Macy's 2008 Annual Report Download - page 64

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
the Company to both accelerate same-store sales growth and reduce expenses. In combination with the
localization initiative, the Company consolidated the Minneapolis-based Macy’s North organization into New
York-based Macy’s East, the St. Louis-based Macy’s Midwest organization into Atlanta-based Macy’s South and
the Seattle-based Macy’s Northwest organization into San Francisco-based Macy’s West. The Atlanta-based
division was renamed Macy’s Central. With My Macy’s, the Company has taken action in certain markets to
ensure that customers surrounding each Macy’s store find merchandise assortments, size ranges, marketing
programs and shopping experiences that are custom-tailored to their needs. The Company has concentrated more
management talent in certain local markets, has created new positions in the field to work with division central
planning and buying executives in helping to understand and act on the merchandise needs of local customers,
and has empowered locally based executives to make more and better decisions. My Macy’s is expected to drive
sales growth by improving knowledge at the local level and then acting quickly on that knowledge.
During 2008, the Company recorded $146 million of costs and expenses associated with the division
consolidation and localization initiative announced in February 2008, consisting primarily of severance costs and
other human resource-related costs.
The following table shows for 2008, the beginning and ending balance of, and the activity associated with,
the severance accrual established in connection with the division consolidation and localization initiative
announced in February 2008:
February 2, 2008
Charged
To Division
Consolidation
Costs Payments January 31, 2009
(millions)
Severance costs .............................. $– $69 $(69) $ –
In February 2009, the Company announced the expansion of the My Macy’s localization initiative across
the country. As My Macy’s is rolled out nationally to new local markets, the Company’s Macy’s branded stores
will be reorganized into a unified operating structure to support the Macy’s business. Existing division central
office organizations will be eliminated in New York-based Macy’s East, San Francisco-based Macy’s West,
Atlanta-based Macy’s Central and Miami-based Macy’s Florida. The New York-based Macy’s Home Store and
Macy’s Corporate Marketing divisions will no longer exist as separate entities. Existing Home Store functions
will be integrated into the Macy’s national merchandising, merchandise planning, stores and marketing
organizations. Macy’s Corporate Marketing will be integrated into the new unified marketing organization. The
New York-based Macy’s Merchandising Group will be refocused solely on the design, development and
marketing of Macy’s family of private brands.
During 2008, the Company incurred $30 million of severance costs in connection with the My Macy’s
expansion announced in February 2009.
The following table shows for 2008, the beginning and ending balance of, and the activity associated with,
the severance accrual established in connection with the division consolidation and localization initiative
announced in February 2009:
February 2, 2008
Charged
To Division
Consolidation
Costs Payments January 31, 2009
(millions)
Severance costs .............................. $– $30 $– $30
F-16