Macy's 2002 Annual Report Download - page 6

2
As noted in our Financial Highlights, cash
inflow before financing activities was
$1.46 billion in 2002, compared with
$509 million in 2001. The company reduced
debt by more than $1 billion in 2002 and
used approximately $390 million of excess
cash to repurchase 11.4 million shares of
Federated common stock during the year.
Even with these uses, we ended 2002 with
$716 million of cash on hand.
Managing receipts to reduce inventory
levels helped to mitigate the margin impact
of lower sales and positioned the company
well for the start of the new retail year.
We also achieved clear progress last year
in our strategy to offer more compelling
merchandise assortments. We are more
aggressively editing our customer offering
to ensure the choice of goods on the sales
floor is plentiful and appealing, but not
overwhelming. We also further strengthened
our private brand merchandise programs,
which deliver exceptional value to the
customer while proving to be a true
differentiator for Federated.
In our quest to improve the customers’
shopping experience, elements of
Federated’s reinvent strategy were rolled
out in 2002 to approximately 40 stores
nationwide, with additional rollouts
planned for 2003.
One of our most significant accomplish-
ments in 2002 was the continued
development of Federated’s people into
the best team in the retailing business.
By any measure, ours is an outstanding
company of talented people with diverse
backgrounds working to provide the best
possible product and service to our
customers. Our commitment to people is
reflected in the growth of our Star
Academy of top sales performers, as
well as in the expansion of the Federated
Leadership Institute and a renewed
commitment to enhanced training at all
levels. We are proud of our people, and
believe them to be our greatest asset.
Focused on sales in 2003
We entered 2003 facing a stiff head wind
of economic and competitive forces.
Recognizing this, Federated has fortified
its determination to drive top-line sales.
We are listening intently to what
customers are telling us about their needs
and preferences, and we are making
changes based on what they tell us. We
are focusing more intensive efforts on
reaching our best customers – the
fashion-conscious consumer whose first
choice for fashion and value is likely to
be the department store.
As we move through the next year, we will
be concentrating our efforts on:
• Offering compelling assortments through
better editing of our merchandising
offering, partnering with name-brand
vendors to bring unique, exclusive and
limited-distribution goods to our stores
first, and further developing our own
private brands.
• Simplifying our pricing through a
program of everyday “Best Values,”
fewer coupon promotions and more
emphasis on the value we deliver relative
to the competition.
• Improving the customers’ shopping
experience, in part through ongoing
rollout of reinvent elements such as
simplified way-finding signage, the
installation of convenient shopping carts
and price-check scanners, and enhanced
fitting rooms and sitting areas.
• Enhancing communication with
customers to clarify our marketing
messages and further leverage the
company’s powerful store brands and
significant annual advertising investment.
• Continuing to refine existing and test
new reinvent initiatives, investing in
the rollout of those elements that
customers tell us they like the most.
To better gauge the impact of the
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.