Macy's Inc announced Tuesday that it plans to close down 125 shops in the next three years and cut around 2,000 corporate positions, as the retail giant shuts down its Cincinnati headquarters and tech offices in San Francisco.
The company plans to shut branches in lower-tier department stores, and venture into new non-mall formats, as it deals with massively declining mall customer figures in the United States. Macy's Inc has already pulled the plug in over 100 shops since 2015.
Macy's disclosed that total profits for the current year are projected to fall within the $23 billion to $24 billion range as a result of a smaller chain of shops, while the company's earnings per share will be around $2.50 and $3.00. Same-branch profits plus licensed basis are expected to drop 1 percent to even flat.
According to Macy's chief executive officer Jeff Gennette, they are taking the company through a major structural facelift to cut down on operational expenses, bring business units closer together and minimize redundancies.
Gennette said the company will focus on the "healthy parts of our business," and directly address the non-performing parts of the business and explore new sources of profits. Macy's to-be-shut stores currently account for approximately $1.4 billion in yearly income, the company said.
Macy's also said it estimate yearly gross expenditure savings of $1.5 billion in the next two years, with $600 million projected in the next months.
The American luxury department store chain's planned employment cuts and store closures come ahead of a meeting with stakeholders in New York late Wednesday, where the company is expected to walk through its multi-year objective.
In recent years, the company has been hounded by declines in sales, and CNBC disclosed the company's shares, which were valued at over $5 billion, has dropped over 35 percent in the past four quarters.
Macy's has lost huge market share in key segments like apparel, and its annual sales have plunged, as fewer customers visit malls, and instead purchase on eBay or Amazon and other internet-based retailers.
Meanwhile, other US retail companies, which have concentrated on value and have rolled out fast online delivery have advanced. Walmart's stock, for instance, rallied almost 22 percent in the last 12 months, while Amazon's market value surpassed the $1 trillion mark on Tuesday.
As the company also closes down its office in Lorain, Ohio, it said New York will become its main corporate base. Macy's Inc is shutting its Tempe, Arizona customer relations office.
