US department store chain Macy’s will cut about 3,900 jobs as part of a restructuring to help it cope with the effect of store closures during the pandemic.
The cutbacks to administrative and management roles are expected to save the company $365m in the current financial year and $630m a year thereafter. Macy’s said it had also reduced staffing across its stores, supply chain and customer support network, but that it could reinstate these as sales recovered. All of its stores closed in March but they have gradually started reopening since early May.
The company, which also owns Bloomingdale’s and Bluemercury, expects most of its remaining furloughed employees to return to work from July 5.
“Covid-19 has significantly impacted our business,” said Jeff Gennette, chief executive. “While the reopening 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.”
Two weeks ago, Macy’s said it had reopened about 450 of its stores at the start of June and that they were performing better than expected.
It had already launched a $1.5bn cost-cutting plan in February, before the lockdown began. This included 2,000 job cuts and the closure of 125 stores. Macy’s had 123,000 employees at the start of February, according to Bloomberg data.
“We know that we will be a smaller company for the foreseeable future, and our cost base will continue to reflect that moving forward,” Mr Gennette said on Thursday.
US companies have been cutting jobs in response to the slowdown caused by coronavirus and more than 47m Americans have claimed unemployment benefits since the start of the crisis.
Retailers have been particularly hard hit: two big chains JCPenney and Neiman Marcus have filed for bankruptcy. Still, the industry started to show signs of a recovery last month, with consumer spending rising sharply as lockdowns began to lift.
However, a resurgence in Covid-19 cases in some southern and western parts of the country that had been among the first to reopen, has complicated the outlook.
Certain states are slowing their relaxation of lockdown rules, while the governors of Texas and North Carolina have called a halt to reopening plans. Meanwhile, Apple has closed 18 of its stores across Texas, Arizona, Florida, North Carolina and South Carolina.
Macy’s last month pledged its real estate portfolio as collateral to raise cash through a $1.1bn bond sale. According to preliminary results this month, it swung to a net loss of $652m in the first quarter and sales fell 45 per cent.
Its shares dropped 4 per cent to $6.52 on Thursday on the news and are down 62 per cent this year.
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