[Editor’s Note 1/23/24: This story was updated on Jan. 22 to include details from a Jan. 21 statement from Macy’s, Inc. investor Arkhouse Management, urging Macy’s to respond to its takeover bid within the week. Response from the Macy’s Inc. board of directors was added to this story on Jan. 23.]
Macy’s, Inc. is laying off 13% of its corporate workforce, amounting to approximately 2,350 jobs, and plans to close five stores as incoming CEO Tony Spring prepares to take the reins. The cuts are part of a new strategy that Spring will implement when he takes over from current CEO Jeff Gennette next month, multiple sources report, citing internal Macy’s memos.
The job cuts amount to 3.5% of the company’s total workforce, excluding seasonal hires, and also include employees at Bloomingdale’s and Bluemercury. Additionally, two furniture locations will be sold and five stores will be closed, in Ballston Quarter, Arlington, Va.; Bayfair Center, San Leandro, Calif.; Kukui Grove Center, Lihue, Hawaii; Simi Valley Town Center, Simi Valley, Calif.; and Governor’s Square, Tallahassee, Fla., according to the Wall Street Journal.
“Despite our strong and tangible progress over the last few years, we remain under pressure,” Gennette and Spring wrote in the memo, which also said that the cuts are in response to nearly a year of consumer research into ways “to both better meet their expectations and to generate consistent growth.”
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Among the organizational changes planned in line with the cuts are adding more automation to the company’s supply chain and outsourcing some roles, although which roles were not specifically outlined. The company also is working to remove management layers in order to speed decision-making and plans to invest more in areas that have a direct impact on the customer experience, such as adding more visual display managers to enhance the look of stores and upgrading digital functions to make online shopping more seamless, an executive told WSJ.
“As we prepare to deploy a new strategy to meet the needs of an ever-changing consumer and marketplace, we made the difficult decision to reduce our workforce by 3.5% to become a more streamlined company,” a Macy’s spokesman said in a statement emailed to The New York Times.
Despite working diligently on a turnaround for several years, net sales in Q3 2023 were down 7% compared to the same period in 2022, to $4.9 billion, with the Macy’s banner specifically reporting 7% declines in both brick-and-mortar and digital sales during the period.
Macy’s Receives, and Rejects, Takeover Bid
The company’s continued poor performance prompted a bid from a group of investors to buy out the company and take it private in December 2023.
On Jan. 21, presumably prompted by news of the layoffs and store closures, one of Macy’s largest investors, Arkhouse Management, which is leading the takeover bid, issued a new statement urging Macy’s to respond to its offer: “We encourage the company to respond to us this week, as it indicated, without further delaying substantive discussions,” reads the statement. “We see the potential for a meaningful increase to our original proposal if we are granted access to the necessary due diligence and, to that end, have offered to sign a mutual non-disclosure agreement to conduct this due diligence. We have conviction in the long-term success of Macy’s, but believe that its potential will only be realized as a private company.”
Macy’s confirmed that it received an “unsolicited, non-binding proposal” from Arkhouse Management and Brigade Capital Management to acquire all outstanding company shares for $21.00 per share in cash on Dec. 1, 2023. The board of directors and management team reviewed the proposal with independent legal, financial and real estate advisors, and has indicated that because it “lacks compelling value,” they will not enter a non-disclosure agreement or provide any due diligence information to Arkhouse and Brigade.
“The Macy’s, Inc. Board of Directors and management team have a proven track record of evaluating a broad range of options to enhance shareholder value. Following careful consideration and efforts to gather additional information from Arkhouse and Brigade, the Board determined that Arkhouse and Brigade’s proposal is not actionable and that it fails to provide compelling value to Macy’s, Inc. shareholders,” said Jeff Gennette, Chairman and CEO of Macy’s, Inc in a statement. “We continue to be open to opportunities that are in the best interests of the Company and all of our shareholders.”
Macy’s is set to report on its Q4 2023, reflecting the all-important holiday season, next month.
