Macy’s to Consolidate its Divisional Organization

Macy’s Inc. (Cincinnati) has announced a streamlining consolidation that will result in the loss of 7000 jobs, or 4 percent of its work force. Macy’s four divisions — East (New York), Central (Atlanta), West (San Francisco) and Florida (Miami) — will be consolidated into a single organization for the first time in the company’s history. The company’s New York-based Bloomingdale’s division will continue to operate separately.

The 69 Macy's districts will be grouped into eight regions that will be based in the Chicago, Houston, Miami, Los Angeles, New York, Pittsburgh, San Francisco and Washington, D.C., areas.

Chairman, president and ceo Terry Lundgren said the move would position Macy’s for 2010, or whenever the retail picture improves. “We want to be in place, we want to have our people trained, we want to have our structure set, we want to have the right brands in the store,” he said. “Now I think is the time to address all of those structural changes that are required. Nothing should be considered a sacred cow.”

Macy’s will roll out its “My Macy’s” initiative across the country. The plan, in which merchandise is tailored to preferences and needs of customers in a specific region of the country, had been undergoing tests in 20 markets. All Macy's stores nationwide will be grouped into 69 geographic districts that will average 10-12 stores each, effective in the second quarter. Of those, 49 will be newly created districts. The other 20 districts (in the Midwest, Upper Midwest and Pacific Northwest) were created as pilots in spring 2008 and will remain in place. In each of the 49 new districts, an average of about 23 new positions – primarily in district merchandising and planning – will be created at the local city level to help central planning and buying executives understand and act on the needs of local customers. In addition, district-based executives, including a district vp, district merchants, district planners and individual store managers, will be empowered to make more and better decisions for their local customers.

Lundgren said the “My Macy’s” strategy has worked well so far, pointing to the fact that 13 of Macy’s 15 top-performing geographic markets in December were part of the pilot program.

Also as part of the restructuring, Macy’s central buying, planning and senior management and marketing functions will be located primarily in New York. And the company said it is eliminating merit salary increases for executives in spring 2009 for performance in 2008. It will also cut its contributions to employees’ retirement accounts this year.

A new Macy's executive management team will lead the corporation going forward under Lundgren’s direction. Timothy Adams, currently chairman and ceo of Macy's Home Store, will become chief private brand officer; Thomas Cole, currently vice chair of Macy's Inc., will become chief administrative officer; Mark Cosby, currently president and chief operating officer of Macy's East, will become president-stores, responsible for all Macy's store operations and support functions; Jeffrey Gennette, currently chairman and ceo of Macy's West, will become chief merchandising officer; Julie Greiner, currently chairman and ceo of Macy's Florida, will become chief merchandise planning officer; Karen Hoguet, currently executive vp and chief financial officer, will remain cfo; Ronald Klein, currently chairman and ceo of Macy's East, will become chief stores officer, responsible for the nationwide portfolio of Macy's stores; Peter Sachse, currently president of Macy's Corporate Marketing, will remain chief marketing officer, as well as chairman and ceo of macys.com; and Vice Chair Susan Kronick, who currently oversees Bloomingdale's and Macy's retail divisions, will co-lead the My Macy's integration along with Cole. She will also continue to oversee Bloomingdale's throughout 2009. Michael Gould remains chairman and ceo of Bloomingdale's.

Other than the previously announced closure of 11 Macy's stores, all current Macy's and Bloomingdale's store locations will remain in place.