2,300 GET PINK SLIPS AT MACY'S

February 7, 2008 -- Macy's cut its fourth-quarter earnings forecast after a decline in January sales and said it will eliminate 2,300 jobs.

The second-biggest US department-store chain will reduce annual expenses by $100 million starting in 2009 and cost the company $150 million this year, Macy's said yesterday in a statement.

Sales at stores open more than a year fell 7.1 percent in January, the second straight monthly decline.

Macy's has struggled to boost sales growth since buying May Department Stores in 2005 for $11 billion.

Chief Executive Terry Lundgren said the retailer will consolidate three divisions to help Macy's tailor merchandise to markets, reducing expenses and boosting revenue.

"The merger has been a struggle," said David Heupel, a Minneapolis-based fund manager with Thrivent Financial for Lutherans.

"They need a better way to manage these stores. The moves to consolidate and cut costs are obviously needed and positive." Thrivent manages $60 billion in assets, including Macy's shares.

Macy's declined $1.16, or 4.6 percent, to $23.94 in New York Stock Exchange trading. The shares have fallen 31 percent since the purchase of May.

The retailer will cut 950 positions at its regional headquarters in Minneapolis, 850 in St. Louis and 750 in Seattle.

The company is adding 250 district managers and staff who will operate its stores according to local tastes, the company said. Macy's has about 188,000 employees.

Standard & Poor's said it lowered its rating on Macy's to BBB-, citing "operating disappointments."