Macy's 2011 Annual Report Download - page 19

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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 stores and Internet websites under two brands (Macy's and
Bloomingdale's) that sell a wide range of merchandise, including apparel and accessories (men's, women's and children's),
cosmetics, home furnishings and other consumer goods in 45 states, the District of Columbia, Guam and Puerto Rico. As of
January 28, 2012, 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 three key strategies for continued growth in sales, earnings and cash flow in the years ahead:
(i) maximizing the My Macy's localization initiative; (ii) driving the omnichannel business; and (iii) embracing customer
centricity, including engaging customers on the selling floor through the MAGIC selling program.
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 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 the My Macy's transformation, the Company's Macy's
branded stores were reorganized in a unified operating structure with division central office organizations eliminated. This has
reduced central office and administrative expense, eliminated duplication, sharpened execution, and helped the Company to
make decisions faster and 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.
Macy's MAGIC selling program is an approach to customer engagement that helps Macy's to better understand the needs
of customers, as well as to provide options and advice. This comprehensive training and coaching program is designed to
improve the in-store shopping experience.
In 2010, the Company piloted a new Bloomingdale's Outlet store concept. Bloomingdale's Outlet stores are each
approximately 25,000 square feet and 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 2011, the Company opened three new Bloomingdale's Outlet stores and re-opened one Macy's store that
had been closed in 2010 due to flood damage. As of the date of this report, the Company had opened two new Macy's stores
and intends to open five Bloomingdale's Outlet stores during the remainder of fiscal 2012. The Company has announced that in
2013 and early 2014 it intends to open three new Macy's stores, one Macy's replacement store, one new Bloomingdale's store,
one Bloomingdale's replacement store, and may open additional Bloomingdale's Outlet stores.
The Company's operations are impacted by competitive pressures from department stores, specialty stores, mass
merchandisers, Internet websites and all other retail channels. The Company's operations are also impacted by general
consumer spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer
confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects
of weather or natural disasters and other factors over which the Company has little or no control.
In recent years, consumer spending levels have been affected to varying degrees by a number of factors, including
substantial declines in the level of general economic activity and real estate and investment values, substantial increases in
consumer pessimism, unemployment and the costs of basic necessities, and a significant tightening of consumer credit. These
factors have affected to varying degrees the amount of funds that consumers are willing and able to spend for discretionary
purchases, including purchases of some of the merchandise offered by the Company.
The effects of economic conditions have been, and may continue to be, experienced differently, or at different times, in
the various geographic regions in which the Company operates, in relation to the different types of merchandise that the
Company offers for sale, or in relation to the Company's Macy's-branded and Bloomingdale's-branded operations. All
economic conditions, however, ultimately affect the Company's overall operations. Based on its assessment of current and