Macy's 2015 Annual Report Download - page 20

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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 three
brands (Macy's, Bloomingdale's and Bluemercury) 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 30, 2016, the Company's operations were conducted
through Macy's, Bloomingdale's and Bluemercury 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 continues to be focused on three key strategies for growth in sales, earnings and cash flow in the years
ahead: (i) maximizing the My Macy's localization/personalization initiative; (ii) driving the omnichannel business; and
(iii) embracing customer centricity, including engaging customers on the selling floor through the Magic Selling program.
These strategies have evolved and the Company has developed specific initiatives to acquire new customers and strengthen
loyalty, deliver distinctive merchandise, expand the digital frontier and new formats and to create signature customer
experiences.
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 focus on localization is now evolving to one of
personalization.
The Company's omnichannel strategy allows customers to shop seamlessly in stores and online, via desktops, laptops
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. Since May 2014, nearly all Macy's and Bloomingdale's stores have been fulfilling orders from
other stores and/or online for shipment. Since August 2014, nearly all Macy's and Bloomingdale's stores have been
fulfilling orders for store pick-up related to online purchases. Beginning on November 1, 2014, same-day delivery pilots
were tested in eight Macy's markets and four Bloomingdale's markets. As of January 30, 2016, the Company operates
same-day delivery in 17 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. Magic Selling is shifting focus
in 2016 to new technologies for building Magic connections with shoppers.
In January 2016, the Company announced a series of cost-efficiency and process improvement measures to be
implemented beginning in early 2016 that will reduce selling, general and administrative ("SG&A") expenses while still
investing in growth strategies, particularly in omnichannel capabilities at Macy's and Bloomingdale's.
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 fine jewelry and watches, expansion of Macy's Backstage (including
freestanding locations and inside existing Macy's stores), "Last Act"- a simplified pricing approach to clearance
merchandise in Macy's stores, a focus on key store locations (including product presentation, customer service and special
events), a focus on the beauty business including the expansion of Bluemercury freestanding locations and inside existing
Macy's stores and a focus on enhancements to mobile technology.