Macy's 2013 Annual Report Download - page 12

Table of Contents
The Company periodically reviews the carrying value of its goodwill for possible impairment; if future circumstances indicate that goodwill is
impaired, the Company could be required to write down amounts of goodwill and record impairment charges.
In the fourth quarter of fiscal 2008, the Company reduced the carrying value of its goodwill from $9,125 million to $3,743 million and recorded a
related non-cash impairment charge of $5,382 million. The Company continues to monitor relevant circumstances, including consumer spending levels,
general economic conditions and the market prices for the Company’s common stock, and the potential impact that such circumstances might have on the
valuation of the Company’s goodwill. It is possible that changes in such circumstances, or in the numerous variables associated with the judgments,
assumptions and estimates made by the Company in assessing the appropriate valuation of its goodwill, could in the future require the Company to further
reduce its goodwill and record related non-cash impairment charges. If the Company were required to further reduce its goodwill and record related non-cash
impairment charges, the Company’s financial position and results of operations would be adversely affected.
The Company depends on its ability to attract and retain quality employees.
The Company’s business is dependent upon attracting and retaining quality employees. The Company has a large number of employees, many of
whom are in entry level or part-time positions with historically high rates of turnover. The Company’s ability to meet its labor needs while controlling the costs
associated with hiring and training new employees is subject to external factors such as unemployment levels, prevailing wage rates, minimum wage legislation
and changing demographics. In addition, as a large and complex enterprise operating in a highly competitive and challenging business environment, the
Company is highly dependent upon management personnel to develop and effectively execute successful business strategies and tactics. Any circumstances
that adversely impact the Company’s ability to attract, train, develop and retain quality employees throughout the organization could negatively affect the
Company’s business and results of operations.
The Company depends upon designers, vendors and other sources of merchandise, goods and services. The Company's business could be
affected by disruptions in, or other legal, regulatory, political or economic issues associated with, our supply network.
The Company’s relationships with established and emerging designers have been a significant contributor to the Company’s past success. The
Company’s ability to find qualified vendors and access products in a timely and efficient manner is often challenging, particularly with respect to goods
sourced outside the United States. The Company’s procurement of goods and services from outside the United States is subject to risks associated with
political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade,
including costs and uncertainties associated with efforts to identify and disclose sources of "conflict minerals" used in products that the Company causes to
be manufactured and potential sell-through difficulties and reputational damage that may be associated with the inability of the Company to determine that
such products are "DRC conflict-free." In addition, the Company’s procurement of all its goods and services is subject to the effects of price increases which
the Company may or may not be able to pass through to its customers. All of these factors may affect the Company’s ability to access suitable merchandise on
acceptable terms, are beyond the Company’s control and could negatively affect the Company’s business and results of operations.
The Company's sales and operating results could be adversely affected by product safety concerns.
If the Company's merchandise offerings do not meet applicable safety standards or our consumers' expectations regarding safety, the Company could
experience decreased sales, experience increased costs and/or be exposed to legal and reputational risk. Events that give rise to actual, potential or perceived
product safety concerns could expose the Company to government enforcement action and/or private litigation. Reputational damage caused by real or perceived
product safety concerns could negatively affect the Company's business and results of operations.
The Company depends upon the success of its advertising and marketing programs.
The Company’s advertising and promotional costs, net of cooperative advertising allowances, amounted to $1,166 million for 2013. The Company’s
business depends on effective marketing and high customer traffic. The Company has many initiatives in this area, and often changes its advertising and
marketing programs. There can be no assurance as to the Company’s continued ability to effectively execute its advertising and marketing programs, and any
failure to do so could negatively affect the Company’s business and results of operations.
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