Macy’s, Inc. Outlines Cost Reduction Initiatives to Support Continued Profitable Sales Growth

  Macy’s, Inc. Outlines Cost Reduction Initiatives to Support Continued
  Profitable Sales Growth

   Annual cost savings of approximately $100 million per year are expected,
                              beginning in 2014;
        Company also details normal-course store openings and closings

Business Wire

CINCINNATI -- January 8, 2014

Macy’s, Inc. (NYSE:M)today announced it will implement focused cost
reductions, including organizational changes, as it prepares to sustain
profitable sales growth in the years ahead.

(Editor’s Note: Macy’s, Inc. this afternoon also issued a separate news
release announcing sales results for the 2013 holiday season and initial sales
and earnings guidance for FY2014.)

“Our company has significantly increased sales and profitability over the past
four years, and we have created a culture of growth at Macy’s, Inc. We began
five years ago with a set of business strategies that were largely untested by
a national retailer of our size and scope. As the success of these strategies
has unfolded, we have identified some specific areas where we can improve our
efficiency without compromising our effectiveness in serving the evolving
needs of our customers,” said Terry J. Lundgren, Macy’s, Inc. chairman,
president and chief executive officer.

“The actions being announced today reinforce our focus on continuous
improvement in our M.O.M. strategies (My Macy’s localization, Omnichannel
integration and Magic Selling customer engagement) and will help us to
maximize the impact of the exceptional talent we enjoy at every level of our
organization,” Lundgren said.

Changes being announced today are estimated to generate savings of
approximately $100 million per year, beginning in 2014. These savings are
incorporated in the company’s 2014 earnings guidance (announced today in a
separate news release).

In conjunction with the implementation of these cost reductions, as well as of
store closings and asset impairment charges, an estimated $120 million to $135
million of charges, of which $50 million to $55 million is expected to be
non-cash, will be booked in the fourth quarter of 2013. These charges were not
previously included in earnings guidance provided by the company.

Operating Cost Reductions

Cost reductions and organizational changes reflect learnings from the
implementation of business strategies and new technologies at Macy’s in recent
years. Changes include:

  *Within the Macy’s stores organizational structure, combining the Midwest
    Region with the North Region – thus creating a new North Central Region
    and reducing the ongoing number of regions to seven from the current
    eight. Nine existing stores districts also are being combined with nearby
    districts – thus reducing the ongoing number of districts to 60 from the
    current 69. In some cases, Macy’s stores are being reallocated within the
    seven regions and 60 districts to equalize workloads and spans of control;
  *In the Merchandise Planning organization, eliminating the district planner
    role for soft home categories. Experience has shown that home assortments,
    unlike apparel and accessories, change less often, are more congruent
    across the country and less subject to localization. Going forward,
    responsibility for soft home planning will be shifted to the regional and
    national level.
  *Realigning, combining and reducing some positions in Macy’s stores in a
    manner that improves productivity and efficiency while also fostering high
    standards for customer engagement and service.
  *Trimming certain central office, administrative and back-of-the-house
    expenses across the company. This involves reductions in workforce, as
    well as in non-payroll costs.

Approximately 2,500 employees are expected to be laid off and are eligible for
severance as a result of these organizational changes. Other associates are
being reassigned with new duties or transferred; some open positions will not
be filled. Meanwhile, the company continues to add positions in other parts of
the company – such as in online operations, direct-to-consumer fulfillment and
new stores. In total, the Macy’s, Inc. workforce is expected to remain at a
level of approximately 175,000 associates.

Store Openings/Closings

Macy’s, Inc. today also detailed a series of normal-course adjustments to its
portfolio of Macy’s and Bloomingdale’s stores across the country.

“Our stores remain a very important component of our omnichannel strategy for
both the Macy’s and Bloomingdale’s brands. We continue to maintain a very
strong nationwide network of stores through an ongoing process of selectively
adding new locations while also trimming those that no longer meet our
performance requirements or where our leases were not renewed,” Lundgren said.

The company is announcing today that it will close the following five Macy’s
stores in early spring 2014. Final clearance sales will begin on Monday, Jan.
13 and run for between 10 and 11 weeks (except for Fashion Place Mall, which
will close on Sunday, Jan. 12 with no final clearance sale).

  *Fiesta Mall, Mesa, AZ (159,000 square feet; opened in 1979; 98
    associates);
  *Metcalf South Shopping Center, Overland Park, KS (216,000 square feet;
    opened in 1967; 88 associates);
  *Jamestown Mall, Florissant, MO (200,000 square feet; opened in 1994; 88
    associates);
  *Medley Centre, Irondequoit, NY (129,000 square feet; opened in 1990; 96
    associates);
  *Fashion Place Mall, Murray, UT (26,000 square feet; opened in 1988; 42
    associates).

The company is committed to treating associates affected by store closings
with respect and openness. Associates displaced by store closings may be
offered positions in nearby stores where possible. Eligible full-time and
part-time associates who are laid off due to the store closing will be offered
severance benefits.

Eight new and replacement Macy’s and Bloomingdale’s stores are currently
planned and/or under construction, as previously announced.

  *New Macy’s stores will be opening in:

       *University Town Center, Sarasota, FL (160,000 square feet; to open in
         fall 2014; approximately 175 associates);
       *Shops at Summerlin, Las Vegas, NV (180,000 square feet; to open in
         fall 2014; approximately 160 associates);
       *Mall at Bay Plaza, The Bronx, NY (160,000 square feet; to open in
         fall 2014; approximately 225 associates);
       *Plaza Del Caribe, Ponce, PR (150,000 square feet; to open in fall
         2015; approximately 275 associates);
       *Mall at Miami Worldcenter, Miami, FL (195,000 square feet; to open in
         fall 2016; approximately 150 associates).

  *New Bloomingdale’s stores will be opening in:

       *Stanford Shopping Center in Palo Alto, CA (120,000 square feet; to
         open in fall 2014). It will be an all-new store to replace an older
         store in the same shopping center;
       *Ala Moana, Honolulu, HI (167,000 square feet; to open in fall 2015;
         approximately 250 associates);
       *Mall at Miami Worldcenter, Miami, FL (120,000 square feet; to open in
         fall 2016; approximately 225 associates).

Once all of these changes have been implemented, Macy’s, Inc. will operate 844
stores in 45 states, the District of Columbia, Puerto Rico and Guam.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the
nation’s premier retailers, with fiscal 2012 sales of $27.7 billion. The
company operates about 840 department stores in 45 states, the District of
Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s,
as well as the macys.com and bloomingdales.com websites. The company also
operates 13 Bloomingdale’s Outlet stores. Bloomingdale’s in Dubai is operated
by Al Tayer Group LLC under a license agreement.

All statements in this press release that are not statements of historical
fact are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are based upon the
current beliefs and expectations of Macy’s management and are subject to
significant risks and uncertainties. Actual results could differ materially
from those expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including conditions to, or
changes in the timing of, proposed transactions, prevailing interest rates and
non-recurring charges, competitive pressures from specialty stores, general
merchandise stores, off-price and discount stores, manufacturers’ outlets, the
Internet, mail-order catalogs and television shopping and general consumer
spending levels, including the impact of the availability and level of
consumer debt, the effect of weather and other factors identified in documents
filed by the company with the Securities and Exchange Commission.

(Note: additional information on Macy’s, Inc., including past news releases,
is available at www.macysinc.com/pressroom)

Contact:

Macy’s, Inc.
Media
Jim Sluzewski, 513-579-7764
or
Investor
Matt Stautberg, 513-579-7780