Macy's to cut 7,000 jobs, slash dividend
Retailer stresses 'unified' approach behind reorganization effort
By William Spain
Joining the parade of companies laying off thousands, department-store chain Macy's Inc. said Monday it would make deep cuts in its workforce and slash its dividend by more than half.
Shares of New York-based Macy's fell as much as 16% but clawed their way back to end with a 4% loss at $8.59. A year ago, the shares had a value of more than $28 before they scraped all the way down to the $5 range last November.
Macy's said about 7,000 jobs -- about 4% of its total employee base -- would be eliminated as part of an effort to save $250 million this year and $400 million annually starting in 2010.
The Macy's board also approved a 62% reduction in its quarterly dividend, down to 5 cents a share from the current payout of 13.25 cents, while the company commenced a tender offer to redeem $950 million in debt set to mature later this year.
The company cited "current economic conditions and expectations for lower sales in 2009" as precipitating the moves.
Further, the company's "My Macy's" localization program, rolled out in 20 markets last spring, will expand across the country in an attempt to "drive sales with a compelling national brand and with stores and merchandise assortments focused on local customer needs and preferences in each location."
The new structure will mean Macy's "will have one unified buying organization, one unified merchandise planning organization, one unified stores organization, one unified marketing organization and one unified organization for each corporate function such as finance, logistics, information technology and human resources instead of four of each operating divisionally," said Terry Lundgren, chief executive.
"By reducing duplication, we will be able to react faster to market trends, simplify our relationship with vendors and ensure that our expense dollars are devoted to activities that will drive the business most effectively," he said in a statement.
Macy's is assuming that same-store sales -- generated by outlets open at least a year -- will be down between 6% and 8%, the company said.
Factoring that in, it expects to earn 40 cents to 55 cents a share, excluding restructuring charges, for the full fiscal year. That compares to the $1.17-a-share average estimate derived in a poll of analysts by FactSet Research.
The new 5-cent dividend is payable April 1 to shareholders of record in March 13, the company said.