UPDATE 2-Macy's to restructure, cut jobs to boost sales
(Recasts, adds byline, company comment, stock price)
NEW YORK, Feb 6 (Reuters) - Macy's Inc (M.N) announced a restructuring on Wednesday that involves cutting 2,300 jobs and closing some division headquarters as the department store operator tries to reduce costs and offset declining sales.
Macy's also said January sales at stores open at least one fiscal year fell a wider-than-expected 7.1 percent and it forecast fourth-quarter earnings that, excluding a tax credit, would miss current Wall Street targets.
"The whole idea behind this is growing comp (comparable) store sales," Terry Lundgren, Macy's chairman, president and chief executive officer, said in an interview of the restructuring.
"If you're growing comp stores sales, that means you're satisfying customers and you're taking market share and that's what we're trying to do."
Macy's, which also runs the Bloomingdale's chain of stores, said it will take charges of about $150 million in 2008 for the restructuring, but added the changes will reduce annual expenses by about $100 million, starting in 2009.
Its shares fell almost 5 percent to close at $23.94 on the New York Stock Exchange.
A NATIONAL MACY'S
Macy's, formerly called Federated Department Stores, acquired May Department Stores in 2005 and converted more than 400 of those outlets to the Macy's name in 2006 to create a national chain of stores.
But the department store operator has struggled in the past year, trying to boost sales at former May stores, while also facing a weakening U.S. economy that has curbed consumer spending. Its stock has fallen 40 percent in the past year.
In December, it said it would close nine underperforming stores in Indiana, Ohio, Louisiana, Oklahoma, Utah and Texas.
As part of the changes announced on Wednesday, Macy's said it will close regional division headquarters in Seattle, Minneapolis and St. Louis, cutting the division headquarters it operates to four from seven.
It will establish small "districts" of roughly 10 stores in cities such as Cleveland, Minneapolis and Salt Lake City, and those districts will report to new regional offices being established in Chicago, Cincinnati, St. Louis and Seattle.
Macy's said the new structure will improve sales by helping it better match the merchandise in its stores to the demands and trends of each local market.
The restructuring will result in the elimination of roughly 2,300 positions, Macy's said. The retailer has 188,000 employees.
A CHALLENGING 2008
While it is hoping the changes will boost sales, it is assuming the economic environment will remain challenging through most of this fiscal year, with some "modest improvement" expected by the fourth quarter.
It said total sales for the four weeks ended Feb. 2 fell 28.4 percent to $1.28 billion, citing a retail calendar change resulted in one less week of sales in the month.
Its January comparable-store sales fell 7.1 percent, while analysts, on average, expected a decline of 5.7 percent according to Reuters Estimates.
For the fourth quarter, it expects to earn between $1.75 and $1.80 per share. That forecast excluding merger integration costs of about $70 million, it said, but includes is a non-cash tax credit of roughly 18 cents per share.
Analysts, on average, were expecting it to earn $1.68 per share, according to Reuters Estimates.
It forecast earnings for its fiscal year ending in early 2009 of $1.85 to $2.15 a share, excluding one-time costs, and said it expects comparable-store sales in the range of down 1 percent to up 1.5 percent.
It also said it will no longer provide quarterly sales or earnings forecasts. (Additional reporting by Aarthi Sivaraman, editing by Leslie Gevirtz/Andre Grenon)
