Macy's 2011 Annual Report Download - page 12

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due and payable immediately. The Company’s assets may not be sufficient to repay in full this indebtedness, resulting in a need
for an alternate source of funding. The Company cannot make any assurances that it would be able to obtain such an alternate
source of funding on satisfactory terms, if at all, and its inability to do so could cause the holders of its securities to experience
a partial or total loss of their investments in the Company.
The Company periodically reviews the carrying value of its goodwill for possible impairment; if future circumstances indicate
that goodwill is impaired, the Company could be required to write down amounts of goodwill and record impairment charges.
In the fourth quarter of fiscal 2008, the Company reduced the carrying value of its goodwill from $9,125 million to
$3,743 million and recorded a related non-cash impairment charge of $5,382 million. The Company continues to monitor
relevant circumstances, including consumer spending levels, general economic conditions and the market prices for the
Company’s common stock, and the potential impact that such circumstances might have on the valuation of the Company’s
goodwill. It is possible that changes in such circumstances, or in the numerous variables associated with the judgments,
assumptions and estimates made by the Company in assessing the appropriate valuation of its goodwill, could in the future
require the Company to further reduce its goodwill and record related non-cash impairment charges. If the Company were
required to further reduce its goodwill and record related non-cash impairment charges, the Company’s financial position and
results of operations would be adversely affected.
The Company depends on its ability to attract and retain quality employees.
The Company’s business is dependent upon attracting and retaining quality employees. The Company has a large number
of employees, many of whom are in entry level or part-time positions with historically high rates of turnover. The Company’s
ability to meet its labor needs while controlling the costs associated with hiring and training new employees is subject to
external factors such as unemployment levels, prevailing wage rates, minimum wage legislation and changing demographics.
In addition, as a large and complex enterprise operating in a highly competitive and challenging business environment, the
Company is highly dependent upon management personnel to develop and effectively execute successful business strategies
and tactics. Any circumstances that adversely impact the Company’s ability to attract, train, develop and retain quality
employees throughout the organization could adversely affect the Company’s business and results of operations.
The Company depends upon designers, vendors and other sources of merchandise, goods and services.
The Company’s relationships with established and emerging designers have been a significant contributor to the
Company’s past success. The Company’s ability to find qualified vendors and access products in a timely and efficient manner
is often challenging, particularly with respect to goods sourced outside the United States. The Company’s procurement of
goods and services from outside the United States is subject to risks associated with political or financial instability, trade
restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade. In addition,
the Company’s procurement of all its goods and services is subject to the effects of price increases which the Company may or
may not be able to pass through to its customers. All of these factors may affect the Company’s ability to access suitable
merchandise on acceptable terms, are beyond the Company’s control and could adversely impact the Company’s performance.
The Company's sales and operating results could be adversely affected by product safety concerns.
If the Company's merchandise offerings do not meet applicable safety standards or our consumers' expectations regarding
safety, the Company could experience decreased sales, experience increased costs and/or be exposed to legal and reputational
risk. Events that give rise to actual, potential or perceived product safety concerns could expose the Company to government
enforcement action and/or private litigation. Reputational damage caused by real or perceived product safety concerns could
have a negative impact on the Company's sales and operating results.
The Company depends upon the success of its advertising and marketing programs.
The Company’s advertising and promotional costs, net of cooperative advertising allowances, amounted to $1,136
million for 2011. The Company’s business depends on high customer traffic in its stores and effective marketing. The Company
has many initiatives in this area, and often changes its advertising and marketing programs. There can be no assurance as to the
Company’s continued ability to effectively execute its advertising and marketing programs, and any failure to do so could have
a material adverse effect on the Company’s business and results of operations.
Parties with whom the Company does business may be subject to insolvency risks or may otherwise become unable or
unwilling to perform their obligations to the Company.
The Company is a party to contracts, transactions and business relationships with various third parties, including vendors,
suppliers, service providers, lenders and participants in joint ventures, strategic alliances and other joint commercial