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Boards block the entrance to a Macy's store in New York on June 8, 2020.

TIMOTHY A. CLARY/AFP/Getty Images

Macy’s Inc said on Thursday it would lay off about 3,900 employees in corporate and management positions as U.S. businesses try to save cash in the face of dwindling demand caused by the COVID-19 pandemic.

The department store chain, which had about 123,000 employees at the end of January, said it expects to save about $365 million in fiscal 2020 and about $630 million every year as a result of the layoffs.

Macy’s had in May warned of nearly $1 billion in operating losses in its first quarter and said it would turn into a “smaller company.”

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The job cuts come at a time when unemployment figures in the United States are already high. Rising coronavirus infections in many U.S. states including California, Texas and Florida are likely to hurt employment further as some people stay away from consumer-facing establishments.

“Expect more layoffs akin to Macy’s to be announced in the coming months,” said Matt Fox, founder of Ithaca Wealth Management in New York.

“Retailers that were struggling before the pandemic hit will re-evaluate their operations and cut jobs out of necessity to stay afloat until the economy recovers.”

Macy’s said it has also reduced staffing at its stores, supply chains and customer support network and would adjust their levels as sales recover.

The company, which reopened its flagship Manhattan store on Monday, said it would bring back most of its remaining furloughed employees in the first week of July.

It expects the layoffs to result in pre-tax charges of about $180 million in fiscal 2020.

Macy’s shares were down about 2 per cent in morning trading.

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