Macy's says it will act with speed in 2019. But it could be too late.
The department store chain on Tuesday announced a restructuring plan, where it will cut jobs and make other structural changes to its business with the goal of saving $100 million annually to spend on growth initiatives.
"We've certainly shown ... with the initiatives that we put in place in 2018 that we're going fast," CEO Jeff Gennette told analysts and investors. "We're operating with speed. And what I would tell you is that our vendors are rooting for us."
Still, Macy's can't ignore the state of retail today. Shoppers are increasingly ringing up purchases online, and fewer are flocking to shopping malls on the weekends to browse for handbags and clothes. Many of the brands found within Macy's stores — such as Nike and Coach — have caught wind of this, and so they've shifted to opening more of their own standalone stores and building out their own websites. Macy's, in turn, has been left with a portfolio of more than 600 department stores across the U.S. and the task of keeping them relevant.
On Tuesday, Macy's said it will spend the most money in 2019 on five areas, with the goal of growing sales and improving profitability. One area is its so-called Growth150 plan, where Macy's has been outfitting some of its most profitable stores with new lighting, fixtures and merchandise. It plans to tap another 100 locations with those upgrades in 2019.
Second is Macy's Backstage, the retailer's off-price business that competes with the likes of TJ Maxx and Nordstrom Rack, selling heavily discounted apparel and home goods. Macy's opened 120 Backstage locations within existing Macy's shops last year. It plans to open 45 more this year and says sales at Macy's stores with Backstage shops inside are up 5 percent, on average.