I N V E S T O R D A Y 2 0 2 0 MACYS, INC. INVESTOR DAY 2020 SAFE - PowerPoint PPT Presentation

I N V E S T O R D A Y 2 0 2 0

MACY’S, INC. INVESTOR DAY 2020 SAFE HARBOR STATEMENT All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions. A detailed discussion of these factors and uncertainties is contained in the company's filings with the Securities and Exchange Commission. This presentation includes non-GAAP financial measures that exclude the impact of certain financial statement items. Additional important information regarding these non-GAAP financial measures as well as others used in the press release can be found at the end of this presentation. 2

MACY’S, INC. INVESTOR DAY 2020 WELCOME Jeff Gennette Chairman & Chief Executive Officer 3

MACY’S, INC. INVESTOR DAY 2020 4

MACY’S, INC. INVESTOR DAY 2020 2017 Year of investment Achieved positive comparable sales in Q4 2018 Strategic initiatives led to 2% annual comparable sales growth Challenging Holiday season 2019 Challenging year for Macy’s Executed Holiday season well 5

MACY’S, INC. INVESTOR DAY 2020 Organizational Close Expand Customer Changes Underperforming Loyalty Program Stores Build 4 $1B Brands Create Best Fashions Website Taking action to address aspects of the business under our control 6

MACY’S, INC. INVESTOR DAY 2020 America is over-malled and over-retailed 1 EXTERNAL America loves to shop, but is shopping FACTORS 2 differently POLARIS PLAN WILL ADDRESS 3 Retail environment moving faster than ever 7

MACY’S, INC. INVESTOR DAY 2020 W I L L Stabilize Position Profitability in Company for 2020 Profitable Growth 8

MACY’S, INC. INVESTOR DAY 2020 MACY’S HAS A STRONG FOUNDATION Loyal Best fashion Growing digital Healthier New in-store customers brand partners business stores experiences Shared Strong Modernized Robust commitment with foundation in supply chain technology mall partners Data analytics agenda 9

MACY’S, INC. INVESTOR DAY 2020 AMERICA’S DEPARTMENT STORE 10

MACY’S, INC. INVESTOR DAY 2020 WE WILL Focus resources on healthy parts of the business Address the unhealthy parts of the business Invest where retail is growing today Develop new plans with improved execution Build new profitable revenue streams and maximize value of our assets 11

MACY’S, INC. INVESTOR DAY 2020 Build profitable customer lifetime value 1 Expand loyalty program STRENGTHEN CUSTOMER RELATIONSHIPS Accelerate personalization & monetization 12

MACY’S, INC. INVESTOR DAY 2020 Drive category roles 2 Best brand destination CURATE QUALITY FASHION Balance sales & margin 13

MACY’S, INC. INVESTOR DAY 2020 Enhance digital experience 3 Grow omni-channel customer base ACCELERATE DIGITAL GROWTH Improve profitability 14

MACY’S, INC. INVESTOR DAY 2020 Invest in best stores 4 Expand off-mall profitably OPTIMIZE STORE PORTFOLIO Test & prove market ecosystem 15

MACY’S, INC. INVESTOR DAY 2020 Right-size organization & expense base 5 Balance sales & profit RESET COST BASE Improve productivity of working capital 16

MACY’S, INC. INVESTOR DAY 2020 17

MACY’S, INC. INVESTOR DAY 2020 w i l l Accelerate savings totaling $1.5B by the end of 2022: • $600M in gross margin improvement • $900M in SG&A savings Stabilize profitability and improve cash flow generation Fuel capital allocation strategy for long-term financial stability 18

MACY’S, INC. INVESTOR DAY 2020 19

MACY’S, INC. INVESTOR DAY 2020 Store locations Outlet locations 20

MACY’S, INC. INVESTOR DAY 2020 AGENDA Strategy Overview JEFF GENNETTE CHAIRMAN & CEO Strengthen Customer Relationships RICH LENNOX CHIEF CUSTOMER OFFICER Curate Quality Fashion PATTI ONGMAN CHIEF MERCHANT Accelerate Digital Growth JILL RAMSEY HEAD OF DIGITAL Optimize Store Portfolio JEFF GENNETTE CHAIRMAN & CEO Real Estate Update DOUG SESLER HEAD OF REAL ESTATE Modernize our Supply Chain DENNIS MULLAHY HEAD OF SUPPLY CHAIN Reset Cost Base and Three-Year Financial Plan PAULA PRICE CHIEF FINANCIAL OFFICER 21

MACY’S, INC. INVESTOR DAY 2020 STRENGTHEN CUSTOMER RELATIONSHIPS Rich Lennox Chief Customer Officer 22

MACY’S, INC. INVESTOR DAY 2020 GREAT BRANDS ARE BEACONS IN CONSUMERS’ LIVES THE POWER OF BRAND RELATIONSHIPS 23

MACY’S, INC. INVESTOR DAY 2020 MACY’S IS A BEACON BRAND AMERICA’S DEPARTMENT STORE 24

MACY’S, INC. INVESTOR DAY 2020 STRONG CUSTOMER FRANCHISE 40M+ ACTIVE CUSTOMERS ANNUALLY 28M+ STAR REWARDS MEMBERS 25

MACY’S, INC. INVESTOR DAY 2020 ENGAGEMENT RE-ENGINEERING STORE DIGITAL DRIVERS OUR ECOSYSTEM Build a high engagement model and unify our initiatives to: Elevate and inspire our customers when, where, and how they shop BOPS/BOSS AT YOUR SERVICE PERSONAL STYLIST 26

MACY’S, INC. INVESTOR DAY 2020 RE-ENGINEERING OUR ECOSYSTEM Build a high engagement model and unify our initiatives to: Elevate and inspire our customers when, where, and how they shop 27

MACY’S, INC. INVESTOR DAY 2020 EVOLVING APPROACH TO Engage Believe, Win the emotional high BUILDING STRONG, Parade & ground Fireworks PROFITABLE Inspire CUSTOMER Build our fashion & gift authority RELATIONSHIPS From buying customers one transaction at a time to Activate Offer great value Building relationships one customer at a time 28

MACY’S, INC. INVESTOR DAY 2020 CROSS CHANNEL: INCREASE ENGAGEMENT IN OMNI ECOSYSTEM CLV $741 9.5 Visits Per Customer Omni-Channel Customer Annual Spend $502 6.4 Visits Per Customer Backstage + $332 Store Customer Annual Spend 3.5 Visits Per Customer $196 Store-Only Customer Annual Spend 2.4 Visits Per Customer MCOM-Only Customer Annual Spend Impact of Brand Engagement 29

MACY’S, INC. INVESTOR DAY 2020 BUILD CLV: AMPLIFY IMPACT OF BRAND ENGAGEMENT DRIVERS +$128 Mobile +$101 Purchases +$192 Cross-Shop Join Loyalty +$247 (Bronze) Redeem Star Money +$209 Replenish +$340 +$128 Beauty Products Open Purchase Credit Card / BOPS/BOSS Loyalty 30

MACY’S, INC. INVESTOR DAY 2020 THE RELATIONSHIP MODEL: TARGET ATTITUDINAL SEGMENT: BEHAVIORAL COHORTS & ATTITUDINAL SEGMENTS FASHIONABLE OPTIMISTS CLV THE ADVOCATES 14% of Sales • 1% of Customers • 36 visits per year • THE CONVINCED THE OCCASIONALISTS • 20% of Sales 53% of Sales • 5% of Customers • 54% of Customers • THE UNCONVINCED 21 visits per year • 5 visits per year • BRAND ENGAGEMENT 31

MACY’S, INC. INVESTOR DAY 2020 ENTERPRISE INITIATIVES STRENGTHEN RELATIONSHIPS • Star Rewards Loyalty Program 1.0 & 2.0 THE ADVOCATES • Brand Events, Early Access, etc. Proprietary and Co-Brand Credit Card • THE Mobile App Experience • CONVINCED Private Label • • Star Rewards 3.0: All-Tier Everyday Loyalty Earn • Growth Store Investments, Backstage, & New Store Formats THE Gifting & Fashion Authority • OCCASIONALISTS Mobile App Download • Test and Prove Market Ecosystem • Star Rewards 3.0: All-Tier Everyday Loyalty Earn • THE U40 Store Pilot • UNCONVINCED Customer-First Media Planning • • New Store Formats 32

MACY’S, INC. INVESTOR DAY 2020 LOYALTY IS THE RISING TIDE AND DRIVES THE BUSINESS +4.4 % Purchase Behavior total program increase purchase behavior +28M Loyalty Accounts total program accounts 98 % Retention Rate retention rate for top tier customers Platinum Members ~15 % Platinum tier increase in purchase behavior +1.4-5.3 pp Positive Migration trend change for upward & downward migration 6.6M Bronze Members Bronze members program to date 33

MACY’S, INC. INVESTOR DAY 2020 LOYALTY 3.0 WILL PROVIDE VALUE TO OCCASIONALISTS Bronze = 1% back Silver = 2% back Gold = 3% back Platinum = 5% back 34

MACY’S, INC. INVESTOR DAY 2020 MIGRATION STRATEGIES WILL TARGET HIGH- VALUE “LOOKALIKES” 5.3M customers “look” like those in our best segments, warranting increased migration focus 35

MACY’S, INC. INVESTOR DAY 2020 MILLENNIAL ACQUISITION ADDRESSING GAPS WITH PROSPECTS Relevant content and experiences for “unconvinced shoppers” 36

MACY’S, INC. INVESTOR DAY 2020 3 PERSONALIZATION AT SCALE 1:Many  1:Few  1:1 In Real Time THE CUSTOMER RELATIONSHIP ECOSYSTEM: 1 LEVERAGED 2 4 FORENSIC UNDERSTANDING ACROSS LOYALTY MONETIZATION & OF OUR 1.0, 2.0, & 3.0 SCALE MARKETING CUSTOMER Hug Our Best Customers Monetization On-site & Inspire the Rest (5.6M Daily Visits) & Off-site (Programmatic & Publishing) 37

MACY’S, INC. INVESTOR DAY 2020 Build profitable customer lifetime value 1 Expand loyalty program STRENGTHEN CUSTOMER RELATIONSHIPS Accelerate personalization & monetization 38

MACY’S, INC. INVESTOR DAY 2020 CURATE QUALITY FASHION Patti Ongman Chief Merchandising Officer 39

MACY’S, INC. INVESTOR DAY 2020 FASHION VALUE CELEBRATION 40