Macy's 1999 Annual Report Download - page 5

• Department store operating income as a percent of sales increased 150 basis points, from 10.3%
in 1998 to 11.8% last year.
• Return on gross investment (ROGI) increased to 16.8% last year from 16.6% in 1998. This is an
important measure of the business defined as earnings before interest, taxes, depreciation,
amortization and gross rent, divided by total average gross investment.
Underlying this strong financial performance were other significant accomplishments that allowed
us to further improve how we run the business.
On the merchandising side, Federated’s private brands continued to gain in market share and
popularity, producing a record year for I•N•C, Alfani, Charter Club, Style & Co. and other popular lines
exclusive to our stores. Sales of Federated’s private brands last year increased at twice the rate of our
overall comp-store sales.
Our department stores continued their development of effective brand identification strategies to
amplify brand awareness, enabling Federated to capitalize on some of the strongest names in
American retailing.
Merchandising and marketing plans for the all-important fourth quarter were further refined to ensure
newness and an abundance of unique holiday gift-giving ideas. The success of these efforts resulted in
another outstanding holiday season performance across Federated, with comp-store sales increases of
4.4% in the fourth quarter.
Strategies for direct-to-customer catalog and e-commerce businesses were developed and refined
throughout the year as Federated evolved its retail presence in these important areas.
The Federated Leadership Institute, recognized for excellence in retailing by the National Retail
Federation earlier this year, emerged as the backbone of our executive training and
development programming. In 1999, hundreds of corporate and division managers,
including all of our store managers from across the country, attended challenging
week-long sessions aimed at making them more effective in their jobs.
Of course, a year of record performance and results poses its own set of challenges.
Keeping the momentum going certainly is one of them. So while we’re optimistic about
producing another strong year in 2000, we aren’t taking anything for granted.
In the coming year, our number one objective and, therefore, the primary measure of our
success, will continue to be comp-store sales growth. If we do this well, profit and return on
investment goals also will be achieved.
Merchandise assortments that are new and kept fresh – including exclusive private brands
that distinguish us from the competition – are key to this strategy. So are strategies designed
to make Federated’s department stores, catalogs and e-commerce sites the retail mecca for
gift giving at any season and for all occasions.
In addition, we are determined to make our stores more exciting and appealing to
customers of all ages. In some cases, this means providing capital for major in-store
remodels, and there are approximately 120 of them planned this year as part of an
3
$333
$685
$575
$453
95 96 97 98 99
$795
Net Income
In Millions
(Excludes unusual items)