Macy's is facing tough times, like many other businesses struggling to keep up with how shoppers are changing. They're closing some stores because people aren't buying there as much as they used to.
To save money and focus on making shopping better for customers, Macy's is cutting 3.5% of its workers and shutting down five stores across the United States in 2024.
Macy's Announces Layoffs and Store Closures
Macy's, the famous department store, is letting go of around 2,350 workers, about 3.5% of its workforce. Alongside this, they're shutting down five of their locations.
Another company, Wayfair, an online furniture seller, is also reducing its staff. They're cutting about 1,650 jobs, 13% of their employees worldwide. Wayfair's CEO, Niraj Shah, explained that they hired too many people during a good economy and needed to return to their main goals.
This isn't the first time Wayfair has made cuts. Last year, they laid off 1,750 workers and cut 870 jobs in August 2022 and 550 jobs in 2020.
Wayfair expects these recent job cuts to save more than $280 million annually. However, they hope to spend about $70-80 million on severance pay and benefits for the affected employees, mainly in the first part of 2024.
A spokesperson emailed that Macy's is making tough choices to adapt to changing shoppers' needs and market trends. They're trimming their workforce by 3.5% to streamline operations.
Reports last month suggested that activist investors were looking to make money from Macy's properties. Tony Spring is expected to become the new CEO soon.
According to Neil Saunders, Managing Director at GlobalData, cutting jobs and store space is normal in retail. But pleasing investors can only go so far. Eventually, a company needs more than just shrinking to do well.
Jeff Gennette, the outgoing CEO, had said that closing a few stores last year marked the end of reducing their fleet. They have shut down about 170 stores since 2016. But some experts think there could be more closures.
Macy's is speeding up its plans to open smaller stores, not in malls. Executives have hinted this might mean closing more big stores. The company explained that closing five big stores this year is part of finding the right balance between stores in and out of malls.
Saunders hopes these changes are just a one-time adjustment, not a trend for the whole year.
He believes that Macy's new leader, Tony Spring, must improve shopping and boost sales.
Although challenging, this approach is better for Macy's future than always cutting costs.
Macy's Closing FiveStores in 2024: Locations
Macy's is set to lay off workers starting Friday, Jan. 26, with store closures expected by the end of the month. The five locations to shut this year are:
In California: Bayfair Center, San Leandro; Simi Valley Town Center, Simi Valley
In Florida: Governor's Square, Tallahassee
In Hawaii: Kukui Grove Center, Lihue
In Virginia: Ballston Quarter, Arlington
Investors await Macy's Christmas season earnings report next month for insight into its financial standing. With a $5.8 billion purchase offer, investors perceive Macy's as undervalued, especially its real estate assets. Although Macy's hasn't publicly commented on the closures or the offer, JP Morgan estimates its Herald Square property alone to be worth $3 billion.
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