MACY'S INC. - Strategic Analysis Group 5: Jason daron, Molly lesher, Jacob munden, Joel Mutamba, Park Ticer, Kristine Torres, and Bonnie Zahne

Introduction

  • Macy's Inc. continues a 150 year-long tradition of providing quality retail goods to U.S. consumers
  • Macy's is known for leading the U.S. retail industry through its extensive store presence and community engagement
  • Macy's profitability has dropped in recent years in a retail marketplace that is progressively moving online
  • To increase net income and effectively compete, Macy's must cut store costs and partner with a dominant online retail enterprise

Vision

We seek to be a leading retailer of American fashion and lifestyle goods that provides the most valuable shopping experience to be found both online and in-store.

Mission

  • Our mission is to provide women, men, and children with exceptional quality in their lifestyle choices regarding apparel and accessories, cosmetics, home furnishings, and related products...
  • To do so, we strive to lead the retail industry by offering the highest value in lifestyle goods in our U.S. locations and global online store to middle and upper-income groups, matching quality with affordable pricing...
  • Macy’s provides a nurturing and transparent environment to our employees and, in turn, our customers. We are devoted to serving our customers and shareholders through social, fiscal, and environmental accountability...
  • By updating our shopping model with the newest technological capabilities and directing resources to where customer’s needs are best met, we will profitably grow both our U.S. and international presence through our online platform.

IFE Matrix

IFE Strengths
IFE Weaknesses Pt. 1
IFE Weaknesses Pt. 2

EFE Matrix

EFE Opportunities
EFE Threats

SWOT Matrix

SWOT (TOWS) Analysis

Proposed Strategy

RETRENCHMENT: selling off lowest-performing stores at Macy's current rate of closings (13%)

ACQUISITION: propose buy-out to Alibaba.com at $12 billion (25% markup over market cap)

Projected Cost

  • Total store closing cost over 5 years is 1.8B
  • Revenue growth year over year is 8%
  • Projected increase in COGS with new infrastructure is conservatively estimated at 10% year over year

Projected Financials

Projected Balance Statement
Projected Income Statement
Projected Ratios

Strategic Backing

  • Macy's is seeing losses in traditional retail outlets
  • High current debt levels vs. low cash influx
  • Macy’s does not have the liquid capital to embark on new strategies on their own
  • Operating margin is slowly declining, increasing difficulty to turn a profit

Future earnings increase drastically by selling outlets and boosting online sales with Alibaba.com

Net income increases at an even higher rate due to the small amount of additional overhead in online retailing

Conclusion

To compete in the current retail landscape, Macy's must make strides online and should partner with a dominant online retailer (Alibaba.com)

To increase profits and lower debt, Macy's must streamline operations through retrenchment (selling off outlets)

Credits:

Created with images by JeepersMedia - "Macy's" • Rubenstein - "Macy's" • JeepersMedia - "Macy's" • Joyce Andes - "Freedom" • digitizedchaos - "Macy's" • Photographing Travis - "Macy's" • Maxime Auger - "Macy's Street Model" • Anthony Quintano - "The 87th Annual Macy's Thanksgiving Day Parade" • edar - "aircraft map of the world earth"

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