|Type||Public (NYSE: M)|
|Founded||Columbus, Ohio (1929 as Federated Department Stores inc.)|
|Headquarters||Cincinnati, Ohio, USA
and New York City, New York, USA
|Key people||Terry J. Lundgren (Chairman, CEO)
|Revenue||▲ US$24.9 Billion (FY 2009)|
|Operating income||▼ US$-4.16 Billion (FY 2009)|
|Net income||▼ US$-4.80 Billion (FY 2009)|
|Total assets||▼ US$22.1 Billion (FY 2009) |
|Total equity||▼ US$4.65 Billion (FY 2009)|
Macy's, Inc. (NYSE: M) is a department store holding company and owner of Macy's and Bloomingdale's department stores. Macy's Inc.'s stores specialize mostly in retail clothing, jewelry, watches, dinnerware, and furniture.
Macy's Inc. is headquartered in Cincinnati, Ohio and operates just over 850 stores in the United States. The company's Macy's locations and related operations account for 90 percent of the company's revenue, while luxury-oriented Bloomingdale's stores and associated ventures represent the balance of the company's business. Macy's is well known for its flagship department stores, most notably in New York, San Francisco, Los Angeles, Boston, the former Dayton's in Minneapolis, the former Kaufmann's in Pittsburgh, and the former Marshall Field's location in Chicago.
Macy's Inc. was founded as Federated Department Stores in 1929 in Columbus, Ohio. Federated was originally a department store holding company for Abraham & Straus, F&R Lazarus & Company (including its Cincinnati division, then known as The John Shillito Company) and William Filene's Sons of Boston. Bloomingdale Brothers joined the organization in 1930. Federated moved its corporate offices to Cincinnati, Ohio, in 1945.
Over the next few decades, Federated expanded 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.
Federated was the successor to the Lazarus operation begun in Columbus, Ohio, in 1851. Lazarus family members served in prominent positions within Federated through the 1980s. In the mid-1930s, a modern merchandising standard was set when Fred Lazarus (son of Simon) arranged garments in groups of a single size with a range of style, color and price in that size, rather than the other way around. Lazarus based this technique upon observations made in Paris. Fred Lazarus Jr. also convinced President Franklin D. Roosevelt that changing the Thanksgiving holiday from the last Thursday of November to the fourth Thursday, extending the Christmas shopping season, would be good for the nation's business. A 1941 Act of Congress perpetuated the arrangement. 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. As of January, 2002, Robert Lazarus Jr. was the only family member still with an official role at Federated, serving as assistant to Ron Klein, then chairman and CEO of the Rich's/Lazarus/Goldsmith's operating unit of Federated, now Macy's South.
In 1983 it sold most of its buildings to JMB Realty.
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 -- now 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 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 Marche 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 in 1998 due to unethical debt-collection practices. Federated forced debtors to sign an agreement that legally bound them to repay their outstanding balances instead of having the debt discharge via bankruptcy. Federated failed to file reaffirmation agreements with bankruptcy courts. As a result, the changes in the agreements were not legally binding.
On July 18, 2005, Federated Department Stores announced that they would acquire May Department Stores company for $11 billion 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 of May's debt, bringing total consideration to $17 billion. The deal would create the nation's largest department store chain with over 1,000 stores and $30 billion in annual sales. To help finance the deal, Federated agreed to sell its combined proprietary credit card business (but still administrated 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 State Attorneys General of New York, California, Massachusetts, Maryland and Pennsylvania.
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 May locations for its luxury Bloomingdale's operation.
On January 12, 2006, Federated announced its plans to divest May Company's Lord & Taylor division (55 stores in 12 states) by the end of 2006 after concluding that chain did not fit with their strategic focus for building the Macy's and Bloomingdale's national brands. On June 22, 2006, Macy's announced that NRDC Equity Partners, LLC would purchase Lord & Taylor for US$1.2 billion, and completed the sale in October 2006.
On September 9, 2006, May Company division stores Famous-Barr, Filene's, Foley's (the prior two are former Federated stores in their own right), Hecht's, The Jones Store, L. S. Ayres, Marshall Field's, Meier & Frank, Robinsons-May, and Strawbridge's brands ceased to exist as Federated replaced most of them with the Macy's masthead, and a select few converting to the Bloomingdale's brand. The conversion of Marshall Field's in Chicago has been particularly criticized, with many customers boycotting the State Street store and staying away from the emporium in droves. The Chicago Tribune continues to report on the poor reception of Macy's in Chicago. Kaufmann's in Pittsburgh also had a dislike to the change most due to the concern of the local parade run by the store. Other stores like Famous-Barr in St. Louis also disliked the change, but not nearly as much as Marshall Field's.
One of the consequences of this rebranding is that over 80 U.S. malls now have two Macy's department 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 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.
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. 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.
In April, 2008, Moody's Investors Service says it may downgrade Macy's Inc. bonds to just above junk status. 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.
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. Buyers, accountants and senior executives lost their jobs. About 40 new jobs will be created in May as part of the restructuring.
By 2009, the company expects to save $100 million a year from the cuts.
On February 2, 2009 Macy's said it will cut 7,000 jobs, or 4 percent of its work force, and slash its dividend as it looks to lower expenses. 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 will also begin getting rid of its division structure and integrating its functions into one organization, effective immediately. Macy's central buying, merchandise planning, stores senior management and marketing functions will be located primarily in New York. 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.