The U.S. Postal Service reported revenue of $16.7 billion for the third quarter of fiscal year 2017 (April 1, 2017 - June 30, 2017). Revenue for the quarter was essentially unchanged compared to the same quarter last year, excluding the effect of a $1.1 billion non-cash change in accounting estimate recognized during the third quarter of fiscal year 2016. Revenue from First-Class Mail and Marketing Mail decreased $422 million and $150 million, respectively, over the prior year quarter, due largely to lower volumes. These declines in revenue for these products were nearly offset by continued growth in the lower-margin Shipping and Packages business, with third quarter revenue increasing $473 million, or 11.3 percent, in that part of the Postal Service's business. Operating expenses for the quarter were $18.8 billion, a decrease of $461 million, or 2.4%, compared to the prior year quarter. Expenses for retiree health benefits and workers compensation declined by $869 million and $1.0 billion, respectively, but were partially offset by $1.2 billion in higher retirement expenses largely driven by changes in Office of Personnel Management actuarial assumptions and interest rates. Click Read More below for additional detail.
*Actions announced today anticipated to create approximately $630 million per year in savings
*Eliminates approximately 3,900 corporate and management roles and is committed to maintaining a lower cost base
*Most remaining furloughed colleagues returning to work beginning July 5, 2020
Macy’s, Inc. (NYSE:M) today announced details of a restructuring that will align its cost base with anticipated near-term sales as the business recovers from the impact of the COVID-19 pandemic, including the closure of stores from March 18 through May 4, 2020 and gradual re-opening.
The company will reduce corporate and management headcount by approximately 3,900. Additionally, Macy’s, Inc. has reduced staffing across its stores portfolio, supply chain and customer support network, which it will adjust as sales recover.
“COVID-19 has significantly impacted our business. While the re-opening of our stores is going well, we do anticipate a gradual recovery of business, and we are taking action to align our cost base with our anticipated lower sales,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “These were hard decisions as they impact many of our colleagues. I want to thank all of our colleagues – those who have been active and those on furlough – for helping us get through this difficult time, and I want to express my deep gratitude to the colleagues who are departing for their service and contributions. We look forward to welcoming back many of our furloughed colleagues the first week of July.”
“We know that we will be a smaller company for the foreseeable future, and our cost base will continue to reflect that moving forward. Our lower cost base combined with the approximately $4.5 billion in new financing will also make us a more stable, flexible company,” Gennette continued.
The company expects the actions announced today to generate expense savings of approximately $365 million in fiscal 2020 and approximately $630 million on an annualized basis. These savings will be additive to the anticipated $1.5 billion in annual expense savings announced in February, which the company expects to fully realize by year-end 2022.
For fiscal 2020, the company expects pre-tax costs of approximately $180 million for these restructuring activities, the majority of which will be recorded in the second quarter and all of which will be in cash.