Macy's 2012 Annual Report Download - page 3

Over the past several years, I have written about the fundamental
changes we have made at Macy’s and Bloomingdale’s to instill a
culture of growth in our company since our restructuring in 2009.
Macy’s, Inc. has become a much stronger business over this
period, and we continue to reap the rewards.
Take a look at our results in 2012, which are presented and
discussed in greater detail in the Company’s 2012 Form 10-K
(including important information on pages 16 - 18 regarding our
non-GAAP financial measures):
• Toplinesalesrosebymorethan$1billionforthethird
consecutiveyear.Infact,ourtotalsalesin2012,at$27.7billion,
wereabout$4.2billionhigherthanin2009.
• Comparablesalesroseby3.7percentin2012,ontopof
increases of 5.3 percent and 4.6 percent in 2011 and 2010,
respectively. We ended 2012 with 12 consecutive quarters
of comparable sales growth of at least 3 percent.
• AdjustedEBITDAasapercentofsalesgrewto13.4percent
in 2012 from 11.3 percent in 2009, significant progress toward
our goal of 14 percent.
• Dilutedearningspershare(EPS)roseby315percentto$3.24
persharein2012from78centspersharein2009.Excluding
certainitems,dilutedEPSgrewby154percentto$3.46in
2012from$1.36in2009,oronaverageby36percentperyear.
• Weincreasedourreturnoninvestedcapital(ROIC)to
21.2 percent in 2012 from 14.9 percent in 2009.
• Improvedcashowhasallowedustoenhanceshareholder
value through repurchasing shares and increasing the
dividend, which was doubled in 2012.
Clearly, Macy’s, Inc. has momentum. We have gained market
share from our competitors, and we remain fully dedicated to
continuous improvement in 2013 and the years ahead. Our
company is alive with activity, and we are energized by the
opportunity we see. The more we accomplish, the more we
realize that there is so much more we can do.
The shopping patterns of our customers are rapidly changing.
We operate in an increasingly omnichannel world where
consumers gravitate seamlessly between stores, computers and
mobile devices. They shop whenever, wherever and however they
prefer. We were fortunate to have seen this shift coming five or
more years ago, and we have invested strategically to prepare
our company for growth and success in an omnichannel world.
Today, we consider ourselves to be America’s Omnichannel
Store and a company that places the customer at the center
of all decisions.
WE OWE IT ALL TO M.O.M.
Underpinning Macy’s, Inc.’s outstanding financial results is
a three-pronged business strategy known by the acronym
of M.O.M. – My Macy’s, Omnichannel and MAGIC Selling.
These strategies may sound familiar because we have been
discussing this blueprint consistently for several years.
In fact, we have benefitted from unwavering commitment to
these strategies and to executing them with creativity and
passion. We are continually testing and learning – using
limited-scope pilots to see what resonates with the customer,
then aggressively rolling out those elements and tactics that
are successful.
MY MACY’S
My Macy’s is our formula for localization – in merchandising, in
marketing and in shopping experience. Even after our three
consecutive years of phenomenal success in bringing localization
to life, no other retailer has anything like My Macy’s. It is our
sustainable competitive advantage. No one has copied it. No
one is likely to copy it because of the investment required in
infrastructure, systems and talent.
But the truth is that we have not yet come close to making all
of our stores as truly local as they can be. Having improved our
implementation processes for localization in 2012, going forward,
we will continue to drill down to understand the customer better
in each location. Our goal is to drive incremental business based
on a well-tailored local shopping experience.
We are identifying and sharing the best examples of what’s
working in one place – for example, granularly
honing the mix of sizes, colors and brands in a
store with a unique customer marketplace –
so we can tailor a version of that best
practice in other stores with a different mix
of customers. We are cultivating a keener
sense of entrepreneurism in each store.
This applies to the merchandise we sell,
how we present and promote it, and how
we engage the community around us.
And we are intensifying discussions with
some vendors about expanding their
products into doors where they were
not previously carried. If enough
customers want a particular item in a
particular Macy’s location, we will be
relentless in making that happen. Our
Stores, Merchant and Planning teams
are committed to working very closely
together with the goal of “putting the
customer at the center of all decisions.”
OMNICHANNEL
Macy’s and Bloomingdale’s have
moved beyond the meaning of
“department store” in the traditional
sense of the word. Today, our brands
are quickly earning the right to be
called “omnichannel stores.”
We are rooted in bricks-and-mortar
stores, and make no mistake about it,
our stores are absolutely critical to our
future. Stores are where our customers
come with their best friends or their
family for entertainment and ideas.
Stores are where customers can touch
and feel and see and experience the
merchandise, and interact
with our knowledgeable
associates. This gives
Macy’s and Bloomingdale’s
a great advantage over
online-only retailers.
TO OUR SHAREHOLDERS:
TERRY J. LUNDGREN
Chairman, President and
Chief Executive Officer
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