America's largest fashion retailer and department store, Macy's, Inc. operates some 840 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 more than $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 about 675 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 nearly 40% of group revenue, followed by Women's Apparel at about 25%; Men's and Children's also brings in almost 25%; and Home/Miscellaneous with more than 15%.
Macy's also operates a bank subsidiary, FDS Bank, which provides credit processing, certain collections, customer service and credit marketing services.
Macy's flagship stores including Herald Square in New York City, Union Square in San Francisco, State Street in Chicago, Dadeland in Miami, and South Coast Plaza in southern California.
The company also operates in China, United Arab Emirates, and Kuwait through joint venture and licensing agreements. Macy's Northeast region of the US accounts for 30% of the stores, followed by South (more than 20%), North Central (more than 15%), Northwest (more than 15%), and Southwest accounting the rest.
Sales and Marketing
Macy's spends heavily across multiple media, including print, television, direct mail, and more, to drive traffic to its stores and websites. The company spent $1.1 billion on advertising and promotion in fiscal 2016.
The industry-wide pressure on department stores is being felt at Macy’s, too. Revenue has been falling year-over-year.
Macy's revenue for 2016 decreased $1.3 billion or 4.8% compared to 2015. The company experienced an overall weakness in sales, but geographically sales in 2016 were strongest in the Southwest, particularly southern California. Digital sales continued to be strong in 2016 and experienced double digit growth.
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. The company is battling discounters by experimenting with an off-price store format, Macy's Backstage. 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 Bloomingdale's and began selling in China in 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.
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