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Macy's, Inc.
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TABLE OF CONTENTS
1 Macy's, Inc.............................................................................................................................................. 6
2 Macy's, Inc. - Key Employees ................................................................................................................ 7
3 Macy's, Inc. - Key Employees Biographies ............................................................................................ 8
4 Macy's, Inc. - Major Products and Services ......................................................................................... 10
5 Macy's, Inc. - History ............................................................................................................................ 12
6 Macy's, Inc. - Company Statement ....................................................................................................... 17
7 Macy's, Inc. - Locations and Subsidiaries ........................................................................................... 22
7.1 Macy's, Inc. - Head Office ................................................................................................................................... 22
7.2 Macy's, Inc. - Other Locations and Subsidiaries .................................................................................................. 22
8 Macy's, Inc. - Business Analysis.......................................................................................................... 24
8.1 Macy's, Inc. - Company Overview ....................................................................................................................... 24
8.2 Macy's, Inc. - Business Description ..................................................................................................................... 24
9 Macy's, Inc. - SWOT Analysis .............................................................................................................. 25
9.1 Macy's, Inc. - SWOT Analysis - Overview ............................................................................................................ 25
9.2 Macy's, Inc. - Strengths ....................................................................................................................................... 25
9.2.1 Strength - Promotional and Marketing Activities ........................................................................................... 25
9.2.2 Strength - Support Services......................................................................................................................... 25
9.2.3 Strength - Omni-Channel Selling ................................................................................................................. 25
9.3 Macy's, Inc. - Weaknesses .................................................................................................................................. 25
9.3.1 Weakness - Lower Inventory Turnover Ratio ............................................................................................... 25
9.3.2 Weakness - Dependence on Selected Region ............................................................................................. 26
9.3.3 Weakness - Declining Financial Performance .............................................................................................. 26
9.4 Macy's, Inc. - Opportunities ................................................................................................................................. 26
9.4.1 Opportunity - Private Label Gaining Momentum ........................................................................................... 26
9.4.2 Opportunity - Expanding Retail Market in the US ......................................................................................... 26
9.4.3 Opportunity - Corporate Restructuring ......................................................................................................... 26
9.5 Macy's, Inc. - Threats .......................................................................................................................................... 27
9.5.1 Threat - Expansion Initiatives by Competitors .............................................................................................. 27
9.5.2 Threat - Changing Fashion Preferences ...................................................................................................... 27
9.5.3 Threat - Increase in Manpower Costs in the US ........................................................................................... 27
10 Macy's, Inc. - Company Financial Analysis ......................................................................................... 28
10.1 Macy's, Inc. - Five Year Snapshot: Overview of Financial and Operational Performance Indicators ..................... 28
11 Macy's, Inc. - Interim ratios .................................................................................................................. 30
11.1.1 Macy's, Inc. - Financial ratios: Capital Market Ratios ................................................................................... 30
11.2 Macy's, Inc. - Financial Performance and Ratio Charts ........................................................................................ 31
11.2.1 Macy's, Inc. - Revenue and Operating margin ............................................................................................. 31
11.2.2 Macy's, Inc. - Asset and Liabilities ............................................................................................................... 32
11.2.3 Macy's, Inc. - Net Debt vs. Gearing Ratio .................................................................................................... 33
11.2.4 Macy's, Inc. - Operational Efficiency ............................................................................................................ 34
11.2.5 Macy's, Inc. - Solvency ................................................................................................................................ 35
11.2.6 Macy's, Inc. - Valuation ............................................................................................................................... 36
11.3 Macy's, Inc. - Competitive Benchmarking ............................................................................................................ 37
11.3.1 Macy's, Inc. - Market Capitalization ............................................................................................................. 38
11.3.2 Macy's, Inc. - Efficiency ............................................................................................................................... 39
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11.3.3 Macy's, Inc. - Turnover: Inventory and Asset ............................................................................................... 40
11.3.4 Macy's, Inc. - Liquidity ................................................................................................................................. 41
12 Macy's, Inc. - Mergers & Acquisitions and Partnerships ..................................................................... 42
12.1 Macy's, Inc. - M&A and Partnerships Strategy ..................................................................................................... 42
13 Macy's, Inc. - Recent Developments .................................................................................................... 47
14 Appendix .............................................................................................................................................. 51
14.1 Methodology ....................................................................................................................................................... 51
14.2 Macy's, Inc. - Ratio Definitions ............................................................................................................................ 51
14.3 Disclaimer........................................................................................................................................................... 56
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List of Tables
Table 1: Macy's, Inc. - Key Employees ................................................................................................................................ 7
Table 2: Macy's, Inc. - Key Employees Biographies ............................................................................................................. 8
Table 3: Macy's, Inc. - Major Products and Services .......................................................................................................... 10
Table 4: Macy's, Inc. - History ........................................................................................................................................... 12
Table 5: Macy's, Inc. - Subsidiaries ................................................................................................................................... 22
Table 6: Macy's, Inc. - Annual ratios .................................................................................................................................. 28
Table 7: Macy's, Inc. - Interim ratios .................................................................................................................................. 30
Table 8: Macy's, Inc. - Capital Market Ratios ..................................................................................................................... 30
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List of Figures
Figure 1: Macy's, Inc. - Revenue and Operating Profit ....................................................................................................... 31
Figure 2: Macy's, Inc. - Asset and Liabilities ...................................................................................................................... 32
Figure 3: Macy's, Inc. - Net Debt vs. Gearing Ratio ............................................................................................................ 33
Figure 4: Macy's, Inc. - Operational Efficiency ................................................................................................................... 34
Figure 5: Macy's, Inc. - Solvency ....................................................................................................................................... 35
Figure 6: Macy's, Inc. - Valuation ....................................................................................................................................... 36
Figure 7: Macy's, Inc. - Market Capitalization ..................................................................................................................... 38
Figure 8: Macy's, Inc. - Efficiency ...................................................................................................................................... 39
Figure 9: Macy's, Inc. - Turnover: Inventory and Asset ....................................................................................................... 40
Figure 10: Macy's, Inc. - Liquidity ...................................................................................................................................... 41
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1 Macy's, Inc.
Fast Facts
Headquarters Address 7 W 7th Street,Cincinnati,Ohio,45202-
2424,United States of America
Telephone +1 513 5797000
Fax +1 302 6365454
Website www.macysinc.com
Ticker Symbol , Exchange Name M,New York Stock Exchange
Number of Employees 157,900
Fiscal Year End January
Revenue (US$ million) 27,079
SWOT Analysis
Strengths Weaknesses
Omni-Channel Selling Declining Financial Performance
Promotional and Marketing Activities Dependence on Selected Region
Support Services Lower Inventory Turnover Ratio
Opportunities Threats
Corporate Restructuring Changing Fashion Preferences
Expanding Retail Market in the US Expansion Initiatives by Competitors
Private Label Gaining Momentum Increase in Manpower Costs in the US
Share Data
Share price (US$) as on 25 Nov 2016 44.14
EPS (US$) 3.22
Market Capitalization (US$ million) 13,154
Enterprise Value (US$ million) 20,200
Shares outstanding (million) 306
Financial Snapshot
Operating Performance
The company reported revenue of US$27,079 million during the fiscal year 2016 (2016). The company's revenue grew at a CAGR of 0.63% during 2012–2016, with an annual decline of 3.65% over 2015. In 2016, the company recorded an operating margin of 7.53%, as against 9.90% in 2015.
Revenue and Margins
Return on Equity
The company recorded a return on equity (ROE) of 25.22% for 2016, as compared to its peers, Target Corporation (Ticker: TGT), W al-Mart Stores, Inc. (Ticker: WMT) and Sears Holdings Corporation (Ticker: SHLD), which recorded ROEs of 25.96%, 18.24% and 0.00% respectively. The company reported an operating margin of 7.53% in 2016.
Return on Equity
Liquidity Position
The company reported a current ratio of 1.34 in 2016, as compared to its peers, Target Corporation, Wal- Mart Stores, Inc. and Sears Holdings Corporation, which recorded current ratios of 1.12, 0.93 and 1.11 respectively. As of January 2016, the company recorded cash and short-term investments of worth US$1,109 million, against US$65 million current debt. The company reported a debt to equity ratio of 1.80 in 2016 as compared to its peers, Target Corporation, Wal-Mart Stores, Inc. and Sears...
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2 Macy's, Inc. - Key Employees
Table 1: Macy's, Inc. - Key Employees
Name Job Title Board Level Since Age
Terry J. Lundgren Chairman, Chief Executive Officer Executive Board 2014 64
Tony Spring Chairman - Bloomingdale‘s, Chief Executive Officer - Bloomingdale‘s
Executive Board 2014
Dennis J. Broderick Executive Vice President, General Counsel, Secretary
Senior Management 2009 67
Douglas W. Sesler Executive Vice President - Real Estate Senior Management 2016
Jeffrey A. Kantor Chief Stores Officer Senior Management 2015 57
Jeffrey Gennette President Senior Management 2014 54
Joel A. Belsky Executive Vice President, Controller Senior Management 2009 62
Justin S. MacFarlane Chief - Strategy, Analytics and Innovation Officer
Senior Management 2016 43
Karen M. Hoguet Chief Financial Officer Senior Management 2009 59
Molly Langenstein Chief Private Brand Officer Senior Management 2015 52
Patti H. Ongman Chief Merchandise Planning Officer Senior Management 2015
Peter Sachse Chief - Growth Officer Senior Management 2016 58
Richard A. Lennox Chief Marketing Officer Senior Management 2016
Robert B. Harrison Chief Omnichannel Officer Senior Management 2013 52
Timothy G. Baxter Chief Merchandising Officer Senior Management 2015
Timothy M. Adams Chief - International Business Development
Senior Management 2015
William S. Allen Chief Human Resources Officer Senior Management 2013 58
Annie Young-Scrivner Director Non Executive Board 2014 47
Craig E. Weatherup Director Non Executive Board 1996 70
Deirdre P. Connelly Director Non Executive Board 2008 55
Francis S. Blake Director Non Executive Board 2015 66
John A. Bryant Director Non Executive Board 2015 50
Joyce M. Roche Director Non Executive Board 2006 69
Leslie D. Hale Director Non Executive Board 2015 43
Meyer Feldberg Director Non Executive Board 1992 73
Paul C. Varga Director Non Executive Board 2012 52
Sara Levinson Director Non Executive Board 1997 65
Stephen F. Bollenbach Director Non Executive Board 2007 73
William H. Lenehan Director Non Executive Board 2016 39
Source: Canadean
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3 Macy's, Inc. - Key Employees Biographies
Table 2: Macy's, Inc. - Key Employees Biographies
Employee Details Biography
Jeffrey A. Kantor
Job Title : Chief Stores Officer
Since : 2015
Age :57
Jeffrey A. Kantor has been the Chief Store Officer of the company since February 2015. Previously, he served as the Chairman of macys.com from 2012 to 2015. Prior to this, he served as the President - Merchandising for Home from 2009 to 2010 and as the President for furniture for Macy‘s Home Store during 2006-2009.
Karen M. Hoguet
Job Title : Chief Financial Officer
Since : 2009
Age :59
Karen M. Hoguet has been the Chief Financial Officer of the company since 2009. Prior to this, she served as an Executive Vice President and the Chief Financial Officer from 2005 to 2009 and as the Senior Vice President and Chief Financial Officer from 1997 to 2005.
Molly Langenstein
Job Title : Chief Private Brand Officer
Since : 2015
Age :52
Molly Langenstein has been the Chief Private Brand Officer of the company since February 2015. Previously, she served as an Executive Vice President - Men‘s and Kids at Macy‘s Private Brands from 2014 to 2015. Prior to this, she delivered her services as an Executive Vice President GMM - Millennial from 2012 to 2014 and as an Executive Vice President Fashion and New Business Development from 2010 to 2012. She also served as the Group Vice President DMM Neo, Impulse and Bridge Sportswear from 2009 to 2010.
Patti H. Ongman
Job Title : Chief Merchandise Planning Officer
Since : 2015
Patti H. Ongman has been the Chief Merchandise Planning Officer of the company since February 2015. Previously, she served as an Executive Vice President - Omnichannel Strategies from 2014 to 2015. Prior to this, she delivered her services as an Executive Vice President GMM - Center Core from 2010 to 2014 and as an Executive Vice President GPM - Cosmetics, Fragrances and Shoes from 2009 to 2010.
Peter Sachse
Job Title : Chief - Growth Officer
Since : 2016
Age :58
Peter Sachse has been the Chief Growth Officer of the company since February 2016. Earlier, he served as the Chief Innovation and Business Development Officer of the company since February 2015. Previously, he served as the Chief Stores Officer from 2012 to 2015. Prior to this, he served as the Chief Marketing Officer from 2009 to 2012. He also served as the Chairman of macys.com from 2006 to 2012.
Robert B. Harrison
Job Title : Chief Omnichannel Officer
Since : 2013
Age :52
Robert B. Harrison has been the Chief Omnichannel Officer of the company since 2013. Previously, he served as an Executive Vice President - Omnichannel Strategy from 2012 to 2013. Prior to this, he delivered his services as an Executive Vice President-Finance from 2011 to 2012 and as the President-Stores during 2009-2011.
Terry J. Lundgren
Job Title : Chairman, Chief Executive Officer
Since : 2014
Age :64
Terry J. Lundgren has been the Chairman and Chief Executive Officer of the company since March 2014. Previously, he served as the Chairman, President and the Chief Executive Officer of the company from 2003 to 2014. Prior to this, he worked as the Chief Operating Officer and the Chief Merchandising Officer of the company from 2002 to 2003. He also served as the President and the Chief Merchandising Officer from 1997 to 2002.
Timothy G. Baxter
Job Title : Chief Merchandising Officer
Since : 2015
Timothy G. Baxter has been the Chief Merchandising Officer of the company since February 2015. Previously, he served as an Executive Vice President GMM - Ready to wear from 2013 to 2015. Prior to this, he delivered his services as an Executive Vice President - Fashion Office, Licensed Businesses and multicultural Business Development from 2012 to 2013 and as a Senior Vice President - Ready to wear from 2011 to 2012. He also served as a Group Vice President Ready to Wear - Bridge/Impulse/NC/Neo Collections Sportswear from 2010 to 2011 and as the Group Vice President Fashion Jewelry, Watches, Sterling Silver during 2009-2010.
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Table 2: Macy's, Inc. - Key Employees Biographies
Employee Details Biography
William H. Lenehan
Job Title : Director
Since : 2016
Age :39
William H. Lenehan will serve as a Non-executive Director of the company with effective from April 2016.
William S. Allen
Job Title : Chief Human Resources Officer
Since : 2013
Age :58
William S. Allen has been the Chief Human Resource Officer of the company since 2013. Previously, he served as the Senior Vice President - Group Human Resources of AP Moller-Maersk A/S from 2008 to 2012.
Source: Canadean
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4 Macy's, Inc. - Major Products and Services
Macy's, Inc. is a department store operator, based in the US. The major products and services offered by the company include:
Table 3: Macy's, Inc. - Major Products and Services
Products:
Home Furnishing
Kitchen and Cutlery
Luggage
Electronics
Home Appliances
Outdoor Furniture
Personal Care
Bathroom Accessories
Bedding
Apparel
Beauty Products
Tools and Accessories
Fashion Accessories
Cosmetics
Fragrances
Services:
Home Delivery
Store Pick Up
Discount Cards
Credit Card Facility
Rewards Programs
Mobile Applications
E-Retail
Skincare Treatments
Aesthetic Treatments
Bodycare Treatments
Spa Services
Brands:
Alfani
American Rag
Bar III
Belgique
Charter Club
Club Room
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Table 3: Macy's, Inc. - Major Products and Services
Epic Threads
first impressions
Giani Bernini
Greg Norman for Tasso Elba
Home Design
Hotel Collection
Hudson Park
Ideology
I-N-C
Jenni by Jennifer Moore
John Ashford
JM Collection
Karen Scott
Martha Stewart Collection
Maison Jules
Material Girl
Morgan Taylor
Studio Silver
Style & Co.
Style & Co. Sport
Sutton Studio
Tasso Elba
the Cellar
Tools of the Trade
Via Europa
Aqua
Thalia Sodi
Banners:
Macy‘s
Bloomingdale‘s
Macy's Backstage
Bloomingdale's Outlet
Bluemercury
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5 Macy's, Inc. - History
Table 4: Macy's, Inc. - History
Year Event type Description
2016
Stake Sale
The company sold its stake to Greenlight Capital.
2016
New Products/Services
The company announced the launch of a new home collection by Kelly Ripa.
2016
Corporate Changes/Expansions
The company planned open a new Bloomingdale‘s Outlet store in Orange, CA.
2016
Contracts/Agreements
The company announced to open a Bloomingdale‘s store in Kuwait in 2017, in partnership with Al Tayer Group LLC.
2016
Contracts/Agreements
The company entered into a partnership with Shaun White to promote ―WHT SPACE‖ brand.
2016
Contracts/Agreements
The company entered into a partnership with Carmelo Anthony to promote ―TMNT x Melo‖ brand.
2016
Contracts/Agreements
The company partnered with Peach & Lily, to open a second brick and mortar store in California, the US.
2016
Plans/Strategy
The company announced the closure of 100 stores.
2016
Divestiture
The company announced the sale of five stores to General Growth Properties.
2016
Contracts/Agreements
The company partners with beGlammed to offer a new level of convenience to itscustomers who are interested in in-home beauty treatments and services.
2015
Acquisitions/Mergers/Takeovers
The company acquired Bluemercury, Inc., a luxury beauty products and spa services retailer, for US$210 million.
2015
Contracts/Agreements
The company entered into an agreement with zTailors, an on-demand digital tailor network, to offer customized alterations services for customers who buy garments online.
2015
Contracts/Agreements
The company signed an agreement with Men‘s Wearhouse to open licensed tuxedo rental shops within 300 Macy‘s stores.
2015
Contracts/Agreements
The company ended its 11-year partnership with Donald Trump.
2015
Asset Disposal
The company sold its downtown Pittsburgh building at 400 Fifth Avenue to Core Realty.
2015
Contracts/Agreements
The company entered into an agreement with KDM Global Partners, LLC to produce a new line of private label wines.
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Table 4: Macy's, Inc. - History
Year Event type Description
2015
Contracts/Agreements
The company entered into a joint venture with Fung Retailing Limited to enhance retailing in China.
2015
Plans/Strategy
The company announced to close 35 to 40 of its stores across America.
2015
Contracts/Agreements
The company entered into an agreement with Best Buy Co., Inc to test licensed consumer electronics department in its stores.
2015
Asset Disposal
The company sold the top four floors at its downtown Seattle store in Washington to an affiliate of Starwood Capital Group.
2015
Corporate Changes/Expansions
The company announced plans to open a new store in Abu Dhabi, the UAE.
2015
Contracts/Agreements
The company entered into an agreement with Luxottica Group S.p.A to open LensCrafters Licensed Departments in its stores.
2014
New Products/Services
The company introduced Shaquille O'Neal Menswear Collection across 100 stores.
2014
New Products/Services
The company introduced new Holiday Arcade with unique gifts in six locations across the US.
2013
New Products/Services
The company launched NantMobile iD Visual Recognition Technology to enhance its mobile consumer engagement offerings.
2013
Contracts/Agreements
The company entered into an agreement with LIDS Sports Group to open licensed team merchandise departments in Macy‘s stores and online.
2013
New Products/Services
The company expanded its brand offerings by launching Keds and Marilyn Monroe collection.
2013
Plans/Strategy
Macy's announced to expand its online order fulfillment center in Goodyear, Arizona, the US.
2012
Business / Operations Closure
The company closed eight stores.
2012
Corporate Changes/Expansions
The company opened seven new stores.
2011
Corporate Changes/Expansions
The company started its e-commerce operations through Macys.com and bloomingdales.com.
2011
Corporate Changes/Expansions
The company opened three Macy's stores in New York and California, the US.
2011
Corporate Changes/Expansions
The company invested US$400 million towards renovation of Macy‘s Herald Square flagship store in New York City, the US.
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Table 4: Macy's, Inc. - History
Year Event type Description
2011
New Products/Services
The company launched Matthew Williamson Capsule Collection.
2011
New Products/Services
Macy‘s launched Kinder Aggugini collection.
2010
Corporate Changes/Expansions
The company opened store in Dubai, under the Bloomingdale brand.
2009
Corporate Changes/Expansions
Macy's opened two new Macy's stores in the Central Valley of California, the US.
2008
Contracts/Agreements
The company partnered with dunnhumbyUSA for a significant multi-year agreement.
2008
Contracts/Agreements
The company signed an exclusive agreement with FAO Schwarz, under which, FAO Schwarz opened FAO-operated toy stores in 275 Macy's stores.
2008
Corporate Changes/Expansions
The company under the Bloomingdale's banner opened a store in Phoenix, Arizona, the US.
2008
New Products/Services
The company launched e-spot automated retail shops in all of its stores.
2007
Corporate Changes/Expansions
The company was renamed as Macy's, Inc.
2006
Divestiture
The company divested many of its stores to Boscov's, Westfield, Warwick, Simon Property Group, Macerich, General Growth Properties and Pennsylvania Real Estate Investment Trust.
2005
Corporate Changes/Expansions
The company commenced operations across the US under two national store brands, Macy‘s and Bloomingdale‘s.
2005
Acquisitions/Mergers/Takeovers
The company, Federated Department Stores merged with The May Department Stores Company and the latter became the surviving company after the merger.
2002
Acquisitions/Mergers/Takeovers
The company merged Rick‘s and Macy‘s stores in the southeast division under the Rich- Macy‘s brand.
2002
Divestiture
The company divested Fingerhut stores.
2001
Divestiture
The company closed its Stern‘s division.
2001
Acquisitions/Mergers/Takeovers
The company acquired Liberty House, a retailer based in Hawaii, the US.
1999
Acquisitions/Mergers/Takeovers
The company acquired Fingerhut Companies, Inc., a direct-marketing company, based in Minnetonka, the US.
1996
New Products/Services
The company‘s subsidiary, Macy‘s West launched its e-commerce website.
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Table 4: Macy's, Inc. - History
Year Event type Description
1996
Acquisitions/Mergers/Takeovers
The company acquired Strawbridge's stores in Philadelphia, the US.
1995
Acquisitions/Mergers/Takeovers
The company acquired Broadway Stores, based in Los Angeles, the US.
1994
Corporate Changes/Expansions
The company formed Federated Logistics (now known as Macy‘s Logistics and Operations).
1994
Acquisitions/Mergers/Takeovers
The company acquired R.H. Macy & Co and Joseph Horne Co.
1992
Corporate Changes/Expansions
The company underwent a divisional consolidation process to form a new public company named Federated Department Stores.
1989
Corporate Changes/Expansions
The company established the Financial, Administrative and Credit Services operation (The FACS Group), now known as Macy‘s Credit and Customer Services.
1988
Ownership Changes
The company was acquired by Campeau Corporation, a real estate developer in Canada.
1987
Acquisitions/Mergers/Takeovers
The company acquired Allied‘s block division, based in Indianapolis, the US.
1985
Corporate Changes/Expansions
The Federated Systems Group (now known as The SABRE Group) converted all Federated divisions to a common electronic data processing system, which is now known as Macy's Systems and Technology.
1976
Acquisitions/Mergers/Takeovers
The company acquired Rich‘s based in Atlanta, the US.
1970
Corporate Changes/Expansions
The company opened a number of discount divisions in Florida, Texas and California, the US.
1964
Acquisitions/Mergers/Takeovers
The company acquired Bullock's and I. Magnin, based in Los Angeles, the US.
1959
Acquisitions/Mergers/Takeovers
The company acquired Rike‘s based in Ohio and Goldsmith‘s based in Memphis, the US.
1945
Acquisitions/Mergers/Takeovers
The company acquired O'Connor Moffat & Company, based in San Francisco, the US.
1930
Acquisitions/Mergers/Takeovers
The company merged with Bloomingdale of New York, the US.
1929
Corporate Changes/Expansions
The company was established as Federated Department Stores through the merger of Abraham & Straus of Brooklyn, Filene‘s of Boston and F&R Lazarus.
1925
Acquisitions/Mergers/Takeovers
The company acquired Davison-Paxon of Atlanta, the US.
1922
Stock Listings/IPO
The company‘s shares were listed on the New York Stock Exchange.
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Table 4: Macy's, Inc. - History
Year Event type Description
1902
Corporate Changes/Expansions
The company established headquarters at Herald Square in New York City, the US.
1888
Contracts/Agreements
The company formed an alliance with Straus family.
1858
Incorporation/Establishment
Macy's, Inc. was established by Rowland H. Macy, as a dry goods store in New York City, the US.
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6 Macy's, Inc. - Company Statement A statement by Mr. Terry J. Lundgren, the Chairman, and the Chief Executive Officer of Macy's, Inc. is given below. The statement has been taken from the company‘s 2016 annual report. Retailing is a dynamic business that requires continuous reinvention. Our company has experienced great times and challenging times throughout its long history, but we have at all times embraced change. I believe that is one of the reasons we experienced such great success and generated an impressive 412 percent total shareholder return over the last seven years. There is no question that 2015 was disruptive to our company and our industry. It presented challenges that caused us to pause, reflect, and hit the reset button on our priorities and ambitions. But it was also instructive, forcing us to let go of some of the things that worked in the past and pushing us to be more aggressive in the way we address the rapidly changing consumer market. Throughout that process my confidence in this company and our team never wavered, and my belief in the vision for growth and leadership for Macy‘s, Inc. remained steadfast. However, the way in which we plan on achieving our vision has changed. In business a tough year can be a great teacher. Our company learned a lot in 2015 – we carefully studied our performance, looked at the changes in the consumer market, and gained many insights. It is clear that many of our existing strategies already focus on changing consumer preferences and buying behaviors, but we have placed a greater level of urgency on evolving them. For example our omnichannel strategy at Macy‘s and Bloomingdale‘s continues to be best-in-class in the retail industry, but we have a renewed focus on driving the performance of these models. As part of this, we are testing and learning from various pilots that will allow us to serve new customers and in new ways over time. Regardless of whether it is online, mobile, or in store, our commitment to our customer continues to drive what we do and how we evolve. Our work has just begun. Over the past year, we have taken steps to operate more effectively and efficiently with an organization that is flatter and faster because as the rate of change among our customers‘ preference increases, so too must our speed to respond. In some cases, there has been short-term pain as we tightened our belt and realigned our resources, but our management team has resolved to stabilize the business in 2016 and lay the foundation for renewed growth in 2017 and beyond. Our eye is on a long-term vision of Macy‘s, Inc. as a progressive retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace. We look ahead with optimism and high hopes grounded in solid strategies and an intensified focus on agility within our organization. A Look Back Macy‘s, Inc. came into 2015 with an exceptional winning streak of five consecutive years of growth in sales, earnings, cash flow and return on invested capital. Macy‘s and Bloomingdale‘s became widely recognized as the industry leader for our omnichannel approach to fashion retailing, and we moved fast to adjust our operations to serve the evolving shopping preferences of customers. In 2015, however, we experienced a convergence of negative factors that impacted our sales, margins and profitability – some external to our company, some of our own making. Our inventory flow early in the year was sidetracked by a labor slowdown in West Coast ports. Holiday season sales of cold-weather goods suffered in the historically warm weather of early winter. A strong dollar deterred spending by international visitors in our flagship stores that are popular tourist destinations. We implemented some key organizational changes at the end of fiscal 2014 that took longer than expected to settle. The end result was a disappointing financial performance in 2015. On a year-over-year basis versus our record results in 2014, comparable sales in 2015 were down by 2.5 percent on an owned plus licensed basis and earnings per diluted share decreased 14.3 percent excluding impairments, store closing and other costs. (See pages 18 to 21 of the company‘s 2015 Form 10-K for information on our non-GAAP financial measures.) Evolving Our Strategies with M.O.M. 2.0 Going forward in pursuit of profitable sales growth within our existing retail businesses, Macy‘s remains rooted in the M.O.M. strategies that have resonated over the past five years with customers seeking fashion, value, quality and convenience in stores and digitally. But we are redefining, updating and redirecting our efforts in each letter of M.O.M. to carry us forward – with My Macy‘s evolving from localization to personalization, Omnichannel now focused on providing Omni Choices for customers, and engaging customers by making Magic Connections. We believe that, as this very focused strategic work leads to incremental sales-driving tactics, Macy‘s will continue to develop as a preferred shopping destination. Testing and Learning Macy‘s continues to test a wide range of concepts and ideas on a limited scale to understand what resonates with shoppers. We learn from our success and our failures and are quick to roll out what works and adjust or discontinue what does not. Examples include:
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Macy's, Inc.
18
MACY‘S BACKSTAGE: We opened our first six Macy‘s Backstage off-price stores in metro New York City in fall 2015. In spring 2016, we will bring the Backstage concept inside about 15 full-line Macy‘s mall stores. By the end of 2016, we expect to have approximately 22 Macy‘s Backstage locations. LAST ACT: As an outgrowth of our research behind the pilot of Macy‘s Backstage, we also tested a simplified pricing approach for our deep clearance apparel merchandise in all Macy‘s stores. Last Act was established as separate spaces on our apparel floors, both in the women‘s and men‘s departments. Based on the successful test, Last Act now has been rolled out to all of Macy‘s stores. BLUEMERCURY: Macy‘s, Inc. acquired Bluemercury, a highly regarded and fast-growing beauty specialty store business, in 2015. The company continues to support the expansion of freestanding Bluemercury stores in upscale neighborhoods (to a total of 115 by year-end 2017) while also improving its digital business and piloting Bluemercury shops within four Macy‘s stores in 2015, with 18 additional in-store shops expected in 2016. JEWELRY: We tested a new approach to Macy‘s jewelry business in stores in southern California in 2015. It involved strengthening associate selling skills, including changes to talent, training and compensation; improved associate availability; increased direct supervision; and a broader and higher-quality product offering. Based on its success, we are rolling out this robust approach to jewelry to 300 Macy‘s stores across the country in fall 2016, with the balance of all stores planned for 2017. CHINA JOINT VENTURE: Macy‘s began direct selling in late 2015 through a joint venture with Hong Kong-based Fung Retailing Limited. The joint venture, which is 65 percent owned by Macy‘s and 35 percent owned by Fung Retailing, began with an e-commerce pilot on Alibaba Group‘s Tmall Global, a premier marketplace that connects overseas branded retailers to Chinese consumers. Reducing Expenses to Fund Growth Beginning in 2015 and continuing in 2016, the company is reducing expenses and tightening capital spending so we can reinvest in growth initiatives. By doing so, we believe we can accelerate the top line while making progress toward the company‘s goal of re-attaining over time an EBITDA rate as a percent of sales of 14 percent. Our target is to reduce annual SG&A expenses by $500 million (net of growth initiatives) from previously planned levels by 2018, with incremental progress in 2016 and 2017 toward that goal. Going into 2016, we already have identified and announced approximately $400 million in annualized reductions. Macy‘s, Inc. will reduce capital spending to an estimated $900 million in 2016 from the $1.1 billion in capital spent in 2015 – which still provides us with ample resources for major investments in technology, digital advancement, physical improvements to top stores and other levers of growth. Adjusting Our Customer Touchpoints As customer shopping patterns continue to evolve across stores and digital, we have refined our touchpoints for interacting with shoppers. Our websites and mobile apps have continued to improve, becoming more robust with merchandise offerings, content and functionality. Fulfillment capabilities are expanding with national availability of Buy Online Pickup in Store and Same Day Delivery in an increasing number of markets at Macy‘s and Bloomingdale‘s. In 2015, we opened our fifth direct-to-consumer fulfillment megacenter, a 1.3 million-square-foot facility in Tulsa, OK. Meanwhile, we are committed to maintaining a healthy portfolio of stores in the best locations across America – both to serve shoppers who walk through the door and to fulfill orders that are shipped directly to customers around the country. The company closed 41 underperforming Macy‘s stores (out of a previous total of about 770 Macy‘s stores) in 2015. We will continue to add stores selectively while also being disciplined about closing stores that are unproductive or no longer robust shopping destinations because of changes in the local retail shopping landscape. Pursuing Value from Real Estate The company also is pursuing the creation of shareholder value through various initiatives to monetize the company‘s significant real estate assets or through partnerships or joint venture transactions for the company‘s owned mall-based properties, as well as Macy‘s flagship real estate assets in Manhattan, San Francisco, Chicago and Minneapolis. In 2015, for example, the company sold the underutilized upper floors of the Macy‘s store in downtown Seattle for $65 million to a real estate developer that is converting it to office use. In Brooklyn, Macy‘s, Inc. completed a $270 million deal with Tishman Speyer that will enable a re-creation of Macy‘s Brooklyn store and further enliven one of New York City‘s most dynamic neighborhoods. We believe these types of transactions, as well as the potential partnerships and joint ventures being explored, can create significant value while also contributing to the success of our retail operations. Enhancing Returns to Shareholders
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19
Even taking into account the disappointment of 2015, Macy‘s, Inc. has a track record of generatin g an impressive return for shareholders through price appreciation, share repurchases and dividends. Total Shareholder Return from the beginning of fiscal 2009 through the end of fiscal 2015 was 412 percent, compared with the Dow Jones Industrial Average‘s increase of 148 percent and the S&P 500‘s increase of 173 percent over that same period. Since resuming our share repurchase program in August 2011, Macy‘s, Inc. has bought back approximately 152.2 million shares for approximately $7.3 billion through Jan. 30, 2016. In early 2016, our board of directors increased the company‘s share repurchase authorization by $1.5 billion. After giving effect to this increase, the remaining authorization outstanding , as of Jan. 30, 2016, was approximately $2 billion. The Board also expressed its intent to increase the quarterly dividend on Macy's common stock to 37.75 cents per share from 36 cents per share, effective with the July 1, 2016, dividend payment. The July dividend will be the sixth increase in t he past five years and represents a more than seven-fold increase from 5 cents per share in 2009 to 37.75 cents per share. The Agility to Adapt It is clear that our customers are demanding more from us in both what we provide and how we do it, and they expect us t o adapt to their changing tastes and preferences faster than ever. This requires agility—something not often associated with large companies like ours. But we are intensifying our focus on being a more agile company. It takes cultivating top talent, fostering an environment of innovation and harnessing data analytics to make decisions that will help us win in this competitive environment. We will go forward by testing various concepts and quickly reacting to what we learn. We will let go of initiatives that are not leading to long term returns to our shareholders. And we will be courageous and try new ideas and experiences that may lead to growing our business and capturing market share in the future. While we did not ask for the challenges 2015 brought to our company, I believe we have been strengthened by our aggressive strategic responses. We have a clearer vision of the future of retail and Macy‘s, Inc.‘s role in it. The keystones of fashion, value and convenience remain at our core and our commitment to doing what is in the best interest of our customers, associates and shareholders remains our focus. Our focus on agility and our renewed sense of urgency will make us stronger and more successful. A setback is just a setup for a comeback. Macy‘s, Inc. became a better company by most measures after the challenging periods of 2001/2002 and 2008/2009. And we intend to deliver continuous improvement in our comeback in the years ahead. A statement by Mr. Terry J. Lundgren, the Chairman, and the Chief Executive Officer of Macy's, Inc. is given below. The statement has been taken from the company‘s 2016 annual report. Retailing is a dynamic business that requires continuous reinvention. Our company has experienced great times and challenging times throughout its long history, but we have at all times embraced change. I believe that is one of the reasons we experienced such great success and generated an impressive 412 percent total shareholder return over the last seven years. There is no question that 2015 was disruptive to our company and our industry. It presented challenges that caused us to pause, reflect, and hit the reset button on our priorities and ambitions. But it was also instructive, forcing us to let go of some of the things that worked in the past and pushing us to be more aggressive in the way we address the rapidly changing consumer market. Throughout that process my confidence in this company and our team never wavered, and my belief in the vision for growth and leadership for Macy‘s, Inc. remained steadfast. However, the way in which we plan on achieving our vision has changed. In business a tough year can be a great teacher. Our company learned a lot in 2015 – we carefully studied our performance, looked at the changes in the consumer market, and gained many insights. It is clear that many of our existing strategies already focus on changing consumer preferences and buying behaviors, but we have placed a greater level of urgency on evolving them. For example our omnichannel strategy at Macy‘s and Bloomingdale‘s continues to be best-in-class in the retail industry, but we have a renewed focus on driving the performance of these models. As part of this, we are testing and learning from various pilots that will allow us to serve new customers and in new ways over time. Regardless of whether it is online, mobile, or in store, our commitment to our customer continues to drive what we do and how we evolve. Our work has just begun. Over the past year, we have taken steps to operate more effectively and efficiently with an organization that is flatter and faster because as the rate of change among our customers‘ preference increases, so too must our speed to respond. In some cases, there has been short-term pain as we tightened our belt and realigned our resources, but our management team has resolved to stabilize the business in 2016 and lay the foundation for renewed growth in 2017 and beyond. Our eye is on a long-term vision of Macy‘s, Inc. as a progressive retailer that serves existing customers and acquires new ones through innovative approaches to the marketplace. We look ahead with optimism and high hopes grounded in solid strategies and an intensified focus on agility within our organization. A Look Back Macy‘s, Inc. came into 2015 with an exceptional winning streak of five consecutive years of growth in sales, earnings, cash flow and return on invested capital. Macy‘s and Bloomingdale‘s became widely recognized as the industry leader for our omnichannel approach to fashion retailing, and we moved fast to adjust our operations to serve the evolving shopping preferences of customers. In 2015, however, we experienced a convergence of negative factors that impacted our sales, margins and profitability – some external to our company, some of our own making. Our inventory flow early in the year was sidetracked by a labor slowdown in West Coast ports. Holiday season sales of cold-weather goods suffered in the historically warm weather of
©Canadean. This product is licensed and is not to be photocopied.
Macy's, Inc.
20
early winter. A strong dollar deterred spending by international visitors in our flagship stores that are popular tourist destinations. We implemented some key organizational changes at the end of fiscal 2014 that took longer than expected to settle. The end result was a disappointing financial performance in 2015. On a year-over-year basis versus our record results in 2014, comparable sales in 2015 were down by 2.5 percent on an owned plus licensed basis and earnings per diluted share decreased 14.3 percent excluding impairments, store closing and other costs. (See pages 18 to 21 of the company‘s 2015 Form 10-K for information on our non-GAAP financial measures.) Evolving Our Strategies with M.O.M. 2.0 Going forward in pursuit of profitable sales growth within our existing retail businesses, Macy‘s remains rooted in the M.O.M. strategies that have resonated over the past five years with customers seeking fashion, value, quality and convenience in stores and digitally. But we are redefining, updating and redirecting our efforts in each letter of M.O.M. to carry us forward – with My Macy‘s evolving from localization to personalization, Omnichannel now focused on providing Omni Choices for customers, and engaging customers by making Magic Connections. We believe that, as this very focused strategic work leads to incremental sales-driving tactics, Macy‘s will continue to develop as a preferred shopping destination. Testing and Learning Macy‘s continues to test a wide range of concepts and ideas on a limited scale to understand what resonates with shoppers. We learn from our success and our failures and are quick to roll out what works and adjust or discontinue what does not. Examples include: MACY‘S BACKSTAGE: We opened our first six Macy‘s Backstage off-price stores in metro New York City in fall 2015. In spring 2016, we will bring the Backstage concept inside about 15 full-line Macy‘s mall stores. By the end of 2016, we expect to have approximately 22 Macy‘s Backstage locations. LAST ACT: As an outgrowth of our research behind the pilot of Macy‘s Backstage, we also tested a simplified pricing approach for our deep clearance apparel merchandise in all Macy‘s stores. Last Act was established as separate spaces on our apparel floors, both in the women‘s and men‘s departments. Based on the successful test, Last Act now has been rolled out to all of Macy‘s stores. BLUEMERCURY: Macy‘s, Inc. acquired Bluemercury, a highly regarded and fast-growing beauty specialty store business, in 2015. The company continues to support the expansion of freestanding Bluemercury stores in upscale neighborhoods (to a total of 115 by year-end 2017) while also improving its digital business and piloting Bluemercury shops within four Macy‘s stores in 2015, with 18 additional in-store shops expected in 2016. JEWELRY: We tested a new approach to Macy‘s jewelry business in stores in southern California in 2015. It involved strengthening associate selling skills, including changes to talent, training and compensation; improved associate availability; increased direct supervision; and a broader and higher-quality product offering. Based on its success, we are rolling out this robust approach to jewelry to 300 Macy‘s stores across the country in fall 2016, with the balance of all stores planned for 2017. CHINA JOINT VENTURE: Macy‘s began direct selling in late 2015 through a joint venture with Hong Kong-based Fung Retailing Limited. The joint venture, which is 65 percent owned by Macy‘s and 35 percent owned by Fung Retailing, began with an e-commerce pilot on Alibaba Group‘s Tmall Global, a premier marketplace that connects overseas branded retailers to Chinese consumers. Reducing Expenses to Fund Growth Beginning in 2015 and continuing in 2016, the company is reducing expenses and tightening capital spending so we can reinvest in growth initiatives. By doing so, we believe we can accelerate the top line while making progress toward the company‘s goal of re-attaining over time an EBITDA rate as a percent of sales of 14 percent. Our target is to reduce annual SG&A expenses by $500 million (net of growth initiatives) from previously planned levels by 2018, with incremental progress in 2016 and 2017 toward that goal. Going into 2016, we already have identified and announced approximately $400 million in annualized reductions. Macy‘s, Inc. will reduce capital spending to an estimated $900 million in 2016 from the $1.1 billion in capital spent in 2015 – which still provides us with ample resources for major investments in technology, digital advancement, physical improvements to top stores and other levers of growth. Adjusting Our Customer Touchpoints As customer shopping patterns continue to evolve across stores and digital, we have refined our touchpoints for interacting with shoppers. Our websites and mobile apps have continued to improve, becoming more robust with merchandise offerings, content and functionality. Fulfillment capabilities are expanding with national availability of Buy Online Pickup in Store and Same Day
©Canadean. This product is licensed and is not to be photocopied.
Macy's, Inc.
21
Delivery in an increasing number of markets at Macy‘s and Bloomingdale‘s. In 2015, we opened our fifth direct-to-consumer fulfillment megacenter, a 1.3 million-square-foot facility in Tulsa, OK. Meanwhile, we are committed to maintaining a healthy portfolio of stores in the best locations across America – both to serve shoppers who walk through the door and to fulfill orders that are shipped directly to customers around the country. The company closed 41 underperforming Macy‘s stores (out of a previous total of about 770 Macy‘s stores) in 2015. We will continue to add stores selectively while also being disciplined about closing stores that are unproductive or no longer robust shopping destinations because of changes in the local retail shopping landscape. Pursuing Value from Real Estate The company also is pursuing the creation of shareholder value through various initiatives to monetize the company‘s significant real estate assets or through partnerships or joint venture transactions for the company‘s owned mall-based properties, as well as Macy‘s flagship real estate assets in Manhattan, San Francisco, Chicago and Minneapolis. In 2015, for example, the company sold the underutilized upper floors of the Macy‘s store in downtown Seattle for $65 million to a real estate developer that is converting it to office use. In Brooklyn, Macy‘s, Inc. completed a $270 million deal with Tishman Speyer that will enable a re-creation of Macy‘s Brooklyn store and further enliven one of New York City‘s most dynamic neighborhoods. We believe these types of transactions, as well as the potential partnerships and joint ventures being explored, can create significant value while also contributing to the success of our retail operations. Enhancing Returns to Shareholders Even taking into account the disappointment of 2015, Macy‘s, Inc. has a track record of generating an impressive return for shareholders through price appreciation, share repurchases and dividends. Total Shareholder Return from the beginning of fiscal 2009 through the end of fiscal 2015 was 412 percent, compared with the Dow Jones Industrial Average‘s increase of 148 percent and the S&P 500‘s increase of 173 percent over that same period. Since resuming our share repurchase program in August 2011, Macy‘s, Inc. has bought back approximately 152.2 million shares for approximately $7.3 billion through Jan. 30, 2016. In early 2016, our board of directors increased the company‘s share repurchase authorization by $1.5 billion. After giving effect to this increase, the remaining authorization outstanding , as of Jan. 30, 2016, was approximately $2 billion. The Board also expressed its intent to increase the quarterly dividend on Macy's common stock to 37.75 cents per share from 36 cents per share, effective with the July 1, 2016, dividend payment. The July dividend will be the sixth increase in the past five years and represents a more than seven-fold increase from 5 cents per share in 2009 to 37.75 cents per share. The Agility to Adapt It is clear that our customers are demanding more from us in both what we provide and how we do it, and they expect us to adapt to their changing tastes and preferences faster than ever. This requires agility—something not often associated with large companies like ours. But we are intensifying our focus on being a more agile company. It takes cultivating top talent, fostering an environment of innovation and harnessing data analytics to make decisions that will help us win in this competitive environment. We will go forward by testing various concepts and quickly reacting to what we learn. We will let go of initiatives that are not leading to long term returns to our shareholders. And we will be courageous and try new ideas and experiences that may lead to growing our business and capturing market share in the future. While we did not ask for the challenges 2015 brought to our company, I believe we have been strengthened by our aggressive strategic responses. We have a clearer vision of the future of retail and Macy‘s, Inc.‘s role in it. The keystones of fashion, value and convenience remain at our core and our commitment to doing what is in the best interest of our customers, associates and shareholders remains our focus. Our focus on agility and our renewed sense of urgency will make us stronger and more successful. A setback is just a set up for a comeback. Macy‘s, Inc. became a better company by most measures after the challenging periods of 2001/2002 and 2008/2009. And we intend to deliver continuous improvement in our comeback in the years ahead.
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Macy's, Inc.
22
7 Macy's, Inc. - Locations and Subsidiaries
7.1 Macy's, Inc. - Head Office
Macy's, Inc.
7 W 7th Street
Cincinnati
Ohio
Zip: 45202-2424
United States of America
Tel: + 1 513 5797000
Fax: + 1 302 6365454
7.2 Macy's, Inc. - Other Locations and Subsidiaries
Table 5: Macy's, Inc. - Subsidiaries
Bloomingdale's, Inc.
1000 Third Avenue
New York
United States of America
Tel: + 1 212 7052000
Zip: 10022
Macy‘s Credit Operations, Inc.
7 W 7th St
Cincinnati
United States of America
Zip: 45202
Macy‘s Retail Holdings, Inc.
7 West Seventh Street
Cincinnati
United States of America
Zip: 45202
Macy‘s Merchandising Corporation
7 West Seventh Street
Cincinnati
United States of America
Zip: 45202
Macy‘s Systems and Technology, Inc.
5985 State Bridge Road
Duluth
United States of America
Tel: + 1 678 4742000
Zip: 30097
Macy‘s Credit and Customer Services, Inc.
PO Box 8113
Mason
United States of America
Zip: 45040
Bloomingdale‘s By Mail Ltd.
919 Third Avenue
New York
United States of America
Tel: + 1 212 4187100
Fax: +1 212 7184121
Zip: 10022
Macy‘s Merchandising Group, Inc.
11 Penn Plaza
Suite 8
New York City
United States of America
Tel: + 1 212 494600
Zip: 10001
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Table 5: Macy's, Inc. - Subsidiaries
Macy‘s Merchandising Group International, LLC
11 Penn Plaza Floor 5
New York City
United States of America
Tel: + 1 646 4296000
Zip: 10001-2003
Bloomingdale‘s The Outlet Store, Inc.
United States of America
FDS Thrift Holding Co., Inc.
Mason
United States of America
Macy‘s Department Stores
United States of America
Advertex Communications, Inc.
151 W 34th Street
New York
United States of America
Tel: + 1 212 4945382
Zip: 10001-2101
Macy‘s Corporate Services, Inc.
7 W 7th Street # 1100
Cincinnati
United States of America
Tel: + 1 513 5797000
Zip: 45202-2419
Macy‘s Florida Stores, LLC
801 N Cngrefl Avenue # 100
Boynton Beach
United States of America
Tel: + 1 561 7384200
Zip: 33426
Macys.com, Inc.
685 Market Street
San Francisco
United States of America
Zip: 94105
FDS Bank
9111 Duke Boulevard
Suite 100
Mason
United States of America
Zip: 45040
Bluemercury, Inc
1010 Wisconsin Avenue N.W .
Suite 700
Washington
United States of America
Zip: DC 20007
Macy‘s Merchandising Group (Hong Kong) Limited
Hong Kong
Macy‘s West Stores, Inc.
United States of America
Macy‘s Merchandising Group Procurement, LLC
United States of America
West 34th Street Insurance Company
United States of America
Source: Canadean
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8 Macy's, Inc. - Business Analysis
8.1 Macy's, Inc. - Company Overview
Macy's, Inc. (Macy's) is a department store operator, based in the US. The product portfolio includes a comprehensive range of products under the categories such as home furnishing, bed and bath accessories, apparels, beauty and fashion and life style accessories. The company offers these products under the licensed brands and company-owned brands such as Alfani, American Rag, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Home Design, Hotel Collection, Hudson Park, Ideology, I-N-C, Jenni by Jennifer Moore, John Ashford, JM Collection, Karen Scott, Martha Stewart Collection, Maison Jules, Material Girl, Morgan Taylor, Studio Silver, Style & Co., Style & Co. Sport, Sutton Studio, Tasso Elba, the Cellar, Tools of the Trade, Via Europa, Aqua and Thalia Sodi. The company operates stores under five banners, Macy‘s, Macy's Backstage Bloomingdale‘s, Bloomingdale's Outlet and Bluemercury. It merchandises products online at www.macys.com. www.bluemercury.com and www.bloomingdales.com. Macy's also provides services such as home delivery, store pick up, discount cards, credit card facility, skincare treatments. aesthetic treatments, bodycare treatments, spa, rewards programs and mobile applications. The company has operations in the US, District of Columbia, Guam and Puerto Rico. Macy‘s is headquartered in Cincinnati, Ohio, the US.
8.2 Macy's, Inc. - Business Description
Macy‘s operates department stores across 45 states of the US, District of Columbia, Guam and Puerto Rico. The company offers a wide range of products such as dining and entertaining, furniture, kitchen and cutlery, luggage, mattresses, bath robes, bath rugs, bath mats, bath towels, bathroom accessories, fragrances, cleansers, moisturizers, active-wear, coats, dresses, jackets and blazers, jeans, jumpsuits and rompers, hair care, makeup, handbags, shoes, belts, hats and scarves and wraps. These products are sold under established brands and private label brands including Alfani, American Rag, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Home Design, Hotel Collection, Hudson Park, Ideology, I-N-C, Jenni by Jennifer Moore, John Ashford, JM Collection, Karen Scott, Martha Stewart Collection, Maison Jules, Material Girl, Morgan Taylor, Studio Silver, Style & Co., Style & Co. Sport, Sutton Studio, Tasso Elba, the Cellar, Tools of the Trade, Via Europa, Aqua, Acqua Di Parma, Ahava, Bliss and Thalia Sodi. Macy‘s merchandises its products through in-stores under the banners, Macy‘s, Macy's Backstage, Bloomingdale‘s, Bloomingdale's Outlet and Bluemercury, and online at Macys.com www.bluemercury.com and Bloomingdales.com. It also provides services such as home delivery, store pick up, discount cards, credit card facility, spa, rewards programs and mobile applications. The company operates through a single reportable division: Retail. It classifies its product line under four groups: Women‘s Accessories, Intimate Apparel, Shoes and Cosmetics ;Women‘s Apparel; Men‘s and Children‘s; and Home and Miscellaneous. In FY2016, these product groups accounted for 38%, 23%, 23% and 16% of the total revenue, respectively. As of January 2016, Macy‘s operated 870 retail stores established within a total retail space of 141.9 million sq. ft. Out of these stores, 426 were company-owned, 318 were leased and 122 were operated under arrangements where the company- owned the building and leased the land. Geographically, the company classifies its operations under five regions: Northeast with 254 stores, North Central with 163 stores, Northwest 137 stores, Southwest 128 and South with 188 stores. Macy‘s operates through 24 subsidiaries, of which FDS Bank provides credit processing, collections and customer service and credit marketing services for all credit card accounts that are owned by Department Stores National Bank (DSNB), which is a subsidiary of Citibank, NA, or FDS Bank. Macy‘s Systems and Technology, Inc. (MST) offers electronic data processing and management information services. Macy‘s Merchandising Group, Inc. (MMG) designs, develops and advertises private labels brands and Macy‘s Logistics and Operations (Macy‘s Logistics) provides warehouse and offers distribution services. Macy‘s manages 23 logistics, and distribution and fulfillment centers (DC), of which, 17 are owned by the company, remaining six are leased.
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9 Macy's, Inc. - SWOT Analysis
9.1 Macy's, Inc. - SWOT Analysis - Overview
Macy's, Inc. (Macy‘s) operates department stores in the US, District of Columbia, Puerto Rico and Guam. Omni-channel selling, support services and promotional and marketing activities are the company‘s main strengths, whereas declining financial performance, high debt, dependence on selected region and lower inventory turnover ratio remains as a major area of concern. In the future, changing fashion preferences, expansion initiatives by com petitors and increasing manpower costs in the US may affect its growth. However, corporate restructuring, expanding retail market in the US and private label gaining momentum are likely to provide growth opportunities to the company.
9.2 Macy's, Inc. - Strengths
9.2.1 Strength - Promotional and Marketing Activities
The company‘s focus on promotional campaigns helped it in reaching diversified customer base. Macy‘s with a focus to broaden the appeal of its brand has taken up various marketing initiatives targeting regular visitors. Macy‘s marketing activities include approaching customers by conducting events such as Macy's Thanksgiving Day Parade, theatrical show Glamorama, Macy's Flower Show, Independence Day fireworks and Macy's Holiday Events. It does not rely on conventional advertising, but focuses more on web-based marketing to maximize sales, traffic and customer loyalty. The company advertises through television, mobile alerts, direct mail, print media, internet and social media sires such as Facebook, Twitter, Youtube, Pinterest and Instagram. It also manages a fashion blogging site Mblog, which offers ideas, tips and latest offerings. In FY2016, the company‘s advertising and promotional costs, net of cooperative advertising allowances, amounted to US$1,173 million. As these promotional activities demonstrate the benefits of the company's products and services to prospective customers, focus on such campaigns may effectively influence its consumers' purchasing behavior.
9.2.2 Strength - Support Services
Macy‘s through its 24 subsidiaries offers various support services. Its FDS Bank and Macy‘s Credit and Customer Service, Inc. (MCCS) subsidiary provide credit processing, collections and customer service and credit marketing services for all credit card accounts that are owned by Department Stores National Bank (DSNB), which is a subsidiary of Citibank, NA, or FDS Bank. The company‘s subsidiary Macy‘s Systems and Technology, Inc. (MST) offers electronic data processing and management information services. Macy‘s Merchandising Group, Inc. (MMG) subisidiary designs, develops and advertises private labels brands and Macy‘s Logistics and Operations (Macy‘s Logistics) provides warehouse and offers distribution services. It also manages 23 logistics, and distribution and fulfillment centers (DC), to distribute the merchandise to the stores of which, 17 are owned by the company, remaining six are leased. The support service allows the company to achieve balanced revenue platform.
9.2.3 Strength - Omni-Channel Selling
The sale of merchandise through multiple channels increases the company‘s direct-to-consumer business. Macy‘s retails its products through a combination of in-stores and online business formats. As of January 2016, the company operated a store network of 870 stores in the US, District of Columbia, Guam and Puerto Rico. It also retails merchandise online at Macys.com bluemercury.com and Bloomingdales.com, whose quality and functionality are continually upgraded by the company. The company provides shopping facility through mobile applications. Macy‘s advertises and markets through direct mail, in-store marketing, customer loyalty programs and social media websites. Due to which, it tags itself as the ‗Omni-channel retail organization‘. Such, diverse retail and marketing channels helps to increase brand awareness, store traffic and sales.
9.3 Macy's, Inc. - Weaknesses
9.3.1 Weakness - Lower Inventory Turnover Ratio
The company reported lower inventory turnover ratio during the review year. In FY2016, Macy‘s reported inventory turnover ratio of 3 compared to inventory turnover ratio of one of its key competitors, Target Corporation (Target) which reported value of 6 in FY2016. Lower inventory turnover than competitors indicates that the company takes more days to clear its inventory in comparison with its competitors. With the given turnover ratio, Macy‘s takes 118 days to sale its inventory compared to 61 days by Target. The decline in the turnover ratio and higher inventory turnover days signify that the company incurs high inventory carrying costs, which affect its operating performance.
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9.3.2 Weakness - Dependence on Selected Region
Although Macy has a strong presence in the US, its insignificant international presence puts the company at a disadvantage when compared to some of its more geographically diverse competitors. In FY2016, all the 870 retail stores of the company are in the US, Puerto Rico and Guam. Its warehouses and distribution centers are also confined to the US whereas one of its key competitor, Sears Holdings Corporation, operates 1,672 stores in the US and Canada. Such concentration in a single area makes the company vulnerable to regional risks including changes in the economy, climate, demographics and population of the US. As a result, Macy‘s loses out on diverse revenue sources and opportunities, arising in other growth markets. Hence, this limits the customer reach and growth prospects that may lower the company‘s competitiveness.
9.3.3 Weakness - Declining Financial Performance
The company reported a weaker financial performance during the review year. It reported a revenue of US$27,079 million in FY2016 as compared to US$28,105 million in FY2015. The revenue declined by 3.7% in FY2016 over the previous year. This decline was due to decrease in comparable store sales by 2.5% on an owned plus licensed basis and a decline in comparable store sales by 3% on an owned basis over the previous year. The company reported an operating margin of 7.5% in FY2016, which was lower than the operating margin of one of its close competitor, L Brands, Inc. which reported a value of 18% in FY2016. The company could not able to generate sufficient cash flows to fund its expansion or protect it from competitive pressures with declining financial performance.
9.4 Macy's, Inc. - Opportunities
9.4.1 Opportunity - Private Label Gaining Momentum
The company stands to benefit from the increasing demand for private label products. Following a period of slow and negative economic growth, private label sales are rising as consumers increasingly shop to a budget. While price is a prime factor driving private label sales, improvements in packaging and quality have helped to remove the stigma attached to buying store brands. As the company sells a wide range of private label brands such as Alfani, American Rag, Bar III, Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, Greg Norman for Tasso Elba, Home Design, Hotel Collection, Hudson Park, Ideology, I-N-C, Jenni by Jennifer Moore, John Ashford, JM Collection, Karen Scott, Martha Stewart Collection, Maison Jules, Material Girl, Morgan Taylor, Studio Silver, Style & Co., Style & Co. Sport, Sutton Studio, Tasso Elba, the Cellar, Tools of the Trade, Via Europa, Aqua and Thalia Sodi, Macy‘s has a strong opportunity to increase its profit margins in the future.
9.4.2 Opportunity - Expanding Retail Market in the US
The company is likely to benefit from the growing US retail market. According to in-house research, the retail sales in the US grew by 2.9% in 2014 and expected to reach US$3,630.1 billion in 2019 growing at a CAGR of 3.1% during 2014-2019. Health and beauty, footwear, jewelry, watches and accessories, electrical and electronics, luggage and leather goods, and sports and leisure equipment are projected to register higher growth than those of overall retail sales. Food and grocery is expected to lead with a share of 47.9% of overall retail sales, followed by apparel, accessories, luggage and leather goods (16%), home and garden products (14.7%), electrical and electronics (9.3%), furniture and floor coverings (3.5%), Books, news and stationery (2.7%), Sports and leisure equipment (2.7%), health and beauty (2.5%), and Music, video and entertainment software (0.9%) in 2019. Macy‘s has taken initiatives to strengthen its presence in the US. For instance in FY2016, the company invested approximately US$900 million for opening of new stores, store remodels, maintenance, the continued renovation of Macy's Brooklyn location, technology and omnichannel investments, distribution network improvements and new growth initiatives. In FY2016, the company opened 26 new stores. In FY2017, it announced to open a new Macy's store in Kapolei and 42 new Bluemercury locations including 24 freestanding locations and 18 stores within Macy's stores. It also plans to open 16 new Macy's Backstage locations. The company announced to open a new Bloomingdale's store in Norwalk, Connecticut in 2018. These investments will enhance the company‘s capabilities to explore expanding US retail market.
9.4.3 Opportunity - Corporate Restructuring
The company stands to benefit from its recent corporate restructuring initiatives. In FY2016, the company closed 41 underperforming Macy‘s stores. This initiative could help the company to reduce its operating expenses. It also sold the underutilized upper floors of the Macy‘s store in downtown Seattle for US$65 million. The company entered into a deal worth US$270 million with Tishman Speyer to remodel the Macy‘s Brooklyn store during the same period. Such restructuring initiatives would enable the company to better deploy its resources, which result in increase in operational profitability.
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9.5 Macy's, Inc. - Threats
9.5.1 Threat - Expansion Initiatives by Competitors
Macy‘s faces intense competition from both domestic and international companies in the retail market, which is based on store size, products and services offering, store format and channel offering. The company faces competition from national, regional and local operators of department stores, specialty stores, general merchandise stores, off-price and discount stores, and manufacturers‘ outlets. It also competes with retail stores who offer its merchandise through online, mail order catalogs and television shopping. Its key competitors include Dillard's, Inc., J. C. Penney Company, Inc., Nordstrom, Inc., L Brands, Inc., Target Corporation and Belk, Inc., among others. While major competitors undertook expansion programs to match the growth rate, the market also registered consolidation involving mergers and acquisitions. In February 2016, DSW Inc announced to acquire Ebuys, Inc., an e-commerce off-price footwear and accessories retailer with presence in North America, Europe, Australia and Asia. This transaction could enable the company to improve its market share in the US and International markets. In FY2016, L Brands opened 36 new stores. This initiative would enable L Brands to reach a wide customer base and improve revenue.
9.5.2 Threat - Changing Fashion Preferences
The company‘s performance may be impacted by the frequent evolution in the fashion trends. The rate of change in fashion trends has been increasing over the years, thereby forcing companies such as Macy‘s to constantly update its product offerings with the latest market trends. To adopt the latest fashion trends, customers often shift their loyalties to those brands that offer these trendy merchandises. Inability of the company to change or update its collection, according to the fashion trends and varying customer preferences, could negatively affect its brand image.
9.5.3 Threat - Increase in Manpower Costs in the US
Labor costs in the US have been increasing in the recent past. The tight labor markets, government mandated increase in minimum wages and a higher proportion of full-time employees result in an increase in labor costs. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA). The minimum wage rate in the US remained at US$7.3 per hour in January 2016. The 29 states and the District of Columbia have minimum wages more than federal rate. These wages range from US$7.5 per hour in Maine and New Mexico to US$10.5 per hour in Washington D.C. The minimum wage in California increased to US$10 per hour starting 1 January 2016. In FY2016, the company employed 157,900 associates. Macy‘s has taken several initiatives to expand its stores, which requires increasing its employee base. Therefore rising manpower cost may impact its stability and operational efficiency of the company..
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10 Macy's, Inc. - Company Financial Analysis
10.1 Macy's, Inc. - Five Year Snapshot: Overview of Financial and Operational Performance Indicators
The company reported revenue of US$27,079 million during the fiscal year 2016 (2016). The company's revenue grew at a CAGR of 0.63% during 2012–2016, with an annual decline of 3.65% over 2015. During 2016, operating margin of the company was 7.53% in comparison with operating margin of 9.90% in 2015. In 2016, the company recorded a net profit margin of 3.96% compared to a net profit margin of 5.43% in 2015.
Table 6: Macy's, Inc. - Annual ratios
Key Ratios Unit/Currency 2016 2015 2014 2013 2012
Equity Ratios
EPS (Earnings per Share) US$ 3.22 4.22 3.86 3.24 2.92
Dividend per Share US$ 1.39 1.19 0.95 0.8 0.35
Dividend Cover Absolute 2.31 3.55 4.07 4.05 8.34
Book Value per Share US$ 13.7 15.79 17.12 15.61 14.32
Cash Value per Share US$ 3.57 6.59 6.23 4.74 6.83
Profitability Ratios
Gross Margin % 39.08 40 40.12 40.27 40.4
Operating Margin % 7.53 9.9 9.59 9.12 9.13
Net Profit Margin % 3.96 5.43 5.32 4.82 4.76
Profit Markup % 64.15 66.67 67 67.41 67.78
PBT Margin (Profit Before Tax) % 6.2 8.5 8.2 7.59 7.45
Return on Equity % 25.22 28.37 23.78 22.06 21.17
Return on Capital Employed % 13.73 17.12 16.85 15.86 15.23
Return on Assets % 5.21 7.15 6.87 6.36 5.68
Return on Fixed Assets % 15.78 21.83 20.71 19.25 18.1
Return on Working Capital % 105.98 79.4 90.41 90.11 95.9
Growth Ratios
Sales Growth % -3.65 0.62 0.88 4.85 5.61
Operating Income Growth % -26.73 3.92 6.1 4.69 31.89
EBITDA Growth % -29.79 4.37 8.94 6.81 49.09
Net Income Growth % -29.75 2.69 11.31 6.29 48.29
EPS Growth % -14.35 9.79 15.98 20 35.81
Working Capital Growth % -45.11 18.33 5.75 11.42 31.76
Cost Ratios
Operating Costs (% of Sales) % 92.47 90.1 90.41 90.88 90.87
Administration Costs (% of Sales) % 30.49 29.73 30.22 30.64 31.36
Liquidity Ratios
Current Ratio Absolute 1.34 1.69 1.52 1.55 1.4
Quick Ratio Absolute 0.37 0.62 0.55 0.51 0.58
Cash Ratio Absolute 0.19 0.44 0.4 0.36 0.45
Leverage Ratios
Debt to Equity Ratio Absolute 1.8 1.36 1.15 1.15 1.31
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Table 6: Macy's, Inc. - Annual ratios
Key Ratios Unit/Currency 2016 2015 2014 2013 2012
Net Debt to Equity Absolute 1.54 0.94 0.78 0.84 0.83
Debt to Capital Ratio Absolute 0.51 0.45 0.45 0.44 0.49
Efficiency Ratios
Asset Turnover Absolute 1.32 1.32 1.29 1.32 1.2
Fixed Asset Turnover Absolute 3.56 3.6 3.52 3.38 3.14
Inventory Turnover Absolute 3 3.11 3.01 3.12 3.08
Current Asset Turnover Absolute 3.54 3.28 3.21 3.52 3.01
Capital Employed Turnover Absolute 6.37 5.23 4.47 4.58 4.45
Working Capital Turnover Absolute 14.07 8.02 9.43 9.88 10.5
Revenue per Employee US$ 171495
Net Income per Employee US$ 6789
Capex to Sales % 4.11 3.8 3.09 3.4 2.89
Source: Canadean
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11 Macy's, Inc. - Interim ratios
Table 7: Macy's, Inc. - Interim ratios
Key Ratios Unit/Currency Oct-2016 Jul-2016 Apr-2016 Jan-2016
Equity Ratios
Interim EPS (Earnings per Share) US$ 0.05 0.37 0.37 1.73
Book Value per Share US$ 12.39 13.12 13.45 13.7
Profitability Ratios
Gross Margin % 39.82 40.88 39.07 37.43
Operating Margin % 1.9 1.99 4.78 10.55
Net Profit Margin % 0.3 0.19 2.01 6.13
Profit Markup % 66.15 69.15 64.14 59.83
PBT Margin (Profit Before Tax) % 0.46 0.34 3.08 9.51
Cost Ratios
Operating Costs (% of Sales) % 98.1 98.01 95.22 89.45
Administration Costs (% of Sales) % 36.81 34.54 34.07 24.88
Liquidity Ratios
Current Ratio Absolute 1.22 1.32 1.38 1.34
Quick Ratio Absolute 0.17 0.35 0.31 0.37
Leverage Ratios
Debt to Equity Ratio Absolute 1.98 1.89 1.84 1.8
Net Debt to Equity Absolute 1.86 1.64 1.66 1.54
Debt to Capital Ratio Absolute 0.53 0.54 0.52 0.51
Source: Canadean
11.1.1 Macy's, Inc. - Financial ratios: Capital Market Ratios
Table 8: Macy's, Inc. - Capital Market Ratios
Key Ratios Value
P/E (Price/Earnings) Ratio 13.37
EV/EBITDA (Enterprise Value/Earnings Before Interest, Taxes, Depreciation and Amortization) 12.04
Enterprise Value/Sales 0.75
Enterprise Value/Operating Profit 9.91
Enterprise Value/Total Assets 0.98
Dividend Yield 0.03
Note: Above ratios are based on share price as of 25-Nov-2016. The above ratios are absolute numbers.
Source: Canadean
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11.2 Macy's, Inc. - Financial Performance and Ratio Charts
11.2.1 Macy's, Inc. - Revenue and Operating margin
The consolidated group revenue of the company for 2016 stood at US$27,079 million, which corresponds to a decline of 3.65% over the previous year. The operating margin of the company was 7.53% in 2016, a decrease of 237.00 basis points over the previous year.
Figure 1: Macy's, Inc. - Revenue and Operating Profit
Source: Canadean
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11.2.2 Macy's, Inc. - Asset and Liabilities
The company's assets declined by 3.53% over the previous year to US$20,576 million in 2016. The company's liabilities grew 2.34% over the previous year to US$16,326 million in 2016. The company's asset to liability ratio reduced fr om 1.34 in 2015 to 1.26 in 2016.
Figure 2: Macy's, Inc. - Asset and Liabilities
Source: Canadean
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11.2.3 Macy's, Inc. - Net Debt vs. Gearing Ratio
The company recorded higher net debt of US$6,528 million at the end of fiscal year 2016 when compared to the previous year's net debt of US$5,063 million. The company's gearing ratio for the year 2016 was 1.65, which was higher when compared to the previous year's gearing ratio of 1.34. The gearing ratio remained higher in 2016 due to higher debt funding act ivities over equity.
Figure 3: Macy's, Inc. - Net Debt vs. Gearing Ratio
Source: Canadean
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11.2.4 Macy's, Inc. - Operational Efficiency
The company's working capital turnover for 2016 grew to 14.07, from the previous year's working capital turnover of 8.02. In 2016, the company‘s asset turnover remained unchanged at 1.32.
Figure 4: Macy's, Inc. - Operational Efficiency
Source: Canadean
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11.2.5 Macy's, Inc. - Solvency
In 2016, the company's current ratio declined to 1.34 from the previous year's cu rrent ratio of 1.69. The company‘s quick ratio declined to 0.37 in 2016 from the previous year's quick ratio of 0.62. In 2016, the company‘s debt ratio increased to 0.37 fr om the previous year's debt ratio of 0.34.
Figure 5: Macy's, Inc. - Solvency
Source: Canadean
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11.2.6 Macy's, Inc. - Valuation
As of 25-Nov-2016, the company recorded an EV/EBIT of 9.91, EV/Total Assets of 0.98 and EV/Sales of 0.75.
Figure 6: Macy's, Inc. - Valuation
Source: Canadean
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11.3 Macy's, Inc. - Competitive Benchmarking
The following companies are the major competitors of Macy's, Inc.: Amazon.com, Inc. (Ticker: AMZN)
Bed Bath & Beyond Inc. (Ticker: BBBY)
Belk, Inc. (Ticker: BLKIA, BLKIB)
Burlington Coat Factory Investments Holdings, Inc. (Ticker: BURL)
Dillard's, Inc. (Ticker: DDS)
DSW Inc. (Ticker: DSW)
J. C. Penney Company, Inc. (Ticker: JCP)
J.C. Penney Co Inc.
Kohl's Corporation (Ticker: KSS)
L Brands, Inc. (Ticker: LB)
Lord & Taylor
Neiman Marcus Group Ltd. LLC
Nordstrom, Inc. (Ticker: JWN)
Ross Stores, Inc. (Ticker: ROST)
Safeway Inc. (Ticker: SWY)
Saks Incorporated
Sears Holdings Corporation (Ticker: SHLD)
T.J. Maxx
Target Corporation (Ticker: TGT)
The Bon-Ton Stores, Inc. (Ticker: BONT)
Wal-Mart Stores, Inc. (Ticker: WMT)
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For competitive benchmarking, latest financial results are considered. Following are the key performance indicators against which the companies have been benchmarked:
11.3.1 Macy's, Inc. - Market Capitalization
As of 25-Nov-2016, the company recorded a market capitalization of US$13,154 million, lower than its close competitors Wal-Mart Stores, Inc. (Ticker: WMT) and Target Corporation (Ticker: TGT) which recorded market capitalizations of US$217,162 million and US$42,947 million respectively. The company recorded earnings per share of US$3.22 in 2016, which has led to a price/earnings ratio (P/E ratio) of 13.37 ratio. This was lower than the P/E ratios of its peers, Wal-Mart Stores, Inc. (Ticker: WMT) and Target Corporation (Ticker: TGT), which recorded P/E ratios of 15.35 and 14.52 respectively.
Figure 7: Macy's, Inc. - Market Capitalization
Source: Canadean Note: Company names are represented by ticker symbols Bubble size represents Market Capitalization US$ Million For those data points with negative values, bubbles will not be displayed. Where the market cap is disproportionately smaller, a bubble may not be displayed.
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11.3.2 Macy's, Inc. - Efficiency
The company recorded an operating margin of 7.53% in 2016. This was higher than the operating margins of its peers , Wal-Mart Stores, Inc. (Ticker: WMT), Target Corporation (Ticker: TGT) and Sears Holdings Corporation (Ticker: SHLD), which recorded th e margins of 5.00%, 7.49% and -3.98% respectively. In terms of revenues, the company is 0.06 times of Wal-Mart Stores, Inc. (Ticker: WMT), 0.37 times of Target Corporation (Ticker: TGT), and 1.08 times of Sears Holdings Corporation (Ticker: SHLD).
Figure 8: Macy's, Inc. - Efficiency
Source: Canadean Note: Company names are represented by ticker symbols
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11.3.3 Macy's, Inc. - Turnover: Inventory and Asset
In 2016, the company reported an inventory turnover of 3.00, lower than that of its peers: during the same period, Wal -Mart Stores, Inc. (Ticker: WMT), Target Corporation (Ticker: TGT) and Sears Holdings Corporation ( Ticker: SHLD) recorded inventory turnovers of 8.12, 6.05 and 3.73 respectively The company‘s asset turnover in 2016 was 1.32, lower than that of its peers: du ring the same period, Wal-Mart Stores, Inc. (Ticker: WMT), Target Corporation (Ticker: TGT) and Sears Holdings Corporation (Ticker: SHLD) recorded asset turnovers of 2.42, 1.83 and 2.22 respectively.
Figure 9: Macy's, Inc. - Turnover: Inventory and Asset
Source: Canadean Note: Company names are represented by ticker symbols
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11.3.4 Macy's, Inc. - Liquidity
The company reported a current ratio of 1.34 in 2016, higher than the current ratios of its peers: during the same period, Wal-Mart Stores, Inc. (Ticker: WMT), Target Corporation (Ticker: TGT) and Sears Holdings Corporation (Ticker: SHLD) record ed current ratios of 0.93, 1.12 and 1.11 respectively. In 2016, the company's debt to equity ratio was 1.80, higher than that of its peers: during the same period, Wal-Mart Stores, Inc. (Ticker: WMT), Target Corporation (Ticker: TGT) and Sears Holdings Corporation (Ticker: SHLD) recorded debt to equity ratios of 0.62, 0.98 and 1.52 respectively.
Figure 10: Macy's, Inc. - Liquidity
Source: Canadean Note: Company names are represented by ticker symbols
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12 Macy's, Inc. - Mergers & Acquisitions and Partnerships
12.1 Macy's, Inc. - M&A and Partnerships Strategy
Macy’s partners with Ellen Tracy
Deal Type Partnership Deal Sub Type Co-Marketing
Deal Status Completed Announced Date 2010-03-03
Deal in Brief
Federated Department Stores, Inc. (Macy's, Inc.), an owner and operator of retail stores, entered into a partnership agreement with Ellen Tracy LLC, a company engaged in design and retail of women's apparels, footwear and related accessories. Under the partnership agreement, Ellen Tracy will begin selling its products exclusively in 105 Macy‘s stores nationwide, with an additional 45 stores to be added in the fall. The partnership will enable the company to expand its business operations and offer more brands to its customers.
Participant Company Information
Company Name Ellen Tracy LLC Involvement Type Target
Company Overview
Ellen Tracy LLC (Ellen Tracy) is a retailer of apparel and accessories for women. The company‘s products portfolio includes sleepwear, outerwear, sportswear, active wear, handbags, hosiery, belts, leg wear, eyewear, fragrance, footwear, jewelry, umbrellas, small leather goods and home wear products. It distributes its products through its stores in the US; department and specialty stores in Canada; and online through its website. The company markets products in Canada, Germany, Japan, Spain and the US. It operates as a subsidiary of Brand Matter, LLC. Ellen Tracy is headquartered in New York, the US.
Macy's partners with mstylelab
Deal Type Partnership Deal Sub Type Other
Deal Status Completed Announced Date 2010-03-03
Deal in Brief
Federated Department Stores, Inc. (Macy's, Inc.), an owner and operator of retail stores, entered into a partnership agreemen t with mstylelab, a contemporary accessories brand, to launch the brand exclusively in 150 Macy‘s stores. Merchandised in the junior‘s department, mstylelab will offer affordable jewelry and hair accessories ranging from $6 - $40. The collection offers a variety of items from necklaces and earrings to bracelets, rings and headbands. The brand will be launched in Macy‘s Junior‘s department stores beginning April 2010. The partnership will enable the company to expand its business operations and offer more brands to its customers.
Participant Company Information
Company Name Undisclosed Company Involvement Type Target
Company Overview
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Macy's partners with Threads & Heirs
Deal Type Partnership Deal Sub Type Co-development
Deal Status Completed Announced Date 2010-03-03
Deal in Brief
Federated Department Stores, Inc. (Macy's, Inc.), an owner and operator of retail stores, entered into a partnership agreement with LF USA, Inc., a manufacturer and marketer of sportswear, women and children wear. Under the partnership, Macy's will launch new men's fashion brand, Threads & Heirs, which will be exclusively available at 200 Macy's stores nationwide. The brand is produced by LF USA‘s Oxford Collections, a subsidiary of Li & Fung Ltd. The collection will offer a modern style sensibili ty and deliver desirable men's fashion at an affordable price. The partnership will enable the company to expand its business operations and offer more brands to its customers.
Participant Company Information
Company Name LF USA, Inc. Involvement Type Target
Company Overview
LF USA, Inc. is a manufactuer and marketer of Sportswear, women's and children's wear.
Macy's partners with Kouture by Kimora
Deal Type Partnership Deal Sub Type Co-development
Deal Status Completed Announced Date 2010-03-03
Deal in Brief
Federated Department Stores, Inc. (Macy's, Inc.), an owner and operator of retail stores, entered into a partnership agreement with Kimora Lee Simmons, a fashion designer of apparel for men, women and children, to launch a new line ―Kouture by Kimora‖ exclusively at 150 Macy‘s stores in March 2010. The company will also launch the products with another 150 stores in May 2010. The products are merchandised in the junior‘s department and will offer affordable jewelry and hair accessories ranging from $24 to $40. The collection offers a variety of items from necklaces and earrings to bracelets, rings and headbands. The partnership will enable the company to expand its business operations and offer more brands to its customers.
Participant Company Information
Company Name Kimora Lee Simmons Involvement Type Target
Company Overview
Kimora Lee Simmons is engaged in designing and retailing of apparel for men, women and children.
Macy’s partners with Eva Mendes
Deal Type Partnership Deal Sub Type Co-Marketing
Deal Status Completed Announced Date 2010-03-03
Deal in Brief
Federated Department Stores, Inc. (Macy's, Inc.), an owner and operator of retail stores, entered into a partnership agreemen t with Eva Mendes, an American actress, to launch the brand Vida for Espana. The brand is an extension to casual Latin-inspired dinnerware. Vida for Espana will feature two hand-painted collections "Catalina" and "Amalfi" and two hand glazed solids "Pearl" and "Espresso," all at an affordable price. The new Vida for Espana tabletop collection ranges from $16 to $50 and is available on-line and in select Macy's stores. The partnership will enable the company to expand its business operations and offer more brands to its customers.
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Participant Company Information
Company Name Eva Mendes Involvement Type Target
Company Overview
Eva Mendes is an American actress. She began acting in the late 1990s, and became known after a series of roles in several major Hollywood films, including 2 Fast 2 Furious, Hitch, Training Day, We Own the Night and The Spirit.
Terry J. Lundgren sells minority stake in Macy’s
Deal Type Acquisition Deal Sub Type Minority Acquisition
Deal Status Completed Announced Date 2011-05-13
Deal in Brief
Terry J. Lundgren, the Macy's CEO, has sold a minority stake in Macy‘s, Inc., a US-based operator of department stores and internet web sites, for a consideration of $8.8 million. Lundgren sold 306,976 Macy's shares, according to the SEC filing. After completion of the transaction, Lundgren continues to hold 423,747,325 shares of the company.
Participant Company Information
Company Name Terry J. Lundgren Involvement Type Acquirer
Company Overview
Terry J. Lundgren is the CEO, chairman of the board, president, and director at Macy's, Inc.
Macy’s and Finish Line partner to launch Finish Line of footwear stores
Deal Type Partnership Deal Sub Type Co-development
Deal Status Completed Announced Date 2012-09-28
Deal in Brief
Macy‘s, Inc. (formerly Federated Department Stores, Inc.) an operator of department stores based, has entered into a partnership agreement with The Finish Line, Inc., an athletic shoes, apparel and accessories retailer, to open Finish Line of athletic footwear stores in more than 450 Macy‘s department stores in the US and online at macys.com. Both companies involved in the transaction are based in the US. As part of the transaction, Finish Line will be Macy‘s partner for men‘s, women‘s and kids athletic footwear and Macy‘s will be the host for Finish Line in-store shops.
Participant Company Information
Company Name The Finish Line, Inc. Involvement Type Target
Company Overview
The Finish Line, Inc. (Finish Line) is a specialty retailer which sells athletic footwear and clothing for men, women and chi ldren. Its footwear product portfolio includes basketball shoes, casual shoes, cross-training shoes, running shoes, track spikes, skate shoes, football cleats, soccer cleats, baseball cleats, sandals and flip flops, boots and trail shoes, wrestling shoes and volleyball shoes. It also offers soft goods such as athletic bags, backpacks, caps, fleeces, jackets, pants, running clothing, shoe-care products, shorts, socks, sunglasses, tops, watches and wind breakers. The company markets brands such as Nike, Jordan, Puma, Adidas, Asics, Brooks, Converse, Reebok, K-Swiss, Lacoste, Mizuno and New Balance through stores and online and mobile websites. Finish Line is headquartered in Indianapolis, Indiana, the US.
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Macy’s signs licensing agreement with LIDS Sports Group
Deal Type Partnership Deal Sub Type Licensing Agreement
Deal Status Completed Announced Date 2013-08-07
Deal in Brief
Macy‘s, Inc. (formerly known as Federated Department Stores, Inc.) has signed a licensing agreement with The LIDS Sports Group, a subsidiary of Genesco Inc., to open its licensed team merchandise departments in Macy‘s stores and online under the name of Locker Room by Lids (LRL). All companies involved in the transaction are based in the US. Macy‘s operates department stores and online stores, while Genesco retails foot wear and hats. Pursuant to the agreement, LIDS Sports will open its LRL departments in approximately 25 Macy‘s stores and on macys.com, the online retailed division of Macy‘s . LRL will offer apparel and headwear for men, women and children, as well as home and novelty products such as glassware, throws and gnomes. Following the transaction, Macy‘s will be the exclusive US department store with LRL locations.
Participant Company Information
Company Name The Lids Sports Group Involvement Type Target
Company Overview
The Lids Sports Group is a sporting goods and apparel retailers. It offers caps for various sports, such as baseball, football, basketball, hockey, racing, and soccer; and headwear, apparel, accessories, and novelties for collegiate teams, professional sports teams, and university athletics, as well as other specialty fashion categories. The company operates as a subsidiary of Genesco Inc.
Macy's Acquires Bluemercury
Deal Type Acquisition Deal Sub Type Majority Acquisition
Deal Status Completed Announced Date 2015-02-03
Deal in Brief
Macy's, Inc., a department store operator, has acquired Bluemercury, Inc, a beauty products and spa services retailer, from The Invus Group, LLC, for a cash consideration of USD210 million. All companies involved in the transaction are based in the US. Invus Group is a private equity firm. Bluemercury currently operates about 60 specialty stores in 18 states. Bluemercury‘s product portfolio includes luxury beauty brands and M-61, a proprietary skincare brand. Following the transaction, Marla Malcolm Beck and Barry Beck, the founders of Bluemercury, will continue to operate the company and approximately 500 associates will remain in their current roles. Credit Suisse Securities (USA) LLC and Jones Day are acting as advisors to Macy‘s. Goldman Sachs & Co., Patterson Belknap Webb & Tyler LLP and Cooley LLP are acting as advisors to Bluemercury. Deal History: Announced: On February 3, 2015, Macy's entered into an agreement to acquire Bluemercury.
Participant Company Information
Company Name Bluemercury, Inc Involvement Type Target
Company Overview
Bluemercury Inc. is a retailer of beauty products and spa services based in the US. It offers face, eye, lip, cheek, nail, an d body makeup products and makeup tools and accessories, makeup palettes and sets, cosmetic bags and makeup cases, and makeup brushes and applicators.
Company Name The Invus Group, LLC Involvement Type Vendor
Company Overview
The Invus Group, LLC (Invus) is a private capital equity and venture capital firm specializing in buyouts, buyins, turnaround, longer-term public equity investments, early stage, expansion capital, and emerging markets investments.
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Macy's Signs Licensing Agreement with Men’s Wearhouse
Deal Type Partnership Deal Sub Type Licensing Agreement
Deal Status Completed Announced Date 2015-06-10
Deal in Brief
Macy's, Inc., has signed a licensing agreement with The Men‘s Wearhouse, Inc., a specialty apparel and footwear retailer, to open licensed tuxedo rental shops within 300 Macy‘s stores. Both companies involved in the transaction are based in the US. Following the transaction, Macy‘s-branded shops will be operated by Men‘s Wearhouse. Macy's (formerly Federated Department Stores, Inc.) is a department store operator.
Participant Company Information
Company Name Tailored Brands, Inc. Involvement Type Target
Company Overview
Tailored Brands, Inc. (Tailored Brands) is a specialty retailer of men‘s apparel. The company offers suits, suit separates, s lacks, formalwear, business casual, sport coats, outerwear, dress shirts, sportswear, shoes and accessories for men. It also provides tuxedo rental products. Tailored Brands offers products and services under private label brands such as Men‘s Wearhouse, Jos. A. Bank, Moores and K&G. The company operates its stores under Men's Wearhouse, Men's Wearhouse and Tux, Jos. A. Bank, Joseph Abboud and K&G banners. It also retails its merchandise through an online website www.menswearhouse.com. The company‘s operations are spread across the US, Canada and the UK. Men‘s Wearhouse is headquartered in Houston, Texas, the US.
Macy's to Form Joint Venture with Fung Retailing
Deal Type Partnership Deal Sub Type Joint Venture
Deal Status Announced Announced Date 2015-08-12
Deal in Brief
Macy‘s, Inc. (formerly known as Federated Department Stores, Inc.), an omnichannel retailer involved in operating stores and internet websites that sell a range of merchandise, home furnishings and other consumer goods based in the US, has agreed to form a joint venture with Fung Retailing Limited, a Hong Kong-based operator of convenience stores and bakeries, to explore retailing in China. The new company to be formed as a result of the joint venture, Macy‘s China Limited, is 65% owned by Macy's and 35% owned by Fung Retailing, will start with an e-commerce pilot. Macy‘s China will be led by Kent Anderson, who will serve as managing director. Anderson is a veteran Macy‘s executive and president of macys.com. Ms. Fung will represent Fung Retailing‘s interest on the board of the joint venture company. Alipay will be a primary payment channel for Macy‘s e-commerce offerings in China. Under the terms of the joint venture, Macy‘s plans to begin selling in China in late 2015 through an e-commerce presence on Alibaba Group‘s Tmall Global.
Participant Company Information
Company Name Fung Retailing Limited Involvement Type Target
Company Overview
Fung Retailing Limited is a Hong Kong-based operator of convenience stores and bakeries.
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13 Macy's, Inc. - Recent Developments Conlumino’s Viewpoint: Macy's Q3 2016 results Date : 10 Nov 2016
Macy’s: still waiting for a miracle
Macy‘s results indicate that it is still a company in decline. However, with the sale of key assets it now has a chance to in vest in its brand and proposition to engineer a turnaround. This, in our view, is Macy‘s last shot at creating a miracle.
Macy‘s has heralded its third quarter figures as a sign that the company is getting back on track, noting that the sales perf ormance beats that posted over the first half of the year. While the statement is technically correct, we think it is largely case of wishful thinking a nd unfair comparisons. In truth, the first half was dragged down by a terrible first quarter when sales tumbled by levels not seen in over a year; this provides for an extremely soft comparison. Moreover, sales performance has actually worsened since the prior quarter at both the total and comparable levels. As such, if anything these figures show a company grappling with what looks l ike terminal decline.
Our view is solidified by the continued erosion in profitability, where net income fell by 87%; this follows a 46% decline over the same period last year. This is the seventh consecutive quarter in which sales and profits have both declined. It is a telling fact that this quarter Macy‘s made just 0.2 cents for every dollar it took in revenue. This is a weak position that, given the general direction, puts the company on a pathway to long term unprofitability.
Its inability to get the retail side of its business to work, is one of the reasons Macy‘s is looking to monetize its assets. The partnership with Brookfield Asset Management, which was announced this morning, will help with – this as will the ongoing sale of underperforming stores. In our view this route is prudent, not least because Macy‘s does have a strong asset base which can yield significant capital - as the sale of the Union Square, San Francisco store for $250m has proved.
We are encouraged by the fact that Macy‘s will use some of the capital to invest and develop locations it sees as having future potential. This is unlike the position of Sears which has used asset monetization to fund the day to day operations of the business, something t hat in our view suggests a company circling the drain. As such, Macy‘s short term future is secure, while over the medium to longer term it has the scope and funds to engineer a turnaround.
That said, revitalizing the business will not be easy. Shopping trends are firmly against Macy‘s; and its brand, while not completely diminished, is most certainly tarnished. In our view, it needs to completely overhaul the experience to make stores easier to shop, more int eresting to browse, and more relevant to today‘s shopper. It also needs to develop a much more fulsome exclusive or own label offer to differentiate it from rivals. We have seen some signs of this activity in its partnership with Brookstone, which will bring a range of exclusive gifts to s tores this holiday season.
Looking ahead to the holidays, we see some upside for Macy‘s, if only because of soft comparatives as a result of last year‘s very weak trading, high discounting, and excess inventory. This should allow Macy‘s to pull out a much better performance this year, potentially breaking the trend of long term profit and sales declines.
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Macy's reports lower Q3 net income, provides annual guidance Date : 10 Nov 2016
Macy's, Inc. has reported that net income attributable to shareholders for the third quarter ended October 29, 2016 was $17 million, or $0.05 per share, compared to $118 million, or $0.36 per share, for the same quarter ended October 31, 2015. Net sales for the third quarter ended October 29, 2016 were $5.63 billion, compared to $5.87 billion for the same quarter end ed October 31, 2015.
Net income attributable to shareholders for the nine months ended October 29, 2016 was $144 million, or $0.46 per diluted sha re, compared to $528 million, or $1.56 per diluted share, for the same period ended October 31, 2015.
Net sales for the nine months ended October 29, 2016 were $17.26 billion, compared to $18.21 billion for the same period ended October 31, 2015.
For the fiscal 2016 the company expects diluted earnings per share to be in the range of $3.15 to $3.40.
"The trends we saw in the third quarter give us confidence that we can deliver our expectations for the fourth quarter and our guidance for fiscal 2016. Our third quarter top line results were better than the first half of the year and our sales -driving initiatives continue to gain traction. Additionally, the strengthening trend across the apparel businesses, coupled with new initiatives like tech watches from Appl e, Michael Kors and others, are good indicators for an improved performance in the fourth quarter," said Terry J. Lundgren, Macy's chairman and CEO.
Macy’s reports Q3 2016 results Date : 10 Nov 2016
Macy‘s, Inc., reported diluted earnings per share of 5 cents in the third quarter of 2016 ended October 29, 2016. The company‘s earnings for the third quarter of 2016 compare with 36 cents per diluted share in the third quarter of 2015, or 56 cents per diluted share excluding asset impairment and other charges of $111 million, or 20 cents per diluted share, primarily related to store closings.
The company also reaffirmed its previous earnings-per-share guidance and raised its sales guidance for full-year 2016.
Macy's, Inc.'s diluted earnings per share for the first three quarters of 2016 were 46 cents ($1.11 per share excluding asset impairment and other charges primarily related to upcoming store closings and non-cash retirement plan settlement charges, as described below), compared with diluted earnings per share of $1.56 in the same period last year ($1.76 per diluted share excluding asset impairment and other charges of $111 million primarily related to store closings).
―The trends we saw in the third quarter give us confidence that we can deliver our expectations for the fourth quarter and ou r guidance for fiscal 2016. Our third quarter top line results were better than the first half of the year and our sales-driving initiatives continue to gain traction. Additionally, the strengthening trend across the apparel businesses, coupled with new initiatives like tech watches from Apple, Michael Kors and others, are good indicators for an improved performance in the fourth quarter,‖ said Terry J. Lundgren, Macy‘s chairman and chief executive officer.
―Our customers tell us we are their holiday shopping destination, and we are excited about our gift assortments, marketi ng strategies and digital enhancements, all of which should set us up for a stronger finish to the year and position us well for an improved performanc e in 2017 and beyond.
―As we have said, a setback is a setup for a comeback and that is why we continue to look with confidence at the close of 2016 and our longer- term outlook. We are reallocating and prioritizing our spending to drive growth, improve the customer experience, increase ou r agility and deliver strong financial results. We also are making good progress on our strategies to create shareholder value through our real estate, while preserving our ability to operate as a top retailer with a healthy balance sheet.‖
Sales
Sales in the third quarter of 2016 totaled $5.626 billion, a decrease of 4.2 percent, compared with sales of $5.874 billion in the same period last year. Comparable sales on an owned plus licensed basis were down by 2.7 percent in the third quarter. On an owned basis, thir d quarter comparable sales declined by 3.3 percent. The difference between the year-over-year change in total and comparable sales largely resulted from the closing of 41 underperforming Macy‘s stores at the end of fiscal 2015.
For the year to date, Macy‘s, Inc.‘s sales totaled $17.263 billion, down 5.2 percent from total sales of $18.210 billionfor the first three quarters of 2015. Comparable sales on an owned plus licensed basis were down by 3.5 percent year to date in 2016. On an owned basis, year to date comparable sales declined by 4.0 percent.
In the third quarter, the company opened a new Macy‘s store in Kapolei, HI, a Macy‘s Backstage store in San Antonio, TX, and seven Bluemercury freestanding specialty stores. Earlier this month, the company opened a Bloomingdale‘s Outlet in Orange County, CA.
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Operating Income
Macy‘s, Inc.‘s operating income totaled $107 million or 1.9 percent of sales for the quarter ended October 29, 2016. Excluding non-cash settlement charges related to the company‘s retirement plans of $62 million, operating income for the third quarter was $169 million or 3.0 percent of sales. This compares with operating income of $258 million or 4.4 percent of sales for the same period last year or $369 million or 6.3 percent of sales excluding asset impairment and other charges of $111 million.
For the first three quarters of 2016, Macy‘s, Inc.‘s operating income totaled $500 million or 2.9 percent of sales. Excluding asset impairment and other charges of $249 million and non-cash settlement charges related to the company‘s retirement plans of $81 million, operating income for the first three quarters of 2016 was $830 million, or 4.8 percent of sales. This compares with operating income of $1.103 billion, or 6.1 percent of sales, for the first three quarters of 2015 or $1.214 billion or 6.7 percent of sales excluding asset impairment and other charges of $111 million.
General Growth Properties acquires five Macy’s stores Date : 02 Nov 2016
US-based retailer Macy's has sold its five stores to General Growth Properties, a real estate investment firm. US-based retailer Macy's has sold its five stores to General Growth Properties, a real estate investment firm.
This deal is a part of Macy's existing strategy to obtain profitable growth by reallocating investments to its highest growth -potential stores and digital businesses.
The company also plans to capitalise on opportunities within the company‘s real estate portfolio.
The stores that are sold include Carolina Place in Pineville, Oakwood Mall in Eau Claire, Quail Springs Mall in Oklahoma City , Tysons Galleria in McLean and Greenwood Mall in Bowling Green.
"Macy’s expects to achieve a gain of $32m from the sales in the third quarter of the current fiscal year."
Four of these were sold in the third quarter, and the Greenwood Mall store was sold earlier this year.
The value of the four stores was $46m.
Macy‘s expects to achieve a gain of $32m from the sales in the third quarter of the current fiscal year.
The retailer will continue to operate the Tysons Galleria store on a lease from General Growth Properties, as well as another store in McLean, Virginia.
The Quail Springs Mall store closed earlier this year, and the other three stores, namely Carolina Place, Greenwood Mall and Oakwood Mall, will continue operations through the holiday season and will be closed next year.
Macy's introduces Brookstone to stores nationwide Date : 17 Oct 2016 Macy‘s launches a new partnership with specialty retailer Brookstone, to bring uniquely designed, high -quality gifts to 347 stores and macys.com this holiday season. ―Brookstone is a brand known for exceptionally innovative products that aim to improve your quality of life and Macy‘s is the premiere destination for holiday gifts,‖ saidTim Baxter, Macy‘s Chief Merchandising Officer. ―By offering Brookstone at Macy‘s – from headphones and speakers to kitchen gadgets or the perfect massage – their extraordinary items will add to our electronic offerings just in time for the holiday shopping season.‖
―Macy‘s is the perfect showcase for Brookstone, and we‘re proud to be in their wonderful stores,‖ said Brookstone CEO, Steven Goldsmith. ―Macy‘s has always been about giving customers high-quality brands, exciting products and enjoyable shopping experiences. These are values Brookstone and Macy‘s share, and we‘re thrilled to bring Brookstone innovations to Macy‘s customers in time for the 2016 holiday gift season.‖
Brookstone products are designed to do amazing things in surprising ways and make everyday moments more interesting – for music and massagers, toys and tech, gadgets, gizmos, gear and gifts. For those who like to stand out in a crowd, quirky Cat Ear Headphones are the perfect way to enjoy music privately, or through the cat ear speakers when sharing songs with friends. Big Blue Party indoor-outdoor speakers are wireless, weatherproof and deliver exceptional, omnidirectional sound. The Nap Massaging W rap uses soothing vibration and ultra-soft fabric to bring neck massage to a whole new level, while the Towel Warmer ensures no one ever has to step out of the shower in the c old again.
Additional Brookstone products available at Macy‘s include:
6-in-1 Tool Pen; $14.99
5-in-1 Gardener‘s Tool; $24.99
Snackman Motion-Sensing Snack Dispenser; $39.99
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Auto Emergency Tool and Flashlight; $19.99
Grill Alert Bluetooth Cooking Thermometer; $69.99
Big Blue Mini Wireless Travel Speaker; $49.99
Wireless Mobile Projector; $299.99
Flight Force Stunt Drone; $59.99
Original Sånd by Brookstone; $19.99
Aperto Auto-sensing Wine Opener; $39.99
Macy‘s will carry more than 30 Brookstone items in store and online at macys.com, priced from $14.99 to $299.99, beginning in mid-October.
Source: Canadean
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14 Appendix
14.1 Methodology
Canadean company reports are based on a core set of research techniques which ensure the best possible level of quality
and accuracy of data. The key sources used include:
Company Websites
Company Annual Reports
SEC Filings
Press Releases
Proprietary Databases
Notes
Financial information of the company is taken from the most recently published annual reports or SEC filings
The financial and operational data reported for the company is as per the industry defined standards
Revenue converted to US$ at average annual conversion rate as of fiscal year end
14.2 Macy's, Inc. - Ratio Definitions
Capital Market Ratios
Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing stock.
Price/Earnings Ratio (P/E)
Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual income earned per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of income, so the stock is more expensive compared to one with lower P/E ratio. A high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Price per share is as of previous business close, and EPS is from latest annual report.
Formula: Price per Share / Earnings per Share
Enterprise Value/Earnings before Interest, Tax, Depreciation & Amortization (EV/EBITDA)
Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with, or as an alternative to, the P/E ratio. The main advantage of EV/EBITDA over the PE ratio is that it is unaffected by a company's capital structure. It compares the value of a business, free of debt, to earnings before interest. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / (Net Income + Interest + Tax + Depreciation + Amortization)
Enterprise Value/Sales
Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy the company's sales. EV/Sales is seen as more accurate than Price/Sales because market capitalization does not take into account the amount of debt a company has, which needs to be paid back at some point. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Sales
Enterprise Value/Operating Profit
Enterprise Value/Operating Profit measures the company's enterprise value to the operating profit. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Operating Income
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Enterprise Value/Total Assets
Enterprise Value/Total Assets measures the company's enterprise value to the total assets. Price per share is as of previous business close, and shares outstanding last reported. Other items are from latest annual report.
Formula: (Market Cap + Debt + Preferred Stock - Cash & Cash Equivalents) / Total Assets
Dividend Yield
Dividend Yield shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment for a stock.
Formula: Annual Dividend per Share / Price per Share
Equity Ratios
These ratios are based on per share value.
Earnings per Share (EPS)
Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company's profitability.
Formula: Net Income / Weighted Average Shares
Dividend per Share
Dividend is the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
Dividend Cover
Dividend cover is the ratio of company's earnings (net income) over the dividend paid to shareholders.
Formula: Earnings per share / Dividend per share
Book Value per Share
Book Value per Share measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly.
Formula: (Shareholders Equity - Preferred Equity) / Outstanding Shares
Cash Value per Share
Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance sheet) that is determined by dividing cash & equivalents by the total shares outstanding.
Formula: Cash & equivalents / Outstanding Shares
Profitability Ratios
Profitability Ratios are used to assess a company's ability to generate earnings, based on revenues generated or resources used. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.
Gross Margin
Gross margin is the amount of contribution to the business enterprise, after paying for direct- fixed and direct variable unit costs.
Formula: {(Revenue-Cost of revenue) / Revenue}*100
Operating Margin
Operating Margin is a ratio used to measure a company's pricing strategy and operating efficiency.
Formula: (Operating Income / Revenues) *100
Net Profit Margin
Net Profit Margin is the ratio of net profits to revenues for a company or business segment - that shows how much of each dollar earned by the company is translated into profits.
Formula: (Net Profit / Revenues) *100
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Profit Markup
Profit Markup measures the company's gross profitability, as compared to the cost of revenue.
Formula: Gross Income / Cost of Revenue
PBIT Margin (Profit Before Interest & Tax)
Profit Before Interest & Tax Margin shows the profitability of the company before interest expense & taxation.
Formula: {(Net Profit + Interest + Tax) / Revenue} *100
PBT Margin (Profit Before Tax)
Profit Before Tax Margin measures the pre-tax income over revenues.
Formula: {Income Before Tax / Revenues} *100
Return on Equity
Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners.
Formula: (Net Income / Shareholders Equity)*100
Return on Capital Employed
Return on Capital Employed is a ratio that indicates the efficiency and profitability of a company's capital investments. ROCE should always be higher than the rate at which the company borrows; otherwise any increase in borrowing will reduce shareholders' earnings.
Formula: EBIT / (Total Assets – Current Liabilities)*100
Return on Assets
Return on Assets is an indicator of how profitable a company is relative to its total assets, the ratio measures how efficient management is at using its assets to generate earnings.
Formula: (Net Income / Total Assets)*100
Return on Fixed Assets
Return on Fixed Assets measures the company's profitability to its fixed assets (property, plant & equipment).
Formula: (Net Income / Fixed Assets) *100
Return on Working Capital
Return on Working Capital measures the company's profitability to its working capital.
Formula: (Net Income / Working Capital) *100
Cost Ratios
Cost ratios help to understand the costs the company is incurring as a percentage of sales.
Operating costs (% of Sales)
Operating costs as percentage of total revenues measures the operating costs that a company incurs compared to the revenues.
Formula: (Operating Expenses / Revenues) *100
Administration costs (% of Sales)
Administration costs as percentage of total revenue measures the selling, general and administrative expenses that a company incurs compared to the revenues.
Formula: (Administrative Expenses / Revenues) *100
Interest costs (% of Sales)
Interest costs as percentage of total revenues measures the interest expense that a company incurs compared to the revenues.
Formula: (Interest Expenses / Revenues) *100
Leverage Ratios
Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. There are several different ratios, but the main factors looked at include debt, equity, assets and interest expenses.
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Debt to Equity Ratio
Debt to Equity Ratio is a measure of a company's financial leverage. The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries tend to have a higher debt equity ratio.
Formula: Total Liabilities / Shareholders Equity
Debt to Capital Ratio
Debt to capital ratio gives an idea of a company's financial structure, or how it is financing its operations, along with some insight into its financial strength. The higher the debt-to-capital ratio, the more debt the company has compared to its equity. This indicates to investors whether a company is more prone to using debt financing or equity financing. A company with high debt-to- capital ratios, compared to a general or industry average, may show weak financial strength because the cost of these debts may weigh on the company and increase its default risk.
Formula: {Total Debt / (Total assets - Current Liabilities)}
Interest Coverage Ratio
Interest Coverage Ratio is used to determine how easily a company can pay interest on outstanding debt, calculated as earnings before interest & tax by interest expense.
Formula: EBIT / Interest Expense
Liquidity Ratios
Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern.
Current Ratio
Current Ratio measures a company's ability to pay its short-term obligations. The ratio gives an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point.
Formula: Current Assets / Current Liabilities
Quick Ratio
Quick ratio measures a company's ability to meet its short-term obligations with its most liquid assets.
Formula: (Current Assets - Inventories) / Current Liabilities
Cash Ratio
Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. It only looks at the most liquid short-term assets of the company, which are those that can be most easily used to pay off current obligations. It also ignores inventory and receivables, as there are no assurances that these two accounts can be converted to cash in a timely matter to meet current liabilities.
Formula: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}
Efficiency Ratios
Efficiency ratios measure a company's effectiveness in various areas of its operations, essentially looking at maximizing its use of resources
Fixed Asset Turnover
Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to generate sales. A higher ratio indicates the business has less money tied up in fixed assets for each currency unit of sales revenue. A declining ratio may indicate that the business is over-invested in plant, equipment, or other fixed assets.
Formula: Net Sales / Fixed Assets
Asset Turnover
Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue to the company. A higher asset turnover ratio shows that the company has been more effective i using its assets to generate revenues.
Formula: Net Sales / Total Assets
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Current Asset Turnover
Current Asset Turnover indicates how efficiently the business uses its current assets to generate sales.
Formula: Net Sales / Current Assets
Inventory Turnover
Inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period. A low turnover implies poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying.
Formula: Cost of Goods Sold / Inventory
Working Capital Turnover
Working Capital Turnover is a measurement to compare the depletion of working capital to the generation of sales. This provides some useful information as to how effectively a company is using its working capital to generate sales.
Formula: Net Sales / Working Capital
Capital Employed Turnover
Capital employed turnover ratio measures the efficiency of a company's use of its equity in generating sales revenue to the company.
Formula: Net Sales / Shareholders Equity
Capex to sales
Capex to Sales ratio measures the company's expenditure (investments) on fixed and related assets' effectiveness when compared to the sales generated.
Formula: (Capital Expenditure / Sales) *100
Net income per Employee
Net income per Employee looks at a company's net income in relation to the number of employees they have. Ideally, a company wants a higher profit per employee possible, as it denotes higher productivity.
Formula: Net Income / No. of Employees
Revenue per Employee
Revenue per Employee measures the average revenue generated per employee of a company. This ratio is most useful when compared against other companies in the same industry. Generally, a company seeks the highest revenue per employee.
Formula: Revenue / No. of Employees
Efficiency Ratio
Efficiency Ratio is used to calculate a bank's efficiency. An increase means the company is losing a larger percentage of its income to expenses. If the efficiency ratio is getting lower, it is good for the bank and its shareholders.
Formula: Non-interest expense / Total Interest Income
Source : Canadean
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