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Macy's Major Reorganization Paves Way to Brighter Future

Jeff Gennette, CEO of Macy’s has just announced major management moves that should help strengthen the company.  He appointed Hal Lawson (43) president of the company. Hal Lawton’s strong background in technology and digital expertise is a welcome addition for the future of the company. At the same time, management announced a major restructuring of its merchandising operation under Macy veteran Jeff Kantor (58). The company will consolidate its operations into five “families of business” (Ready to Wear, Center Core, Beauty, Men’s and Kids, and Home).

This is the first dramatic move by the new CEO, Jeff Gennette. He recognizes the need for more digital communications in order to more effectively engage with the young customers – be it Millennials or GenZ. Hal Lawton’s expertise comes from his recently toiling at eBay North America as SVP. In that position, Lawton oversaw marketing, merchandising and consumer selling. Prior to joining eBay, Lawton spent 10 years at Home Depot where most recently he was SVP for merchandising. He developed Home Depot’s internet business and built it to nearly $2 Billion. And, before going the corporate route, he was with McKinsey & Co. He clearly he joins with a lot of solid experience in hard-lines, and I think he will have to learn quickly about the culture of the company and the needs of soft-goods vendors. He is said to have fabulous personal relationships which should help him get started.

The reorganization of Macy’s merchandising is long overdue and something that makes me more positive about future prospects. The company is shrinking and must act faster with every merchandise decision. The five groups listed above - Ready to Wear, Center Core Beauty, Men’s and Kid’s, and Home - are key groups for any major department store organization (although I would have split Men’s and Kids to give both classifications more emphasis). In addition, private label and planning will now be integrated under merchandise managers that will head these groups. It is likely to allow for quick decisions and dramatic action when fashion changes.

Jeff Kantor has superb vendor relationship and great leadership skills. He is revered by the vendor community; especially in the home area where he had been president. Most recently, he was chief stores and human resources officer and prior to that he was chairman of macys.com. He has been with various Macy’s businesses for 35 years.

While Jeff Gennette is a great men’s wear fashion merchant, I now hope he is searching for a great ready-to-wear leader for the company to round out his leadership team. The legendary fashion mavens are gone and Mr. Lawton and Mr. Kantor will have to jointly develop new creative talent in that area. That will be a challenge since the whole retail industry lacks leadership that can develop a strong fashion image.

Macy’s announced that all of this consolidation and restructuring will result in a headcount reduction of about 100 people. As a result, the company hopes to save $5 million in the fourth quarter of this year. The cost of the restructuring is anticipated to be about $20 t0 $25 Million. It will be booked in the third quarter of 2017.

The die is cast. A new team is going to take charge under Jeff Gennette’s leadership. It will be tighter, there will be fewer chiefs and there will be more empowerments for the Indians. That is good and I look forward to improved results that are sorely needed.

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