Case Study: Macy's Corporation Group #9

Introduction

  • Began in 1858
  • World famous retail company
  • American Icon

Strategy

  1. Retrenchment
  2. Brand Image
  3. Experience
  4. Omnichannel
  5. Blue Mercury

Vision Statement

Previous Statement

  • Focused on answering the question "What are we?" instead of "What do we want to become?"

New Statement

Macy's vision is to be the major premium department store; offering an unmatched customer experience through personalization, omnichannel retailing, and department store redesign and expansion

Mission Statement

Previous Statement

  • Non-existent

New Statement

  • Improving customer experience
  • Hiring the right people
  • Implementing technology
  • Maintaining quality brand image

Internal Assessment

Strengths

  • Omnichannel same day delivery in 17 markets
  • 870 mortgage free stores in 45 states
  • Macy's Magic Selling Program

Weaknesses

  • Consumer Experience decreased 3.7%
  • Decreased in foot traffic
  • Decrease of $1.04 in base EPS

External Assessment

Opportunities

  • Ecommerce increased by 17.2%
  • Popularity of mobile payments
  • 3.1% increase of middle class population until 2019

Threats

  • Competitive Pressures
  • Potential Hostile Takeover
  • Lower level of trust in Macy's brand

SWOT

S.O. Strategies

  • Market penetration
  • Selling retail property for investment
  • Brand directed toward middle class

S.T. Strategies

  • Revive Macy's Magic program
  • Regain employees trust
  • Use of real estate to prevent hostile takeover

W.O. Strategies

  • Combat decreasing sales from lower foot traffic
  • Reduce short term debt through retrenchment
  • Improve customer experience

W.T. Strategies

  • Buyback stocks to improve EPS
  • Decrease employee turnover
  • Offer higher sales in closing stores

Strategies

1. Retrenchment

2. High End Brand

3. Store Experience

4. Omnichannel

5. Blue Mercury

Financial Analysis

Projected Cost of Retrenchment, Expansion of Bluemercury and Omnichannel, and Restructure

Projected Costs and Cash Inflows/Savings For Retrenchment

Debt to Equity Funding

Pro-forma Statements

Historical Income Statement

Projected Income Statement ( $ in Millions )

  • Sales increase averaging 2.5%
  • Plan to decrease operating expenses to 29% of Sales
  • EBIT expanded to 10% of sales vs. 7% in 2016 & 2017
  • Sales in 2016 and 2017 were $27, 079 and $26,781 respectively

Projected Balance Sheet ( $ in Millions)

Consolidated Statement of Cash Flows ($ in Millions)

  • Net Increase in Cash Flow Vs. Net Decrease in cash flow of -$1,137 in 2016 and -$43 in 2015.
  • Increased depreciation is a factor and increase in net income.

Projected Financial Ratios

Credits:

Created with images by JeepersMedia - "Macy's" • PublicDomainPictures - "abstract architecture background" • MabelAmber - "glasses spectacles eye wear" • 089photoshootings - "men employees suit" • stevepb - "calculator calculation insurance" • djgr - "sydney city looking south..." • edar - "business smartphone communication" • kevin dooley - "Business." • jfjwak - "Macy`s"

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