In a saga that continues for Macy's (NYSE:M), the department store chain is planning to close one of its major offices in San Francisco and 125 of its stores. This is another chapter in the company's efforts to drastically cut costs sales decline.
As first reported by Business Insider, Macy's will close the office in April. The San Francisco location includes tech and online groups as well as Macy's product and digital revenue divisions. Right now, there are over 1,000 workers there, 880 full time employees and 200 contract workers. A portion of them will have the option of being transferred to other company offices in New York or Atlanta, and the rest will lose their jobs and receive severance pay.
The retailer will also shutter 125 of its stores, which is approximately one fifth of its total retail footprint.
What it means for the company
Macy's saw 11 quarters of declines before sales came back up in 2017, but then it saw revenue decline 3.5% in the third quarter of 2019 as the retail giant struggles to remain relevant in a new retail climate that increasingly favors online shopping. The company's huge stores are outdated for the age of shopping-in-your-palm, and it has been shrinking store footprints in an effort to optimize space and cut costs.
Macy's originally laid out a plan to close 100 stores in 2017, and went through with 63 closures the following year. It closed 30 more since then, bringing the total close to the intended amount, but company is planning to close an additional 28 Macy's locations and one Bloomingdale's location in the coming year.
The company's share price lost almost 40% of its value in 2019 but gained on the news of the closure, which many investors are interpreting as a step in the right direction.