Macy's 2011 Annual Report Download - page 3

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Fiscal 2011 was the third consecutive year of signifi cantly
improved fi nancial performance at Macy’s, Inc., and I am very
proud of the sustained positive momentum in our company.
What you are seeing emerge at Macy’s, Inc. is the result of
the culture of growth that we have been building since we
reorganized the company in 2008 and 2009. We have the
right long-term strategies in place to win with our customers
in the years ahead. Meanwhile, our very talented organization
is executing superbly on each key strategy.
Simply put, we have been hitting on all cylinders — gaining
market share, strengthening customer loyalty and maintaining
effi ciencies in our operations, all against the backdrop of
a stagnant economic environment. Our growth has been
balanced — involving both Macy’s and Bloomingdale’s, stores
and online, virtually every family of business and every region
of the country.
Our progress and success is rooted in having become a
customer-centric organization that embraces localization, a
seamless omnichannel blending of stores, online and mobile,
and more meaningful customer engagement on the selling fl oor.
FINANCIAL RESULTS
Our company generated growth on all fi nancial fronts in
fi scal 2011:
• We added more than $1 billion in top-line sales in 2011 for
the second consecutive year. Same-store sales rose a very
healthy 5.3 percent, on top of an increase of 4.6 percent in
2010. Going into 2011, we had forecast a 3 percent increase
for the year. We exceeded that target by a wide margin.
• Online sales (macys.com and bloomingdales.com combined)
grew by 40 percent year-over-year in 2011, on top of growth
of 29 percent in 2010 and 20 percent in 2009.
• Diluted earnings per share, adjusted for a gain on store
leases, costs associated with store closings and expenses
associated with the early retirement of debt, grew by 36
percent in 2011, on top of double-digit increases in each
of 2009 and 2010 (see Supplemental Operating Results on
page 3 for a reconciliation of this non-GAAP measure to the
most comparable GAAP measure).
• Our EBITDA rate reached 13.1 percent in 2011, re ecting
steady improvement toward our goal of 14 percent to
15 percent (see Supplemental Operating Results on
page 3 for a reconciliation of this non-GAAP measure
to the most comparable GAAP measure).
• Net cash provided by operating activities was $2.093 billion
in  scal 2011, compared with $1.506 billion in  scal 2010.
This includes $375 million in pension plan contributions in
scal 2011, compared with $825 million in  scal 2010.
• Net cash  ow before  nancing activities was $1.476 billion
in  scal 2011, compared with $1.041 billion in  scal 2010
(see Supplemental Operating Results on page 3 for a
reconciliation of this non-GAAP measure to the most
comparable GAAP measure).
• We repaid $454 million in debt in 2011 in addition to the
$1.245 billion of debt repaid in 2010. This helped us to
regain investment-grade status at S&P and Moody’s.
• Return On Invested Capital (ROIC) — a key measure of
operating productivity — rose signifi cantly in 2011, the
third consecutive year of improvement.
ENHANCED SHAREHOLDER RETURNS
The results and momentum in our company have driven
enhanced returns to our shareholders.
During  scal 2011, the price of Macy’s, Inc. common stock
rose by nearly 50 percent, and the share price has nearly
quadrupled since the beginning of fi scal 2009.
We doubled our cash dividend on common stock to an
annualized 40 cents per share, beginning with the quarterly
payment on July 1, 2011. Effective with the quarterly
payment on April 2, 2012, the dividend will double
again to an annualized 80 cents per share.
In late August 2011, we resumed our share repurchase
program using excess cash, having reached our target credit
ratios earlier than expected. In fi scal 2011, we repurchased
a total of 16.4 million shares for approximately $500 million.
Going into fi scal 2012, the company had remaining
authorization to repurchase approximately $1.352 billion of
common stock, including a $1 billion increase in authorization
approved by the board of directors in January 2012.
STRATEGIC ADVANCEMENTS AT MACY’S
Three key strategic initiatives — My Macy’s localization,
omnichannel integration and MAGIC Selling — combined
to drive sales growth at Macy’s in 2011. We believe we still
are in the early stages of implementation in each, and we
have intensifi ed planning for future improvement in 2012
and beyond.
• With My Macy’s localization, we continue to tailor the
merchandise assortment and shopping experience in every
store location for the customer who shops there. We believe
To O u r
Shareholders:
TERRY J. LUNDGREN
Chairman, President and Chief Executive Offi cer
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