Macy's 2012 Annual Report Download - page 19

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14
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The discussion in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related
notes included elsewhere in this report. The discussion in this Item 7 contains forward-looking statements that reflect the
Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these
forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those
discussed below and elsewhere in this report, particularly in “Risk Factors” and “Forward-Looking Statements.”
Overview
The Company is an omnichannel retail organization operating stores and 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
February 2, 2013, 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.
Through the My Macy's localization initiative, the Company has invested in talent, technology and marketing which
ensures 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 provided for more local decision-making in every
Macy's community, and involves tailoring merchandise assortments, space allocations, service levels, visual merchandising,
marketing and special events on a store-by-store basis.
The Company's omnichannel strategy allows customers to shop seamlessly in stores, online and via mobile devices. A
pivotal part of the omnichannel strategy is the Company's ability to allow associates in any store to sell a product that may be
unavailable locally by selecting merchandise from other stores or online fulfillment centers for shipment to the customer's door.
Likewise, the Company's online fulfillment centers can draw on store inventories nationwide to fill orders that originate on the
Internet or via mobile devices. As of February 2, 2013, 292 Macy's stores were fulfilling orders from other stores and/or from
the Internet and mobile devices, as compared to 23 Macy's stores as of January 28, 2012. By the end of fiscal 2013,
approximately 500 Macy's stores are expected to be fulfilling orders from other stores and/or from the Internet and 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 ongoing training and coaching program is designed
to improve the in-store shopping experience.
In fiscal 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 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. During 2012, the Company opened two new Macy's stores in Salt Lake City, UT; and
Greendale, WI; and five new Bloomingdale's Outlet stores in Livermore, CA, Merrimack, NH; Garden City, NY; Grand Prairie,
TX; and Dallas, TX. Also during 2012 the Company opened its new 1.3 million square foot fulfillment center in Martinsburg,
WV. The Company has announced that in 2013 it intends to open three new Macy's stores; a Macy's replacement store; a new
Bloomingdale's store; and a Bloomingdale's Outlet store. In addition, 2014 will include three new Macy's stores; and a
Bloomingdale's replacement store.