Macy's 2002 Annual Report Download - page 5

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Since then, the fundamental nature of our
business has not changed. Unfortunately, the
same cannot be said of the world around us.
2002 was a difficult year. A weak economy
depressed retail sales across all sectors,
and department stores suffered more than
other formats. This has even caused some
skeptics to question the validity of the
department store – an exaggerated leap,
in our view, given that despite disappointing
sales, Federated produced improved
earnings, solid gross margins and continued
strong free cash flow last year.
The essential fabric of Federated obviously
is strong. The durable threads that comprise
this company – our exceptional store
nameplates, our private brands, our support
operations, our people – are unequaled
in all of retail.
We have confidence in the future of the
department store, and in Federated in
particular. It is a retail format that has
changed and adapted to evolving consumer
tastes for more than 160 years, and in this
progression Federated has advanced further
than most. Our reinvent process is an exciting
new chapter in the life of the department
store, and the resulting initiatives are
meeting with positive customer response
across the country. As they do, and as our
customers give us valuable feedback, we will
continue to develop and test new ideas for
our stores.
In the pages that follow, we attempt to
answer some of the questions that you
might have about our business. This includes
how we are acting to win a greater portion
of our customers’ discretionary spending and
regain market share as we position ourselves
to take full advantage of the inevitable
economic recovery to come. Before getting
into these issues, however, we want to
review with you the accomplishments of the
past year, and take a look at some of our
goals for the year ahead.
Progress in 2002
Federated produced improved earnings of
$638 million, or $3.21 per share, from
continuing operations in 2002, despite the
weak economy and disappointing sales.
This was well ahead of EPS from continuing
operations of $2.59 in 2001.
Achieving higher earnings despite a soft retail
environment is evidence of exceptional
efforts on the part of our stores and division
management during the year, and an
unabated focus on inventory management,
expense and capital control for which
Federated is well known.
DEAR FELLOW
Shareholder:
UST THREE YEARS AGO, FEDERATED PRODUCED
THE BEST ACROSS-THE-BOARD RESULTS IN THE
HISTORY OF THE COMPANY.
J