Macy's CEO says management changes, job cuts target faster sales, better margins

Key Points
  • Macy's CEO Jeff Gennette says the company is looking to double down on some of Macy's existing initiatives such as Backstage and Bluemercury.
  • The retailer tapped Hal Lawton, from eBay, to serve as Macy's president starting Sept. 8.
  • Lawton brings his digital background to the department store chain.
  • Macy's also is streamlining management, cutting 100 jobs.
Hal Lawton brings retail and technology experience: Macy's CEO Jeffrey Gennette

Five months into the job, Macy's CEO Jeff Gennette is starting to make his mark on the department store chain, bringing in a top executive from eBay to help him run the company and shaking up his management team.

The changes, announced Monday evening, are part of Gennette's first efforts to overhaul Macy's, and they take aim at making the retailer less bureaucratic by streamlining its decision-making.

"Yesterday's announcement is about how Macy's is going to grow sales faster," Gennette told CNBC's "Squawk Box" on Tuesday morning in an exclusive interview. "We're going to grow sales faster at better margins."

Like its peers, Macy's has struggled as a department store brand, where mall traffic is steadily declining, and shoppers are opting to make purchases either online or in different specialty outlets. Margins have suffered as a result of deep discounting and heavy promotions used to lure shoppers in.

Customers have more choices than ever before, brands have more distribution options than ever and the expectation for the department store experience has evolved rapidly, Gennette told CNBC.

But he's not giving up. "We want to have great stores in the best malls in America," the CEO said. "The consumer wants Macy's to win again."

In an attempt to return to growth, Macy's will cut 100 jobs, consolidating its merchandising, planning and private-label functions into a single department. The retailer is also expanding its customer insights and data analytics to include inventory replenishment and pricing capabilities.

Hal Lawton, from eBay, will serve as Macy's president starting Sept. 8.

Investors appeared to welcome the news, with Macy's shares moving higher, recently up about 3 percent in early trading Tuesday. The stock has been on a downward trend all year.

"All told, while the move won't impact sales or profitability overnight, we think the addition could mark the beginning of a new chapter for Macy's," Gordon Haskett analyst Chuck Grom wrote in a note to clients. "Lawton will bring a fresh perspective — one that is arguably long overdue."

Gennette on Tuesday said that Lawton understands the "intersection of retail and technology."

Meantime, Gennette looks to double down on some of Macy's existing initiatives that have boded well for the company thus far.

Macy's Backstage, the department store chain's off-price nameplate, is being rolled out inside more of Macy's existing big boxes.

Macy's also continues to leverage its strength in beauty, having acquired makeup and spa retailer Bluemercury in 2015.

Coming this fall, Macy's will launch a new loyalty program — something that falls "right at the heart of what the consumer wants," Gennette told CNBC. He revealed little other details about what the membership program might look like, but it's set to officially hit the market in October.

"How we are approaching growth is business by business, store by store," Gennette said of Macy's expansion from here. "We're excited about the green shoots. ... Expect us to continue to put wins on the board."

As of Monday's market close, Macy's stock has fallen more than 50 percent over the past 12 months, and is down 45 percent in 2017.

During the fiscal second quarter, Macy's topped analysts' expectations across the board, but Gennette told CNBC at the time that he wasn't "ready to declare when we will get back to positive."

Macy's still expects comparable sales for the full year to decline by 2.2 percent to 3.3 percent.

Monday's news of a key hire at Macy's, "could start to change [the] narrative," Grom added.

— CNBC's Courtney Reagan contributed to this story.

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