Macy's, Inc.

Macy's, Inc.
Public
Traded as
Industry Retail
Founded
1929, Columbus, Ohio (Federated Department Stores, Inc.)
Headquarters Cincinnati, Ohio, U.S.
Number of locations
 888 (3Q 2016)[1]
Area served
 Nationwide
Key people
 Terry J. Lundgren
(Executive Chairman)
Jeff Gennette
(President and CEO)
Products
  • Clothing
  • footwear
  • accessories
  • bedding
  • furniture
  • jewelry
  • beauty products
  • housewares
Revenue
  • Decrease US$ 27.079 billion (2015)[2]
  • Decrease US$ 25.778 billion (2016)[2]
  • Decrease US$ 2.039 billion (2015)[2]
  • Decrease US$ 1.315 billion (2016)[2]
  • Decrease US$ 1.072 billion (2015)[2]
  • Decrease US$ 619 million (2016)[2]
Total assets
  • Decrease US$ 20.576 billion (2015)[2]
  • Decrease US$ 19.851 billion (2016)[2]
Total equity
  • Decrease US$ 4.25 billion (2015)[2]
  • Increase US$ 4.323 billion (2016)[2]
Number of employees
 157,900 (2016)[3]
Subsidiaries Macy's
Bloomingdale's
Bluemercury
Website macysinc.com

Macy's, Inc., originally Federated Department Stores, Inc., is an American holding company headquartered in Cincinnati, Ohio. It is the owner of department store chains Macy's and Bloomingdale's, which specialize in the sales of clothing, footwear, accessories, bedding, furniture, jewelry, beauty products, and housewares; and Bluemercury, a chain of luxury beauty products stores and spas. As of 2016, the company operated approximately 888 stores in the United States, Guam, and Puerto Rico.[1] Its namesake locations and related operations account for 90% of its revenue.

According to Deloitte, Macy's, Inc. is the world's largest fashion goods retailer and the 36th largest retailer overall, based on the company's reported 2010 retail sales revenue of $25 billion (equivalent to $27.5 billion in 2017).[4]

History

Early history

Federated Department Stores was founded in Columbus, Ohio on November 25, 1929 as a department store holding company for Abraham & Straus, F&R Lazarus & Company (including its Cincinnati division, then known as Shillito's) and William Filene's Sons of Boston, with Bloomingdale Brothers of New York joining the next year. Founded by Xavier Warren, Federated was the successor to the Lazarus operation begun in Columbus in 1851. In the mid-1930s, a modern merchandising standard was set when Fred Lazarus, Jr. arranged garments in groups of a single size with a range of style, color and price in that size, basing the technique upon observations made in Paris. Lazarus convinced President Franklin D. Roosevelt that changing the Thanksgiving holiday from the last Thursday of November to the fourth Thursday, thus extending the Christmas shopping season, would benefit the nation's business. An act of Congress perpetuated the arrangement in 1941. After this date Black Friday became a nationwide sensation and the most profitable day for Federated. Various Lazarus family members also held key positions on Federated's board and within its various divisions—namely, Foley's, Filene's, Lazarus and Shillito's. Robert Lazarus Jr. was the only remaining family member with an official role at Federated until his death in 2013, serving as assistant to Ron Klein, then chairman and CEO of the Rich's/Lazarus/Goldsmith's operating unit. Federated's corporate offices were relocated to Cincinnati in 1945.

The later half of the 20th century saw the company expand nationwide, adding Rike Kumler of Dayton, Ohio (merged into Shillito's in the 1980s to become Shillito-Rike's); Burdines of Miami, Florida; Rich's of Atlanta, Georgia; Foley's of Houston, Texas; Sanger Brothers and A. Harris, both of Dallas, Texas (which was merged with Sanger Brothers to form Sanger-Harris); Boston Store of Milwaukee, Wisconsin; MainStreet of Chicago, Illinois; Bullock's, of Los Angeles; I. Magnin, of San Francisco, California; Gold Circle; and Richway Discount Department Stores of Worthington, Ohio. In 1982, Federated acquired the Twin Fair, Inc. discount store chain based in Buffalo, New York and merged it with Gold Circle.[5] In 1983, it sold most of its infrastructure to JMB Realty.

Former F&R Lazarus & Company flagship store in Downtown Columbus; Original headquarters of Federated/Macy's, Inc.

To support its huge retail operations, Federated centralized its back-office functions into several large divisions, covering financial services, marketing, merchandising, logistics, and data processing systems. Other retailers' branded credit cards are usually issued and serviced by a third-party bank. Federated was so huge that it ran its own private bank, FDS Bank, which for many years issued and maintained the majority of its own consumer credit card portfolio, with a portion at one time owned by General Electric Credit Corporation, an arrangement inherited from when R.H. Macy & Company sold their credit portfolio in an attempt to prevent filing for bankruptcy. In 2005 Federated finalized an arrangement with Citigroup to sell its consumer credit portfolio, reissuing its cards under the Federated-CitiGroup Alliance name Department Stores National Bank (DSNB) and allowing Federated to continue servicing the credit accounts from its Financial, Administrative and Credit Services Group (Macy's Credit and Customer Services)

In 1990, Federated, under the control of Robert Campeau, went bankrupt after its hostile takeover of Allied Stores; it emerged from bankruptcy after the ouster of Campeau in 1992 as a new public company. Federated then took over Macy's in 1994 while that company was still emerging from its own bankruptcy in 1992. Federated entered e-commerce late, in 1998. FDS Bank was one of the last credit card banks to begin to allow its cardholders to access account information online (around 2004). The department store chain Stern's, a division of Federated, ceased operations in 2001 and most of its stores became Macy's stores. In 2003, Federated changed the nameplates of all their non-Macy's stores, except Bloomingdale's, to include the Macy's name. The rebranding process was referred internally to as Project Hyphen. Under the plan, Seattle-based The Bon Marché became Bon-Macy's; Goldsmith's in Tennessee became Goldsmith's-Macy's; Lazarus, Burdines, and Rich's also added "-Macy's" to their name. A year later, the original hyphenated names were dropped in favor of just Macy's, a rebranding process referred internally to as Project Star.

Federated settled an SEC investigation for $14.46 million (equivalent to $21.2 million in 2017) in 1998 due to unethical debt-collection practices. Federated routinely forced credit card holders/debtors to sign an agreement that legally bound them to repay their outstanding balances instead of having the unsecured debt discharge via the filing of bankruptcy. Federated failed to file reaffirmation agreements with bankruptcy courts. As a result, the changes in the agreements were not legally binding.[6][7][8]

May Department Stores acquisition

The former Federated Department Stores logo, in use until 2007.

On July 18, 2005, Federated Department Stores announced that it would acquire May Department Stores company for $11 billion (equivalent to $13.5 billion in 2017) in cash and stock. Also part of the buyout was the bridal and formal unit of May, consisting of David's Bridal and After Hours Formalwear. Federated would also assume $6 billion (equivalent to $7.36 billion in 2017) of May's debt, bringing total consideration to $17 billion (equivalent to $20.8 billion in 2017). The deal would create the nation's largest department store chain with over 1,000 stores and $30 billion (equivalent to $36.8 billion in 2017) in annual sales. To help finance the deal, Federated agreed to sell its combined proprietary credit card business (but still administered by FACS Group, a subsidiary of Federated) to Citigroup. The merger was completed on August 30, 2005, after an assurance agreement was reached with the Attorneys General of New York, California, Massachusetts, Maryland and Pennsylvania, as a result of the merger Federated also in the process reacquired two of their former department store chains Foley's & Filene's (Which Federated originally sold to May Company.) putting them back under the Federated Department Stores corporate umbrella for the first time since 1988.

Federated announced plans to sell 80 store locations in 2006, having pledged in its settlement to sell most of them as viable businesses, with preference being given to a group of thirteen competitors. This number could fluctuate pursuant to Federated's negotiations with various mall landlords and its final decision regarding using former Macy locations for its luxury Bloomingdale's operation.

On January 12, 2006, Federated announced its plans to divest May Company's Lord & Taylor division (48 stores in 12 states) by the end of 2006 after utilizing prime and conflicting real estate by closing and converting several locations. On June 22, 2006, Macy's announced that NRDC Equity Partners, LLC would purchase Lord & Taylor for US$1.2 billion (equivalent to $1.43 billion in 2017), and completed the sale in October 2006.

On September 9, 2006, the former May Company store names Famous-Barr, Filene's, Foley's, Kaufmann's, Hecht's, The Jones Store, L. S. Ayres, Marshall Field's, Meier & Frank, Robinsons-May, and Strawbridge's disappeared as Federated switched most of them to the Macy's masthead and a few to the Bloomingdale's name. The conversion of Marshall Field's in Chicago was particularly criticized, with many customers boycotting its historic State Street flagship store. The Chicago Tribune continues to report on the poor reception of Macy's in Chicago. Pittsburgh customers strongly resisted the change from Kaufmann's mostly due to the local parade that the store had run for years.

One of the consequences of this rebranding is that several malls have two Macy's stores. In downtown Boston, Federated liquidated an acquired Filene's because it already had a Macy's (formerly a Jordan Marsh) across the street. The two stores have a combined floorspace of more than 1,400,000 square feet (130,000 m2), more than two-thirds the size of Macy's New York City flagship store.

On November 17, 2006, the bridal and formal unit was sold. David's Bridal and Priscilla of Boston were sold to Leonard Green & Partners. After Hours Formalwear was sold to Men's Wearhouse.[9]

Operations as Macy's, Inc.

On February 27, 2007, Federated announced that its board of directors would ask shareholders to change the company's name to Macy's Group, Inc. By March 28, the company revised its plans for the new name, opting to eventually become Macy's, Inc. Federated shareholders approved the revised proposal during the company's annual meeting on May 18, 2007.[10] The company was previously known as Federated Retail Holdings, Inc.

The name took effect on June 1, 2007. Reasoning for the proposed name change, according to Terry Lundgren, Federated's chairman, president and chief executive officer — hinges on the large-scale conversions throughout the company toward the Macy's nameplate. "Today, we are a brand-driven company focused on Macy's and Bloomingdale's, not a federation of department stores," Lundgren said in the company's press release heralding the proposed name.[11] Upon the change to Macy's Inc., Federated's stock ticker symbol on the New York Stock Exchange changed from "FD" to "M", making the new Macy's Inc. one of a handful of single-letter ticker symbol companies.[12]

In April, 2008, Moody's Investors Service said that it may downgrade Macy's Inc. bonds to just above junk status.[13] That same month, Fitch Ratings downgraded their ratings to BBB- from BBB, noting a deterioration in the company's operating and credit metrics. A rating of BBB- is one notch above junk status.

The domain macysinc.com attracted at least 3 million visitors annually by 2008 according to a Compete.com survey.[14]

On Wednesday, February 6, 2008, Terry Lundgren announced the localization strategy and the company's plan to shed 2,550 jobs. This new localization strategy is known as "My Macy's."

Employees of the Macy's North headquarters office in Minneapolis, the Macy's Northwest headquarters office in Seattle, and the Macy's Midwest headquarters office in St. Louis were given pink slips, as Macy's pared its seven regional centers to four. About 40 new jobs were to be created in May as part of the restructuring. By 2009, the company expected to save $100 million (equivalent to $112 million in 2017) a year from the cuts.

On February 2, 2009 Macy's announced the elimination of 7,000 jobs, or 4% of its work force, and slashed its dividend as it looked to lower expenses as part of major restructuring. Cincinnati-based Macy's Inc. said the work force reduction includes positions in offices, stores and other locations. The cuts will include some unfilled jobs. "Reducing our workforce is an unfortunate outcome of the current economic environment, and I am frustrated that so many of our people will be unable to move forward with us as we proceed into a very exciting future for Macy’s and Bloomingdale's" said Terry J. Lundgren, chairman, president and chief executive officer. "

Macy's also got rid of its division structure and integrated its functions into one organization. Macy's central buying, merchandise planning, stores senior management and marketing functions merged to its New York City corporate office (formerly Macy's East). Corporate-related business functions, such as finance and human resources, will be primarily in Cincinnati. To buy with local consumers in mind, Macy's developed a concept called "My Macy's", in which the buyers and planners all look at what the local consumer base is looking for in their local Macy's store. This will help bring a better sense of branding, sizing, and marketing to each Macy's store nationwide.

Macy's Inc. decided to close the Bloomingdale's at the Mall of America in Minnesota. Since 1994, Bloomingdale's had been one of the 4 anchor stores of the mall, and will be replaced with a $30 million renovation with four new foreign clothing stores.

On October 14, 2013, Macy's Inc. announced the decision to open most of their stores for the first time on Thanksgiving Day 2013, breaking a long-standing tradition of 155 years, and joined the ranks of retailers who created Gray Thursday the year before. Its doors opened at 8 p.m. (local time) on the holiday evening, and remained open for 24 hours straight until the close of business on Friday, which is usually about 10 p.m.[15]

As of February 2014, Macy's Inc. is valued at USD $28 billion.[16]

In September 2015 Macy's announced it would close 40 stores, 5% of its total stores in early 2016. It also announced plans to open 6 additional Macy's Backstage locations. From 2010-2015 Macy's had closed 52 stores and opened 12.[17]

Nameplates

Name Established Defunct Operated by Macy's, Inc. Other names Notes
Current
Bloomingdale's 1860 N/A 1994–present
Bluemercury 1999 N/A 2015–present
Macy's 1858 N/A 1994–present
Former
Abraham & Straus 1865 1995 1929–1995 Folded into Macy's
Bamberger's 1893 1986 1929-1986 Folded into Macy's
The Bon Marché 1890 2005 1992–2005 The Bon Macy's (2003–2005) Folded into Bloomingdale's and Macy's
Bullock's 1901 1996 1995–1996 Folded into Macy's
Burdines 1896 2005 1956–2005 Burdines–Macy's (2003–2005) Folded into Macy's
Dayton's 1902 2001 2006 Folded into Marshall Field's
Famous-Barr 1911 2006 2005–2006 Folded into Macy's
Filene's 1881 2006 1929–1988, 2005–2006 Folded into Macy's
Foley's 1900 2006 1947–1988, 2005–2006 Folded into Macy's
Goldsmith's 1870 2005 1959–2005 Goldsmith's–Macy's (2003–2005) Folded into Macy's
Hecht's 1857 2006 2005–2006 Folded into Bloomingdale's and Macy's
Hudson's 1881 2001 2006 Folded into Marshall Field's
The Jones Store 1887 2006 2005–2006 Folded into Macy's
Jordan Marsh 1841 1996 1988–1996 Folded into Macy's
Kaufmann's 1871 2006 2005–2006 Folded into Macy's
Lazarus 1851 2005 1929–2005 Lazarus–Macy's (2003–2005) Folded into Macy's
Lord & Taylor 1826 N/A 2005–2006
Marshall Field's 1852 2006 2005–2006 Folded into Bloomingdale's and Macy's
Meier & Frank 1852 2006 2005–2006 Folded into Macy's
L. S. Ayres 1872 2006 2005–2006 Folded into Macy's
Rich's 1867 2005 1976–2005 Rich's–Macy's (2003–2005) Folded into Bloomingdale's and Macy's
Robinsons–May 1993 2006 2005–2006 Folded into Bloomingdale's and Macy's
Strawbridge's 1868 2006 2005–2006 Folded into Macy's
Strawbridge & Clothier 1868 1995 2006 Folded into Macy's
Stern's 1867 2001 1988–2001 Folded into Bloomingdale's and Macy's
Wanamaker's 1876 1995 2006 Hecht's (1995-1997) Folded into Strawbridge & Clothier

References

  1. 1 2 "2016 Store Count and Square Footage". Macy's, Inc.
  2. 1 2 3 4 5 6 7 8 9 10 "Macy's, Inc. 2013 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. April 2, 2014.
  3. ↑ "2011 Form 10-K, Macy's, Inc.". United States Securities and Exchange Commission.
  4. ↑ Deloitte, Switching Channels: Global Powers of Retailing 2012, January 2012, at pp. G11 and G27.
  5. ↑ "Federated to Buy Twin Fair Stores," The New York Times, Mar 27, 1982 (accessed Aug 26, 2008).
  6. ↑ "Federated Settles for Millions," BCD News and Comment. Vol. 32:1. 3 March 1998.
  7. ↑ "Federated Department Store Settles FTC Action for 8 Million," Consumer Financial Services Law Report. Vol. 3:1. 11 June 1999.
  8. ↑ "FTC and Federated Settle Reaffirmation Claims," Consumer Bankruptcy News, Vol. 8:19. 17 June 1999.
  9. ↑ Federated Agrees to Sell Bridal Group, Federated Department Stores, Inc., November 17, 2006.
  10. ↑ http://biz.yahoo.com/ap/070518/federated_macy_s.html?.v=1
  11. ↑ Federated Plans Corporate Name Change, Federated Department Stores, February 27, 2007.
  12. ↑ Federated Plans 'M' Stock Ticker, AP, March 28, 2007.
  13. ↑ Witkowski, Wallace. "Moody's may downgrade Macy's on weak credit". MarketWatch. Retrieved 2015-05-24.
  14. ↑ "macysinc.com UVs for April 2015". siteanalytics.compete.com. Retrieved 2015-05-24.
  15. ↑ Malcolm, Hadley (October 14, 2013). "Most Macy's stores will open at 8 p.m. on Thanksgiving". USA Today. Retrieved 15 October 2013.
  16. ↑ Moin, David (26 February 2014). "Macy's Sets Strategy to Keep Momentum". WWD. Retrieved 26 February 2014.
  17. ↑ CNN money article on Macy's closures
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