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Macy’s to Close 14 Stores, Explore Off-Price

Macy’s, Inc. said Thursday that it would close 14 stores and “evolve” its business to include a more omnichannel approach and efforts to explore opportunities for off-price.

The company announced initiatives, including restructuring merchandising and marketing, and adjusting store and field organization to support its M.O.M. strategies (My Macy’s localization, Omnichannel integration and Magic Selling customer engagement) to increase productivity and efficiency.

“Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smart phones. We must continue to invest in our business to focus on where the customer is headed – to prepare for what’s next,” Terry J. Lundgren, Macy’s chairman and chief executive officer, said.

Merchandising and marketing functions at both Macy’s and Blooomingdale’s will be revised so each brand can develop and present its assortments seamlessly across channels. Whereas, previously, online assortments were bought and marketed by separate organizations, one unified organization—a hybrid of store and online buying, according to Macy’s—will support each business to sustain both store and digital growth.

“Going forward, Macy’s and Bloomingdale’s will be better able to move more quickly and nimbly to select merchandise, assort inventories and serve total customer demand, no matter how, when or where the customer shops. Some redundant activity also can be avoided to accelerate speed to market, partner more effectively with vendor resources and ensure the merchandising organizations are more responsive to the marketplace in making and implementing decisions,” Lundgren said.

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The company said it will also eliminate district planner positions and reinvest in regional teams dedicated to merchandise localization in an effort to get the right assortments in stores for its varying customers, like more traditional customers living in northern climate zones, for example. The shifts are expected to affect 115 associates at Macy’s and Bloomingdale’s in New York City central offices and roughly 150 in local markets nationwide. Macy’s, Inc. said it is working to place as many employees as possible in other available positions.

Another 2,200 associates nationwide will be affected as the company changes its selling service and support to match each department’s business opportunity.

The company is also reducing its number of store districts from 60 to 58 by merging two of them into nearby districts.

Fourteen Macy’s stores will be shuttered by early spring, and clearance sales will start on Monday and run for between eight and 12 weeks. The company announced two new store openings Thursday in addition to seven other new Macy’s and Bloomindale’s store openings already planned or under construction and slated to open over the next two years. Once all store changes have been made, Macy’s will operate 830 stores in 45 states, D.C., Puerto Rico and Guam.

“We continue to maintain a very strong nationwide network of stores through an ongoing process of selectively adding new locations while also trimming those that no longer meet our performance requirements, where the real estate can be redeployed to more productive uses, or where our leases were not renewed,” Lundgren said.

Savings resulting from these shifts, which Macy’s estimates will be roughly $140 million per year, will go mainly toward technology, talent and business development, the company noted.

Macy’s, Inc.’s plans for 2015 include creating a team to explore opportunities for Macy’s off-price business; continuing progress in digital retailing including further developing the speed and experience of its e-commerce sites; and advancing business systems, information technology and security to support its growing omnichannel business. The company also plans to increase its direct-to-consumer fulfillment capacity in its existing fulfillment centers in addition to its new 1.3 million-square-foot center currently being built in Tulsa County, Okla. expected to begin operations in April with a workforce of more than 2,500 associates.

The company also announced Thursday that its comparable sales on an owned plus licensed basis for November and December rose 2.7%. Macy’s, Inc. narrowed its guidance to the upside, now expecting comparable sales growth for the fourth quarter in the 2.5 to 3 percent range.

“We feel very good about our performance in the November/December period as we reversed trend from a soft third quarter and set the stage for continued progress going forward. Our success was rooted in the ability of our exceptional team to thoroughly execute our M.O.M. strategies (My Macy’s localization, Omnichannel integration and Magic Selling customer engagement), and our passion for delivering the right combination of fashion, freshness, value and service to our customers,” Lundgren said. The company’s digital strategy, convenience of its companywide Buy Online Pickup in Store Rollout, and positive results from its pilot of Same Day Delivery were also key business drivers, Lundgren added.

Macy’s, Inc. will report its fourth quarter earnings on Feb. 24, 2015.