Macy’s Department stores, one of the financially healthier American retailers, announced it will eliminate 2,500 jobs as part of a reorganization effort, according to a January 9, 2014 article published by the Chicago Tribune.
Macy’s reported a strong holiday shopping season and excellent profits for the most recent quarter- end. It has performed better than other retailers during the economic downturn and would seem like an unlikely candidate for job cuts, but Macy’s CEO Terry Lundgren feels the reorganization is necessary.
"Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy's Inc.," said Lundgren. "As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers."
The reorganization effort will result in a net elimination of jobs, but in reality, there will some new positions created and some eliminated. The total Macy’s workforce will be around 175,000 after the changes take effect. The number of stores will be modified slightly, with five closing and eight opening, bringing the nationwide total to 844 locations.
Macy’s says that these changes will improve the financial bottom line and better serve a changing market. The retailer predicts the changes will save $100 million per year and push earnings per share for 2014 into the $4.40 to $4.50 range, beating Wall Street expectations.
Reaction to the news from investors has been positive, pushing Macy’s shares higher in early trading.
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