Macy's Inc. and Brown Shoe Co. joined a number of companies announcing major layoffs to streamline operations in the face of the recession. Macy's plans to cut 7,000 jobs, or 4% of its workforce, while Brown Shoe, the parent of Famous Footwear, expects to reduce 12% to 14% of its domestic workforce.
At Macy's, the job cuts mainly stem from a move to consolidate its four buying divisions – East, Central, West and Florida – into a single organization for the first time in the companys history. The department store giant, which also owns Bloomingdale's, is also eliminating an average of five to six positions eliminated per store. On the cost side, Macys is eliminating merit salary increases for executives performance in 2008, reducing its matching amount to employee 401K retirement contributions, and cutting its quarterly dividend to 5 cents a share, from 13.25 cents a share. Its 2009 capital expenditure budget was slashed to about $450 million – $100 million to $150 million less than previously announced. The retailer also plans to buy back $950 million in bonds maturing this year.
Macys said the changes will save the company $250 million this year, and $400 million a year beginning in 2010.
The job reductions at Brown Shoe are part of its expense and capital containment initiatives that were announced January 21. Overall costs related to its expense initiatives are currently anticipated in the range of $27 million to $30 million ($5 million to $6 million will be non-cash), the majority of which will be incurred in the company's fourth quarter of fiscal 2008.
The company has also reduced its planned capital expenditures for the 2008 to 2011 period by an additional $35 million, bringing total planned capital expenditure reductions to $107 million for this period. Additionally, the company has made commensurate reductions in workforce and payroll in its Far East sourcing operations, stores, and distribution centers.
These initiatives, which include changes in compensation structure, rationalization of operating expenses, and workforce reduction, are now expected to yield annual savings in the range of $28 million to $31 million.
