The Wall Street Journal - Macy's Inc. said it is eliminating 7,000 jobs, or 4% of its work force, and taking other steps to cut costs, in the latest sign that slumping consumer spending is forcing retailers to change the way they do business.
The Cincinnati-based operator of 840 department stores also said it is cutting its dividend by 62%, ending merit pay increases for executives and slashing its 2009 capital-spending budget by another $100 million to $150 million to around $450 million. The original budget was $1 billion.
"This is a time where nothing should be considered a sacred cow," said Macy's Chief Executive Terry Lundgren in a conference call with analysts Monday.
The moves are expected to save the company $250 million this year and $400 million a year thereafter.
Separately, Macy's said it is launching a tender offer to buy back $950 million in debt maturing in 2009, using cash on hand. The offer will expire at 5:00 p.m. EST next Tuesday. Chief Financial Officer Karen Hoguet described the decision not to refinance the maturing debt as part of a "deleveraging strategy."
Macy's shares were down 36 cents, or 4%, at $8.59 Monday in 4 p.m. composite trading on the New York Stock Exchange.
The job cuts are part of a broad reorganization that will merge four different buying and planning offices into one centralized unit. Macy's said it will also roll out nationwide an experimental program called "My Macy's," in which 15% of a store's merchandise is tailored to local tastes. Launched in 20 markets in the spring of 2008, the program will be extended to 49 more "districts" in the second quarter.http://online.wsj.com/article/SB123359845981440137.html
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