Home / Knowledge / News / Apparel/Garments / Macy's cost cutting to save $400mn in SG&A
Macy's cost cutting to save $400mn in SG&A
08
Jan '16
US apparel retailer Macy's said it will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy's and Bloomingdale's.

“The actions represent progress toward the company's previously stated goal of re-attaining over time an EBITDA rate as a per cent of sales of 14 per cent,” a Macy's press release stated.

As part of the program, the retailer will consolidate the grouping of existing Macy's stores into five regions and 47 local districts, down from the current structure of seven regions and 58 local districts.

“This reflects a smaller portfolio of stores and new technologies and techniques for managing the store business and tailoring assortments to local customer preferences,” the company added.

Adjusting staffing levels at each Macy's and Bloomingdale's store will be in line with current sales volume to increase productivity and improve efficiency.

An average of three to four positions will be affected in each of Macy's and Bloomingdale's approximately 770 going-forward stores, out of an average workforce of around 150 associates in each store.

However, Macy's also added that roughly 50 per cent of affected store associates are expected to be placed in other positions.

It will also consolidate the four existing Macy's, Inc. credit and customer services center facilities into three and the call center in St. Louis will be closed in spring 2016, affecting around 750 employees.

Work currently performed in St. Louis will be divided among existing credit and customer services centers in Tempe, AZ, Clearwater, FL, and Mason, OH, where a total of about 640 positions will be added.

The company has begun a search for a senior-level real estate executive to join the company to oversee and manage real estate activities, including the leadership of any partnerships or joint ventures.

The company listed 40 Macy's store closings out of a current total of about 770 Macy's stores and of the 40, 36 will be closed in early spring 2016, consistent with its announcement in September 2015.

The 40 Macy's stores being closed account for approximately $375 million in annual sales, some of which are expected to be retained in nearby stores and with online or mobile sales.

According to Macy's, the implementation of cost reductions is estimated to generate annual SG&A savings of approximately $400 million, beginning in 2016.

This will help the company to achieve modest improvement in its EBITDA rate as a percent to sales in 2016 compared with 2015 excluding gains from the expected sale of real estate in Brooklyn.

In conjunction with the announcements, as well as incremental asset impairment charges related to store closings, around $200 million of charges, of which around $165 million is expected to be cash.

These charges were not previously included in earnings guidance provided by the company and are in addition to the $111 million, or 20 cents per share, booked in the third quarter. (AR)

Fibre2Fashion News Desk – India


Must ReadView All

Courtesy: Michael Kors

Fashion | On 25th Jul 2017

Michael Kors to acquire Jimmy Choo

Global fashion luxury brand Michael Kors Holdings Limited has reached ...

Apparel/Garments | On 25th Jul 2017

VF Corp posts $2.4 billion revenue for Q2 2017

VF Corporation has recorded revenue of $2.4 billion, up 2 per cent,...

Textiles | On 25th Jul 2017

Egypt signs agreement with UNIDO for cotton production

Egypt has signed a €1.5 million ($1.74 million) cooperation agreement ...

Interviews View All

Md Hanifur Rahman
Aman Group

The level of understanding the job role and organisational requirements...

Riddhika Shah
SS Homme

'Worsted wool is the ideal fabric for menswear'

Yash Agarwal
Hitansh Online

Every market region has its own culture and trends

Marten Alkhagen
Swerea IVF AB

Marten Alkhagen, Senior Scientist - Nonwoven and Technical Textiles of...

Mohammad Hassan
Biax Fiberfilm

About one in every 20 patients picks up an infection while hospitalised....

Kevin Nelson
TissueGen

Kevin Nelson, Chief Scientific Officer, TissueGen discusses the growing...

Mike Hoffman
Gildan Activewear SRL

Gildan Activewear, a manufacturer and marketer of branded clothing and...

Sanjukta Dutta
Sanjukta's Studio

<b>Sanjukta Dutta</b> creates unique garments by clubbing prints of...

Bani Batra

Bani Batra’s couture wedding collection is inspired by traditional Indian...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

July 2017

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Planning to Take the Leap towards
Sustainability?

Do you see sustainability as a route to business growth?

Yes No

Do you think the sustainability space has the needed tools and resources available for a business to lead change?

Yes No

Do you think adopting a sustainable approach will be a profitable move for your business?

Yes No

Do you want the world to know about your sustainability journey and your business’ environmental footprint?

Yes No

Thanks for your valuable feedback. Claim your free latest sustainability e-book.


E-News Insight
Subscribe Today and Get the
Latest News Update in Your Mail Box.
Advanced Search



X