenda at scale.” Before joining EBay in 2015, Lawton spent 10 years at Home Depot Inc., where he helped craft the home-improvement company’s website, now a $2 billion part of the business.