Markets

U.S. open in 60 hrs, 9 mins

DJIA

10,309.92

-154.48

1.48%

NASDAQ

2,138.44

-37.61

1.73%

S&P 500

1,091.49

-19.14

1.72%

10yr Note

101.406

0.5625

0.56%

FTSE 100

5,245.73

51.60

0.99%

Nikkei 225

9,081.52

-301.72

3.22%

Hang Seng

21,134.50

-1,075.91

4.84%

Euro (in USD)

1.498

-0.0023

0.15%

Yen (per USD)

85.54

-0.86

1.00%

Gold

1,177.80

-9.20

0.78%

Oil

75.97

-1.99

2.55%

BUSINESS NEWS

INVESTING

Financial Glossary

PERSONAL FINANCE AT WALLETPOP

SMALL BUSINESS

Macy's to Cut 7,000 Jobs, Slash Dividend

By ANNE D'INNOCENZIO

posted: 297 DAYS 12 HOURS AGO

comments: 231

PRINT|E-MAIL MORE

Text SizeAAA

NEW YORK (Feb. 2) - Macy's Inc. announced Monday that it will cut 7,000 jobs, almost 4 percent of its work force, and reduce its contributions to its employees' retirement funds and slash its dividend to preserve cash amid a severe pullback in consumer spending.

Skip over this content

The Cincinnati-based department store chain also announced the national rollout of a plan to localize merchandising to specific markets, which it began in some regions last year.

The company, which also delivered downbeat earnings and sales forecasts for the year on Monday, said it plans to integrate all its geographic divisions into a single unit.

Skip over this content

Macy's shares fell 4 percent Monday to close at $8.59.

Macy's said the job cuts, which include some unfilled positions and 1,900 being eliminated in the restructuring, will come at corporate offices, stores and other locations. The company employs about 180,000 people.

Macy's announced last month - on the heels of the worst holiday shopping season in decades - that it would close 11 stores, affecting 960 employees. The company expects the additional actions announced Monday to lower its annual selling, general and administrative expenses about $400 million per year starting in 2010.

The company also slashed its quarterly dividend to 5 cents from 13.25 cents. The dividend will be paid on April 1 to shareholders of record March 13.

"We just believe that this is a time when nothing should be considered a sacred cow," Macy's Chief Executive Terry J. Lundgren said in a conference call with analysts on Monday after the announcement.

The news from Macy's came as the Commerce Department released yet another batch of bad news on consumers' financial health: Consumer spending fell for a record sixth straight month in December as financially strapped households, worried about rising layoffs, increased their savings rates to the highest level since May, federal officials said Monday.

Department stores have been especially hard-hit by the poor economy as shoppers cut spending and turn to discount stores. Last month, Fresno, Calif.-based department store chain Gottschalks Inc. put itself up for sale and said it had filed to reorganize in a Chapter 11 bankruptcy. Dallas-based Neiman Marcus Group Inc. said this month that it was cutting about 375 jobs, or 3 percent of its work force.

Macy's began testing the localization strategy in 20 regional markets last spring and expects the reorganization to be complete beginning in the second quarter this year.

The idea is to concentrate Macy's top talent in local markets and better stay on top of trends by grouping Macy's stores nationwide into 69 geographic districts of 10 to 12 stores each. Twenty of the districts - in the Midwest, Upper Midwest and Pacific Northwest - were created as pilots in spring 2008 and will remain in place.

In a phone interview with The Associated Press on Monday, CEO Lundgren acknowledged that he would have preferred to take more time with the national rollout. But, given the weak economy, he said, "You have to take action now."

Lundgren told analysts Monday that he is looking at the company as a "clean slate of paper" and is "starting from scratch" as he spearheads the overhaul. He also said he hopes Macy's will improve on inventory turns as a result of the restructuring.

He declined to comment on how much inventory will be down this year but said that, given the localization effort, the merchandising team will be better able to eliminate duplications in a given merchandise category in a given market.

Also as part of the restructuring, Macy's central buying, planning and senior management and marketing functions will be located primarily in New York.

Corporate-related businesses functions such as finance, human resources, legal, property development and company purchases will be located primarily in Cincinnati.

The localization began last year as the company struggled with disappointing sales in some markets where the Macy's name replaced a local favorite as the company absorbed May Department Stores Co. in 2005.

Macy's moves received kudos from Wall Street analysts.

"The environment is giving (Macy's) the opportunity to streamline its infrastructure," wrote Liz Dunn, an analyst at Thomas Weisel Partners LLC in a note released Monday. "We believe that (Macy's) regional buying strategy has been an impediment to profitability."

Also to reduce expenses, Macy's is eliminating merit salary increases for executives in spring 2009 for performance in 2008, and it will cut its contributions to employees' retirement accounts this year.

Macy's said it expects to earn between 40 cents and 55 cents, excluding one-time costs, for the year that ends next January.

Analysts surveyed by Thomson Reuters project earnings of 87 cents per share.

The company predicts its same-store sales or sales at stores opened at least a year will fall between 6 percent and 8 percent in the year that ends in January 2010. Same-store sales are considered a key indicator of a retailer's health.

The company reports its fourth-quarter earnings results on Feb. 24.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-02-02 13:36:33

PRINT|E-MAIL TWITTER FACEBOOK DIGG AIM MORE

Must Read?

0 %

0 VOTES

Recent Comments

Post Your Own

1 - 10 of 231

231 comments

Sarah56123 05:37:57 PM Feb 03 2009

Report This!

Besides the absence of what MF had, what I didn't like about Macy's was that lets say I needed one pair of black pants; I would have to go to each Designer division within Macy's to see what they have; very time consuming....not about to do that to pay top dollar only on a sale. I can go to Marshalls, Ross, etc., and all of my sizes of whatever are in one place at a fraction of Macy's cost, and it comes from Macy's, Nordstroms, etc.

Sarah56123 05:34:40 PM Feb 03 2009

Report This!

Sarah56123 05:20:56 PM Feb 03 2009

Report This!

Today I went into a small business and from the second I went in the door, I was being hounded to be a patron, in an expensive town that can't compare to the ones I came from in any way but get all this hype....as well as being impersonal. In any case, here are the mistakes this poor business woman was making:If you are trying to sell expensive new products, sample generously, you have to lure people in. Also, don't just sell one product, if it's a bakery item, sell coffee and set up tables. If you advertise, give discount coupons. You haven't even lured anyone's money yet....you aren't going to stay alive asking top dollar without these suggestions. Then, do not hound customers, be able to stand back and let them take their time. BTW...I can make anything you can, at a fraction of the cost and make it healthier so there has to be a draw for me.....

Sarah56123 05:10:42 PM Feb 03 2009

Report This!

Wagdude 10:31:56 AM Feb 03 2009 Report This! Macy's can improve their bottom line in the Chicago area: Bring back the Marshall Field's name and merchandise. We are very tradional here and value memories that go back several generations.---I know what you mean; it's hard to put into words but Macys never did have what Marshall Fields did, MF wasn't just about merchandise, but what else is knew...they still don't get that concept where I live. Marshall Fields is the experience plus the merchandise, and more unique as I recall....but Macy's sales are giveaways for good stuff....but that is all it's about....kind of like living here...it's only about your job.

Sarah56123 05:08:28 PM Feb 03 2009

Report This!

test

JaniceFenton 04:05:39 PM Feb 03 2009

Report This!

We all need to start buying American made goods. Keep America working. When a person is working, they can pay their mortgage and taxes. FDR had the right idea in 1939 with the WPA. He put the country back to work. This rosy idea of a global economy might work if the globe was not full of greedy, lying, cheating ba$tard$. We need to remember that most of the globe goes to sleep hungry every night. We cannot depend on our Government to help us. If we cannot resist the foreign made goods, we will all be sleeping in the crates used to import those goods. You are holding the last dollar, don't waste it!

Claudejuly55 01:41:47 PM Feb 03 2009

Report This!

when will people start realizeing that as long we supporting these geeedy corprations that we lose not them. the only reason macys is laying off people is that the geeedy ceos who are overpaid can keep thier jobs . and how much you want to bet that the ceos who ran circuit city will open a new chain of stores within a year .what these companys dont tell you is how much profit they make on each product they sell.i knew a clothing manufacter who sold swaters to macys for 3 dollars each and this was in 2003 and yes thay sold them for 40 to 50 bucks each .

Jwmgrand 01:39:04 PM Feb 03 2009

Report This!

THE PROTECTIONISM STORM IS BREWING ..... THE RICH HATE IT BECAUSE THEY LOVE TO EXPLOIT ( ANYTHING ) THAT CAN KEEP THEM LIVING LARGE ! BUT THE MASSES WILL FORCE PROTECTIONISM ( TO BE LEGISLATED ) AND VOTED INTO LAW ONCE THE UNEMPLOYMENT RATE HITS 11 % NEXT YEAR .I GUESS THE PHRASE OR MYTH .........ITS A SERVICE ECONOMY .... WAS PURE B.S. !

Budzbyme 01:03:44 PM Feb 03 2009

Report This!

The retail store that I work for is not on this list of cutting back...However, a week ago last /friday, they lowered the hammer and "eliminated" job titles, full time positions and have cut some of their part time help to one or two days a week, and not an 8 hour day either......some of these employees have worked and made them what they are today, for well over 10 years ! I just wonder if the higher ups sacraficed anything. So shoppers, be aware that you will have to wait in line longer to check out, put up with empty shelves(its probably sitting in the stockroom, there's one to do stock, a less inventory available. So, be kind to the associate that you do find working, its not their fault they are the only one on the sales floor....

Tinamwelch 12:56:00 PM Feb 03 2009

Report This!

totally agree with jeffclowns that is what it is going to take however, americans have been spending way to much time buying cheap things they dont need. it is time to scale back and buy only what is necessary and then we can start mending this terrible crisis that we have created. We are a nation of waste to say the least and a throw away society..

1 - 10 of 231

231 comments