Macy's 2014 Annual Report Download - page 19

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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, websites and mobile applications 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. The Company has stores in 45 states, the
District of Columbia, Guam and Puerto Rico. As of January 31, 2015, the Company's operations were conducted through
Macy's and Bloomingdale's which are aggregated into one reporting segment in accordance with the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting.”
On March 9, 2015, the Company completed its acquisition of Bluemercury, Inc., a luxury beauty products and spa
retailer. The Company is focused on accelerating the growth of sales in self-standing Bluemercury stores in urban and
suburban markets, enhancing its online capabilities and adding selected Bluemercury products and boutiques to Macy's
stores nationwide.
The Company continues to be 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.
In addition to these key strategies, the Company is also focused on driving additional profitable sales growth through a
series of organic and new business initiatives. The initiatives include a focus on key categories (i.e., shoes, beauty and
jewelry and watches), key store locations, loyalty programs, best and private brands and potential off-price, international
and new store formats.
In January 2015, the Company announced a series of initiatives, including a restructuring of merchandising and
marketing functions consistent with its omnichannel approach to retailing, as well as a series of adjustments to its field and
store operations designed to increase productivity and efficiency. These changes are intended to support continued growth
and an enhanced shopping experience online and via mobile, as well as in stores.
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 and online, via computers or
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 shipping merchandise from other stores or customer fulfillment centers to the
customer's door. Likewise, the Company's customer fulfillment centers can draw on store inventories nationwide to fill
orders that originate online, via computers or mobile devices. Since May 2014, nearly all Macy's and Bloomingdale's stores
have been fulfilling orders from other stores and/or online for shipment, compared to 500 Macy's stores as of February 1,
2014. Since August 2014, nearly all Macy's and Bloomingdale's stores have been fulfilling orders for store pick-up related
to online purchases. Starting November 1, 2014, same-day delivery pilots were tested in eight Macy's markets and four
Bloomingdale's markets and in 2015 same-day delivery will be expanded to additional markets.
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 and all other customer interactions.
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. As of January 31, 2015, the
Company operated thirteen Bloomingdale's Outlet stores.