Macy's 2010 Annual Report Download - page 22

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Company is a retail organization operating retail stores and Internet websites under two brands (Macy’s
and Bloomingdale’s) that sell a wide range of merchandise, including men’s, women’s and children’s apparel and
accessories, cosmetics, home furnishings and other consumer goods in 45 states, the District of Columbia, Guam
and Puerto Rico. As of January 29, 2011, the Company’s operations were conducted through Macy’s,
macys.com, Bloomingdale’s, bloomingdales.com and Bloomingdale’s Outlet which are aggregated into one
reporting segment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 280, “Segment Reporting.”
The Company is focused on four key strategies for continued growth in sales, earnings and cash flow in the
years ahead: (i) maximizing the My Macy’s localization initiative; (ii) developing private and exclusive brands;
(iii) embracing customer centricity, including engaging customers on the selling floor; and (iv) driving the
omnichannel business.
The My Macy’s localization initiative was developed with the goal of accelerating sales growth in existing
locations by ensuring that core customers surrounding each Macy’s store find merchandise assortments, size
ranges, marketing programs and shopping experiences that are custom-tailored to their needs. My Macy’s has
concentrated more management talent in local markets, effectively reducing the “span of control” over local
stores; created new positions in the field to work with district planning and buying executives in helping to
understand and act on the merchandise needs of local customers; and empowered locally based executives to
make more and better decisions. Also as part of My Macy’s, the Company’s Macy’s branded stores are organized
in a unified operating structure and division central office organizations were eliminated. This has reduced
central office and administrative expense, eliminated duplication, sharpened execution, and helped the Company
to partner more effectively with its suppliers and business partners.
The Company’s omnichannel strategy allows customers to shop seamlessly in stores, online and via mobile
devices. As part of the comprehensive focus on its omnichannel business, the Company is building an efficient
and resourceful organization that thrives on unrelenting creativity and innovation. Current and future expansions
to the macys.com and bloomingdales.com online businesses represent investments in merchandising, marketing
and site development, all of which complement ongoing improvements in systems infrastructure, fulfillment
capacity and customer service.
During 2010, the Company launched a new Bloomingdale’s Outlet store concept, which initially consists of
four Bloomingdale’s Outlet stores, each with approximately 25,000 square feet. Additional Bloomingdale’s
Outlet stores are expected to roll out to selected locations across the country in 2011 and beyond. Bloomingdale’s
Outlet stores offer a range of apparel and accessories, including women’s ready-to-wear, men’s, children’s,
women’s shoes, fashion accessories, jewelry, handbags and intimate apparel.
Additionally, in February 2010, Bloomingdale’s opened in Dubai, United Arab Emirates under a license
agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC, under which the Company is entitled to a
license fee in accordance with the terms of the underlying agreement, generally based upon the greater of the
contractually earned or guaranteed minimum amounts.
During 2010, the Company opened two new Macy’s stores, one new Bloomingdale’s store, and four
Bloomingdale’s Outlet stores. During 2009, the Company opened five new Macy’s department stores, re-opened
two Macy’s department stores that had been damaged in 2008 by Hurricane Ike, opened one replacement Macy’s
department store, and also expanded into an additional Macy’s location in an existing mall. In 2011, the
Company intends to open three Bloomingdale’s Outlet stores and re-open a Macy’s department store that had
been closed in 2010 due to flood damage.
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