In a bid for efficiency to enable its Polaris turnaround, Macy's on Monday announced senior leadership changes, including the elimination of the chief operations role and the departure of COO John Harper from the company Aug. 1.
Chuck DiGiovanna, currently vice president, real estate, will replace Douglas Sesler, who is leaving after five years of leading Macy's real estate strategy. DiGiovanna will report to CFO Adrian Mitchell, according to a company press release.
Effective March 15, former InterContinental Hotel Group Chief Information Officer Laura Miller will take the CIO role at Macy's. She's replacing Chief Technology Officer Naveen Krishna, who is leaving. Finally, Bluemercury co-founder and CEO Marla Beck will leave this summer. About a year ago Beck and co-founder Barry Beck were set to leave, but Marla Beck ended up staying put.
Apparently in response to the pandemic's acceleration of several shifts in the retail industry — including the rise of e-commerce and off-price and the downfall of malls — Macy's appears to be stepping on the gas when it comes to its own changes.
The department store said as much last week when it announced tweaks to its Polaris turnaround strategy, though Monday's executive shakeup revealed some specifics. The appointment of DiGiovanna, for example, suggests more will be done with its real estate, according to Jan Rogers Kniffen, CEO of J.Rogers Kniffen Worldwide CEO, who knows him personally.
"He's a younger guy and he'll be more aggressive in getting things done with the real estate, I believe," Kniffen said by phone. "And I don't think that tells us anything different in their strategy. You know Macy's has been divesting real estate since before COVID, and they'll continue to divest real estate post COVID. But it's not just Macy's, it's in general. There's too much retail square footage. There's too many malls, there's too many stores, the stores are too big. That's a general statement. This applies to Macy's, but it applies to all of them."
For his part, Macy's CEO Jeff Gennette in a statement called the changes "exciting."
"We are building a diverse leadership team that includes a blend of new talent with outside perspectives along with our tenured and best developed leaders who will accelerate the progress of our Polaris growth strategy," he said. "I am confident that these changes in reporting structure will enable us to be nimbler and more efficient as we move forward in our recovery and drive top and bottom-line growth."
But they may also reflect how little wiggle room Macy's has when it comes to extracting efficiencies from its operations, according to retail consultant Brian Kelly. The company closed 100 locations a few years ago and last year announced another 125 would close over three years. Last year nearly 4,000 corporate jobs were slashed, a move the company said would save some $630 million annually.
"They cut the store portfolio to the bone. They've cut selling square footage by store and simplified the assortment. They've focused on 'off price' as the value proposition for the brand. Its share of voice in Chicago has radically dropped. It's managing promotions to increase margins and just goose top line," Kelly said by email. "Across the selling model, Macy's, or any retailer who has shuttered in the past five years, has endured a similar fate."
That stands in contrast to the likes of Tractor Supply, Target or Best Buy, according to Kelly. Last week, Best Buy announced a 17% year over year cut to its workforce, shifting the emphasis toward more part-time workers, and the closure of more large-format stores.
"Best Buy is interesting because as they cut costs, they are doing it for a new business model due to the change in consumer shopping behavior from the impact of technology," Kelly said.
On Tuesday, Macy's also announced that wholly owned subsidiary Macy's Retail Holdings intends to offer $500 million in senior notes due in 2029. The proceeds including repayment of debt, according to a filing with the Securities and Exchange Commission.