America's largest fashion retailer and department store, Macy's,
Inc. operates some 830 stores in 45 states, Guam, Puerto Rico, and
Washington, DC. Its three banners -- Macy's, Bluemercury's, and
Bloomingdale's banners (and accompanying e-commerce sites) --
together ring up some $25 billion in annual sales. The company's
stores sell men's, women's, and children's apparel and accessories,
cosmetics, and home furnishings, among other things. Macy's
historic flagship store in Manhattan's Herald Square has held the
title of world's largest department store since 1924. The Macy's
Thanksgiving Day Parade, started in 1924, is an annual rite.
Main chain Macy's and Bloomingdale's, its up-scale subsidiary,
are American retail institutions having run department stores since
1830. Both chains have online incarnations (macys.com,
bloomingdales.com). The company operates 670 Macy's stores, 101
Bluemercury stores, and 55 Bloomingdale's stores. Its new Macy's
Backstage business offers discount wares.
Women's Accessories, Intimate Apparel, Shoes and Cosmetics
accounts for around 38% of group revenue, followed by Women's
Apparel at 23%; Men's and Children's also brings in 23%; and
Macy's also operates a bank subsidiary, FDS Bank, which provides
credit processing, certain collections, customer service and credit
Macy's flagship stores including Herald Square in New York City,
Union Square in San Francisco, State Street in Chicago, and
Dadeland in Miami and South Coast Plaza in southern California.
Sales and Marketing
Macy's spends heavily across multiple media, including print,
television, direct mail, and more, to drive traffic to its stores
The industry-wide pressure on department stores is being felt at
Macy's, too. Revenue fell 5% to $25.8 billion - the second
consecutive year of reduced sales.
In fiscal 2015, revenue fell 4%, or around $1.1 billion, on
prior year to $27.1 billion. Weaker comparable sales in watches,
cold weather items, and housewares and tabletop were the main
culprits. Lower tourist spending in New York City, Las Vegas, San
Francisco, and Chicago also impacted the top line. The company also
experienced a bad Christmas period, with November and December
sales down 4.7%; the company blames unseasonably mild weather for
impacting sales of coats, sweaters and gloves.
Net income at Macy's tends to track revenue, and consequently in
FY2015 it fell 30% to $1 billion. Cash from operations was down 27%
to $2 billion due to an increase in accounts payable and accrued
Macy's is suffering from a triple-header of sluggish mall
traffic, increasing competition from other department stores and
discount retailers, and the negative impact of the strong US Dollar
on tourists. After a poor 2015 Christmas period, the company
announced it would be re-examining its real estate footprint and
shutting down 100 underperforming stores, to the cost of 4,000
sales associate and back-end jobs, in attempt to solidify its
The company is battling discounters by experimenting with an
off-price store format, Macy's Backstage, and it opened six pilot
stores in 2015 in the New York metropolitan area. Averaging around
30,000 sq. ft., Macy's Backstage stocks women's, men's and
children's apparel, shoes, fashion accessories, housewares, home
textiles, intimate apparel, and jewelry.
The company is also investing in its omnichannel strategy for
Macy's and Bloomingdales's, and began selling in China in Q4 2015
via a joint venture with Fung Retailing (Macy's has a 65% stake).
It operates an online store on Alibaba.
Macy's is also expanding in the Middle East. It opened a
Bloomingdale's in Kuwait in 2017, and has plans to open Macy's and
Bloomingdale's stores in the UAE in 2018.
Mergers and Acquisitions
In fiscal 2015 Macy's acquired luxury beauty products and spa
services retailer Bluemercury, Inc. for about $210 million.
Bluemercury was the company's first acquisition in 10 years. At the
point of completion, Bluemercury has 62 stores in 18 states,
typically in prime street-level locations and urban lifestyle
centers, as well as an online business. Macy's aims to expand
Bluemercury's store count to 115 by the end of 2017.