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Macy's Omnichannel Strategy Improves Profit as Sales Hold

Feb 25, 2014 8:35 AM   By Jeff Miller
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RAPAPORT... Macy's Inc. revenue fell 1.6 percent year on year to $9.2 billion in the fourth quarter that ended on February 1 and included the Christmas season. However, Macy's maintained a gross margin of 40.6 percent and lowered its administrative expenses slightly, helping to improve profit to $811 million from $730 million one year earlier. For the fiscal year, Macy's reported that revenue barely improved, rising 0.9 percent year on year to $27.9 billion; however, profit jumped 11 percent to $1.5 billion.

Comparable-store sales for the fourth quarter increased 1.4 percent, while they rose 1.9 percent for the fiscal year.  The company maintained that its long-term investment in creating best-in-class omnichannel strategy has proven successful in serving and attracting customers.

Terry J. Lundgren, the chairman of Macy's, said, "Having generated this sustained level of momentum, we continue to drive for further growth through progressively deeper implementation of the My Macy's  omnichannel and Magic Selling strategies that have set Macy's Inc. apart from other retailers."

Lundgren added that the company's My Macy's and Magic Selling  have re-engineered the company's organizational structure to improve efficiencies and hold expenses down, which is ''unlikely to be copied'' by its competitors.

During the fiscal year, Macy's opened six new stores and closed seven stores, while  Bloomingdale's opened two new stores. Net cash provided by operating activities was $2.5 billion in fiscal 2013, compared with $2.2 billion in 2012. Capital expenditures were below the company's plan by $62 million and it expects that approximately $50 million of this amount will carry into 2014.

Macy's anticipates that annual sales and earning guidance for 2014 will include same-store sales growth of approximately 2.5 percent to 3 percent and earnings per share of between $4.40 to $4.50. Capital expenditures are expected to be approximately $1.05 billion, which includes amounts delayed from 2013.

The company has announced plans to open new Macy's stores in Sarasota, Florida, Las Vegas, Nevada and The Bronx, New York this year.  A new Bloomingdale's will open in Palo Alto, California to replace an older store in the same shopping center.

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Tags: bloomingdale's, earnings per share, Jeff Miller, macy's, Omni-channel, revenue, sales
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