Macy’s Shifts to a Single Division
By Carole Sloan and James Mammarella -- Home Textiles Today, 2/9/2009 12:00:00 AM
Macy’s Inc. is restructuring to a single national organization, even while it accelerates its “My Macy’s” local merchandising initiative; the $26 billion retailer also will cut its quarterly dividend from 13.25 cents to 5 cents per share, and is using cash to early-retire $950 million of senior debt notes.
Some 7,000 positions will be eliminated — net of about 1,200 new district merchant and district planner positions that are being generated by the planned creation of 49 new districts, said chairman, president and ceo Terry Lundgren on a special conference call last week.
There are 20 My Macy’s pilot districts, up and running since May 2008. Now the entire company will be subdivided into 69 districts, grouped into eight geographic regions. Some of the new positions will be filled by Macy’s personnel whose present jobs will be phased out with the elimination of the San Francisco, Atlanta and Miami divisions.
“Bloomie’s and macys.com will not be significantly affected by this restructuring,” Lundgren noted.
“I think we’re going to make faster decisions,” said Lundgren of the new, unified structure. Responding to an analyst question, he emphasized, “Now that we have the My Macy’s initiative, that’s what has given me the confidence that we can be both national as well as locally responsive.”
In response to a question about how home merchandising — previously broken out as a separate division — might change, Lundgren said, “Now we’ll be able to tuck Home underneath our chief merchant, which will be Jeff Gennette.”
Amongst a slew of executive title changes and responsibility shifts, Jeffrey Gennette becomes chief merchandising officer responsible for all buying and merchandising functions for Macy’s nationwide, as well as relations with market vendor partners. He is currently chairman and ceo of Macy’s West.
Timothy Adams, the current chairman and ceo of Macy’s Home Store — which will phase out — becomes chief private brand officer for the entire Macy’s department store structure, responsible for the organization that conceives, designs, sources and markets the company’s private brands.
Jeff Kantor, president of “Big Ticket” home furnishings (furniture and rugs), has been named president and general merchandise manager heading the new Macy’s Inc. home furnishings business. Kantor joined the company following the Macy’s (then Federated Department Stores) acquisition of May Department Stores in 2005. At the time of the acquisition, Kantor was the president and ceo of May’s Hecht’s/Strawbridge’s in Arlington, Va.
In his new position, which begins early in the second quarter, Kantor will report to Gennette.
Macy’s also altered its lineup of home furnishings merchandising executives at the divisional merchandise manger level.
Bob Weiser is dmm of Big Ticket, which includes furniture, mattresses and rugs. In August 2008, he had been named svp, general merchandise manager for the same area.
Audrey Schlaepfer, who had been vp, dmm for tabletop and luggage, has become dmm for home textiles and trim.
Lisa Magann, who had been promoted to svp, mattresses and area rugs also in August 2008, has been named dmm for housewares and confections.
Dana Brown has been named dmm, tabletop and decorative housewares. She had been vp, dmm, decorative housewares.
Elsewhere at Macy’s Inc., Michael Gould remains chairman and ceo of Bloomingdale’s, which continues to operate as a separate organization.
Lundgren said the company believed the corporate reshaping — and the ability to “better gear our assortments to the local needs” will put Macy’s Inc. “in a better position to grow business when the economy improves.”
Karen Hoguet, evp and cfo, said the overhaul measures combined will save about $400 million on an annual basis starting in 2010. About $250 million in savings are seen for 2009.
Hoguet also stated the 2009 outlook: comps in the -6% to -8% range, “with the spring to have a deeper decline than the fall;” SG&A dollars down, but up as a percentage of sales; EPS, excluding restructuring-related expense, of 40-55 cents. She said capital expense will be reduced this year to $450 million.
Retiring the senior notes through its cash tender offer is expected to reduce interest expense — and to “eliminate any uncertainty about the company’s ability to handle near-term debt maturities,” Macy’s said. The cash tender offer to buy outstanding notes will expire next Tuesday, Feb. 10.
Answering a store-closing question, Lundgren and Hoguet said Macy’s is working on reducing its rent expense and is negotiating with landlords, but must act within the covenants of the leases and financial stipulations covering its 840 stores. The company stated, “Other than the previously announced closure of 11 Macy’s stores, all current Macy’s and Bloomingdale’s store locations will remain in place.”
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