Macy's to shutter 14 stores, expects charges up to $110M

Macy's to restructure

Macy's is closing more than a dozen stores and expects to take charges of up to $110 million, according to the company on Thursday.

Shares for Macy's was trading down nearly 3 percent in after-hours.

An estimated $100 million to $110 million charges will be booked in the fourth quarter of 2014, which was not previously included in the company's earnings guidance. These are related to the retailer's merchandising and marketing restructuring, which includes store closings and asset impairment charges, among other things.

In early spring this year, 14 out of a total of about 790 Macy's stores will close. The closings represent about $130 million in annual sales, some of which are anticipated to be retained through nearby stores and online sales.

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The changes announced are part of the company's target to generate savings of $140 million a year starting in 2015, which it hopes to reinvest in new technology and to offset growing expenses from health care and retirement plans.

"Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones. We must continue to invest in our business to focus on where the customer is headed—to prepare for what's next," said Terry Lundgren, Macy's CEO.

Although Macy's will be expanding its workforce in some areas while cutting in others, the number of total employees is expected to remain at around 175,000.

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The company also plans to gather a team that will investigate the potential for a Macy's off-price business, in hopes of catering to consumers' evolving shopping habits.

"We are continuing to learn from our experiences and to mold our business model ... around what our customers are telling us and how they are behaving so that we can continue to succeed in this environment," said Lundgren.