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Stock Market Report
A Stock Market Report that reveals various areas of the publically traded company Macy’s. Student will share research and report on topics such as Company Background, Product Line, Competition, Diversity Management, etc. throughout this report.
Stock Market Report
Name of Company: Macy’s Inc.
Ticker Symbol: M
Security Market: NYSE
R.H. Macy’s & Co., today known as Macy’s Inc. was founded by Rowland Hussey Macy, business man who owned four retail stores previously. In 1858, in New York City on Sixth Avenue-between thirteenth and fourteenth Streets the first R.H. Macy’s & Co store opened. In 1875 Macy, took on two partners on his business venture Robert M. Valentine and Abiel La Forge. R.H. Macy’s & Co started as a small dry goods store , with its expansions now carrying a variety of products including clothing, footwear, accessories, bedding, furniture, jewelry, beauty products, and house wares it has become the nation’s largest retailer. Through marketing and advertising they ensured the expansion success of the business. “In 2014 Macy’s totaled seven-hundred and ninety-three total locations across the nation” (Macys Inc. 2012). The company’s headquarters is located in Cincinnati, Ohio, accompanied by a well-known flagship store in Herald Square located in Midtown Manhattan in New York City. “Macy’s pioneered such revolutionary business practices such as the one-price system, in which the same item was sold to every customer at one price, and quoting specific prices for goods in newspaper advertising”(Macy’s Inc). After many acquisitions over the years that have both contracted and expanded the company. Macy's Inc is divided into mid-tier Macy's and Bloomingdale's, an upper-tier store that sells more exclusive items. Currently in 2014, the CEO of Macy’s is Terry J. Lundgren . Macy's has not only liberated business practices to suit their consumers, but they also provide the diversity of its merchandise to their customers.
Macy’s Inc. is a global department retailer with stores across the nation carrying a variety of private brands and third party goods , including men's, women's and children's apparel and accessories, cosmetics, home furnishings and other consumer goods. “Macy’s offers powerful assortments and the best brands, tailored to each and every customer with obvious value, engaging service and unforgettable moments, creating a product mix that cannot be competed with”( Sluzewsk, 2012).
In the household department, various private brands such as can be found Dyson, Kitchen Aid, and Cuinstart. Macy’s also carries private brands such as Calvin Klein, Tommy Hilfiger, Charter Club, and Ralph Lauren in all apparel departments including Men’s, Women’s, and Children’s. Consumers can shop at Macy’s and purchase a Kitchen Aid Blender, Clinique foundation, and Jessica Simpson heels in the same store. Macy’s has the largest selection of private brands and exclusive lines, Macy’s also relies on big-name designers to get shoppers in the door. “Such brands allow retailers to eliminate middlemen and capture more earnings. Exclusive partnerships, such as Macy's with Madonna and J.C. Penney Co.'s with Liz Claiborne, are also on the rise” (Miller).
Macy’s Inc mission statement is "Our goal is to be a retailer with the ability to see opportunity on the horizon and have a clear path for capitalizing on it. To do so, we are moving faster than ever before, employing more technology and concentrating our resources on those elements most important to our core customers." (Alchin 2012). Most recently Macy’s has been implementing the M.O.M and Omni-Channel strategies to focus on capitalization of customer interaction to produce customer awareness. M.O.M strategy includes My Macy’sis our formula for localization – in merchandising, in marketing and in the shopping experience. The Omni-Channel Strategy also known as the Macy’s App “ uses technology and mobile devices allows customers to browse online, then come to Macy’s to lie on the mattress or try on the shoes before buying them in the store” (Sluzewsk).
Macy’s operates in the retail markets of United States which is a highly competitive in environment with an immense selection of market players offering a wide range of products. The company faces certain level of external threats in its competitive market of monopolistic competition exists. In monopolistic competition market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors. Macy’s Inc. largest competitors are Dillard’s Inc, J.C. Penny Corporation Inc. , and Saks Incorporated (Yahoo Finance). All three of Macy’s top competitors create this monopolistic environment by selling differentiated products, in their stores such as private-brand labeled goods.
My Macy’s localization, Omni channel Strategy, and MAGIC Selling are what make Macys Inc products different from their competitors. The company implements all three of these strategies to set itself apart from competitors by providing a world class customer service with MAGIC Selling. The Omni channel creates personalized experience by recognizing and fostering brand advocacy while driving repeat purchases. Lastly, with My Macys localization, Macy’s Inc. is able to locate to fit each customer’s specific merchandise need. With diversity of its merchandise ensured at low prices, the three strategies stated above, it assists the company in defining its niche in retail markets.
Macy’s participates in the retail industry of department stores .The Retail Department Stores industry consists of companies engaged in the operation of department store chains including auxiliary Internet and mail order facilities; the industry is limited to department store retailers offering a diversified product line (Miller). “The Department Store Industry collected about two hundred-billion in revenue dollars, with an annual profit growth of 0.3% in 2013” (IBIS World). Of the two hundred million in revenue collected by this industry, 9.35 billion belong to Macy’s Inc. “Macy's is the largest U.S.department storecompany by retail sales and is the sixteenth-largest retailer in theUnited Statesin 2013 in terms of revenue” (Hoovers). Products are sold throughout stores nationwide in the domestic market as well. Products are also sold in the global and international market through Macys Inc. Macys.com. Macy’s markets its products in over one-hundred countries including Australia, Canada, the United Kingdom, Antigua and Barbuda, Argentina, Austria, Bahrain, Bangladesh, Barbados etc. “International shipping will enable Macy’s to build upon its existing customer base beyond the United States by exposing our product offerings abroad”(Alchin).
Ethical and Social Responsibility
Macy’s Inc has an ethic code that is both integrity and compliance based. The ethic code can be found on an internet website named eMag for Macy’s. The company does not have an ethics officer but if a problem occurs an HR Manager must be contacted.
Macy’s Inc participates in many philanthropic pursuits whether it’s done internally with the help of employee engagement or externally through customer engagement. Internally, Macy’s Inc partnered with United Way fund to allow employees to contribute a portion of their paycheck weekly. “More than 700 United Way chapters across the United States received contributions totaling more than $10.9 million from Macy’s, Inc. associates during 2013” (Sluzewsk).Another philanthropic pursuit carried out by Macys Inc. includes there Macy’s ‘Thanks For Sharing Program’ a holiday gift rewards program allowing customers to give back to charities while spending money in the store. “Macy’s contributed $14.7 million to charities such as ‘Go Red for Women,’ ‘Make-A-Wish Foundation in 2013” (Sluzewsk).
Macy’s Inc is always involved in community relations with neighboring communities. In a recent campaign “Great Give Back” each Macy’s location nationwide was given a local park which they had to raise money for. At Macy’s Tyson’s Corner in Virginia customers were encouraged to donate funds to support the Wolf Trap National Park Performing Arts in Vienna, Virginia.
Macy’s Inc does meet its corporate responsibilities by hiring minority workers. “Racial minorities represent more than 52 percent of our associate team and more than 39 percent
of our management team” (Macy’s). Macy’s Inc ensures that diverse perspectives are vital to their company promoting diversity greatly from the individual strengths of each associate.
Macy’s purchases its products through a third party company which legally requires them to offer safe products. Macy’s private brand merchandise allow unannounced factory inspections for contractual compliance, as well as for compliance with laws and regulations dealing with child or forced labor, wages and hours, and unsafe working conditions (Macy’s). The company does provide safe working conditions for its employees as well. At Macy’s, Inc., our commitment to safety and health is based on a vision to create an environment free of hazards for both employees and guests. Establishing, implementing and enforcing good safety standards and best practices at every location accomplish this (Macy’s).
The company takes measures to minimize overall waste and pollution by following “Sustainability Guidelines”. One of the company’s policies on sustainability includes “Macy’s 5-Point Action Plan”, this plan is designed to ensure that Macy’s, Inc.’s commitment to sustainability is multidimensional. Point one ensures that Macy’s Inc will be aggressive in our drive to eliminate wasteful behavior, point two ensures Macy’s Inc will reduce our use of scarce resources in a meaningful way. Point three ensures that whenever possible and sensible within the context of our business requirements, Macy’s, Inc. will pursue the most environmentally-friendly solution. Today 100% Macy’s shopping bags are made of 100 percent recycled paper with 50 percent post-consumer content and are totally recyclable.(Macy’s Inc) Point four Macy’s Inc will take a comprehensive approach to sustainability, involving everyone around us we will measure what we do and strive toward quantifiable goals. According to business fact book Growth on all Fronts Terry Lundgren states “As a leading national retailer with a signiï¬cant workforce, we have the opportunity to make a meaningful difference in improving the environment and we do so by using resources more efficiently and striving to reduce our overall impact on the environment”(Sluzewsk).
Form of Business Ownership
Macy’s Inc is a publically shared company owned by various banks and institutions. The company is considered a Conventional-Corporation because it has more than one hundred shareholders. Under the C-Corporation regulations, Macy’s Inc also is a state-chartered legal entity with authority to separate from it owner’s as well. Another factor that sets apart Macy’s Inc into a C-Corporation is because it has liability separate from its owners.
Since its opening in 1858 Macy’s Inc has had quite a few corporate mergers expanding the company into what we know as Macy’s Inc today. Both horizontal mergers and horizontal acquisitions were made outside of the New York City region. In 1986 Edward Finkelstein, Chairman & CEO of R. H. Macy & Co., Inc., led a leveraged buy-out of the company and subsequently engaged in a takeover battle for department retailers(IBIS World). At the start of 1994, Federated began pursuing a merger with Macy's. After a long and difficult courtship, R. H. Macy & Co. finally merged withFederated Department Storeson December 19, 1994. Department stores in Federated Department Stores, Inc. were formed as a holding company by several different family-owned department stores, including Abraham & Straus and F&R Lazarus and Filene’s of BostonFederated also merged itsAbraham & Straus, Jordan Marshdivision with the new "Macy's East" organization based in New York. In mid-1995 Macy’s Inc. sought to acquire the bankruptWoodward & Lothrop/John Wanamakerorganization in the mid-Atlantic region. Consequently Macy’s Inc. lost bid to rival group and future acquisition targetThe May Department Stores Company.
Acquisition with The May Department Stores Company taken place on February 28, 2005, Federated agreed to terms of a deal to acquire.“The May Department Stores Companyfor $11billion in stock, creating the nation's second largest department store chain with $30billion in annual sales and more than 1,000 stores”(IBIS World). On July 28, 2005, Federated announced, based on the success of converting its own regional brands to the Macy's name, its plans to similarly convert 330regional department stores (Macy’s Inc).
Macy’s Inc distributes its products through three channels, including their own retail stores, e-commerce website, and fulfillment centers. The company uses e-tailing to sell their products as well. Macys.com has enabled customers globally; to order merchandise from Macy’s that cannot be found in stores in their home country. With technology and mobile devices taking over Macy’s has implemented a distribution network that the company uses called OmniChannel. With OmniChannel pertains to in-store, online, and mobile customer interaction so it can have a 360-degree view of customer shopping habits, and so it can collaborate merchandising strategies and integrate the shopping experience across all channels. “Macy's goal has been to cater to the omnichannel consumer, not just in the sense to cater to each type of consumer, but Macy's is also using digital technology for marketing purposes”(Miller).
Marketing and Promotional Mix
Macy’s Inc, fosters various departments, which in result leaves target markets their products to a wide range of consumers varying in age and gender. The typical consumer shopping at Macy’s is bargain savvy and looking for the best price possible for a quality item. For example an expansion for a new Impulse apparel and accessories department, would be targeted toward 13- to 30-year-old shoppers. The company uses a combination of advertising, MAGIC selling, sales promotion, and credit incentives to inform consumers about their products. For example, when a customer applies for a Macy’s Credit Card the cardholder is eligible for 20% discount off their purchase for that day and the subsequent day. Macy’s also airs television ads before their sale events to inform customers for upcoming sales promotions. Macy’s does have a public relations office located in New York City. They their stakeholders with information on topics including range of news items, such as scheduled events, personal promotions, awards, new products and services, sales and other financial data, accomplishments. Recently Macy’s Inc. has had favorable publicity from the media. The most recent press release are articles reporting topics such as expansion of private brands in a specific department. Tommy Hilfiger will expand his women’s apparel brand, to bring in a collection with celebrity Zooey Deschanel that captures the classic “American Icon” looks with an array of merchandise varying from skirts, to pants, and dresses (Macy’s Inc).
“Year over year, Macy's, Inc. has seen revenues remain relatively flat $27.7BUSDto $27.9BUSD, though the company was able to grow net income from $1.3BUSDto $1.5BUSD. A reduction in the percentage of sales devoted to selling, general and administrative costs from 30.64% to 30.22% was a key component in the bottom line growth in the face of flat revenues.” (Miller). Macy’s also has assets totaling $21,634 dollars a $643 increase from last year’s total. Total Liabilities and Shareholders’ Equity for Macy’s Inc. was $21,623. For the 52 weeks of fiscal 2013, Macy’s, Inc.’s operating income totaled $2.678 billion.. Earnings per diluted share were $4.00 for fiscal 2013, excluding pre-tax expenses and asset impairment charges of $88 million. “The company is reiterating its annual sales and earning guidance, initially provided on January 8, 2014. Comparable sales growth in fiscal 2014 is expected in the range of 2.5 percent to 3 percent. Earnings of $4.40 to $4.50 per share are expected in 2014.”(Macy’s Inc).
During the research and investigation of this report I learned different aspects of the company not only from an internal viewpoint but as well as an external viewpoint. After my investigations I believe Macy’s Inc. stock is a good investment. I would invest in this company because through my research I have found that Macy’s Inc is a sustainable company always using technology to its advantage, which is why the are one of the world’s largest omni-channel retailers. In my investigations I also found that Macy’s has a made expansions in order to adapt to an ever-changing industry, which is key to staying profitable in this industry. In conclusion I would invest in Macy’s because the business practices are profitable and their social responsibilities are in line with my personal morals.
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