Macy's 2011 Annual Report Download - page 8

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In 2011, the Company’s subsidiaries provided various support functions to the Company’s retail operations on an
integrated, company-wide basis.
• The Company’s bank subsidiary, FDS Bank provides credit processing, certain collections, customer service and
credit marketing services in respect of all proprietary and non-proprietary credit card accounts that are owned
either by Department Stores National Bank (“DSNB”), a subsidiary of Citibank, N.A., or FDS Bank and that
constitute a part of the credit programs of the Company’s retail operations.
• Macy’s Systems and Technology, Inc. (“MST”), a wholly-owned indirect subsidiary of the Company, provides
operational electronic data processing and management information services to all of the Company’s operations.
• Macy’s Merchandising Group, Inc. (“MMG”), a wholly-owned direct subsidiary of the Company, and its
subsidiary Macy's Merchandising Group International, LLC., is responsible for the design, development and
marketing of Macy’s private label brands and certain licensed brands. Bloomingdale’s uses MMG for only a very
small portion of its private label merchandise. The Company believes that its private label merchandise further
differentiates its merchandise assortments from those of its competitors and delivers exceptional value to its
customers. The principal private label brands currently offered by Macy’s include Alfani, American Rag, Bar III,
Belgique, Charter Club, Club Room, Epic Threads, first impressions, Giani Bernini, greendog, Greg Norman for
Tasso Elba, Holiday Lane, Hotel Collection, Hudson Park, Ideology, I-N-C, jenni by jennifer moore, John
Ashford, JM Collection, Karen Scott, Martha Stewart Collection, Material Girl, Morgan Taylor, so jenni by
jennifer moore, Sky, Studio Silver, Style & Co., Style & Co. Sport, Tasso Elba, the cellar, Tools of the Trade,
Tools of the Trade Basics, and Via Europa. The principal licensed brands managed by MMG are American Rag,
Greg Norman for Tasso Elba, Martha Stewart Collection, and Material Girl. The trademarks associated with all
of the foregoing brands, other than American Rag, Greg Norman for Tasso Elba, Martha Stewart Collection, and
Material Girl are owned by Macy’s. The American Rag, Greg Norman for Tasso Elba, Martha Stewart
Collection, and Material Girl brands are owned by third parties, which license the trademarks associated with
such brands to Macy’s pursuant to agreements which have renewal rights that extend through 2050, 2020, 2027,
and 2030, respectively.
• Macy’s Logistics and Operations (“Macy’s Logistics”), a division of a wholly-owned indirect subsidiary of the
Company, provides warehousing and merchandise distribution services for the Company’s operations.
MMG also offers its services, either directly or indirectly, to unrelated third parties.
The Company’s executive offices are located at 7 West Seventh Street, Cincinnati, Ohio 45202, telephone number:
[phone] and 151 West 34th Street, New York, New York 10001, telephone number: [phone].
Employees. As of January 28, 2012, the Company had approximately 171,000 regular full-time and part-time employees.
Because of the seasonal nature of the retail business, the number of employees peaks in the holiday season. Approximately 10%
of the Company’s employees as of January 28, 2012 were represented by unions. Management considers its relations with its
employees to be satisfactory.
Seasonality. The retail business is seasonal in nature with a high proportion of sales and operating income generated in
the months of November and December. Working capital requirements fluctuate during the year, increasing in mid-summer in
anticipation of the fall merchandising season and increasing substantially prior to the holiday season when the Company must
carry significantly higher inventory levels.
Purchasing. The Company purchases merchandise from many suppliers, no one of which accounted for more than 5% of
the Company’s net purchases during 2011. The Company has no material long-term purchase commitments with any of its
suppliers, and believes that it is not dependent on any one supplier. The Company considers its relations with its suppliers to be
satisfactory.
Competition. The retailing industry is intensely competitive. The Company’s operations compete with many retailing
formats in the geographic areas in which they operate, including department stores, specialty stores, general merchandise
stores, off-price and discount stores, manufacturers’ outlets, the Internet, mail order catalogs and television shopping, among
others. The retailers with which the Company competes include Amazon, Bed Bath & Beyond, Belk, Bon Ton, Burlington Coat
Factory, Dillard’s, Gap, J.C. Penney, Kohl’s, Limited, Lord & Taylor, Neiman Marcus, Nordstrom, Saks, Sears, Target, TJ
Maxx and Wal-Mart. The Company seeks to attract customers by offering superior selections, obvious value, and distinctive
marketing in stores that are located in premier locations, and by providing an exciting shopping environment and superior
service through an omnichannel experience. Other retailers may compete for customers on some or all of these bases, or on
other bases, and may be perceived by some potential customers as being better aligned with their particular preferences.