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

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

May 27, 2023 150 likes •921 views

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

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

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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.

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WELCOME

Jeff Gennette

Chairman & Chief Executive Officer

MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

Year of investment Achieved positive comparable sales in Q4 Strategic initiatives led to 2% annual comparable sales growth Challenging Holiday season Challenging year for Macy’s Executed Holiday season well

2017 2018 2019

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MACY’S, INC. INVESTOR DAY 2020

Close Underperforming Stores Build 4 $1B Brands Create Best Fashions Website Organizational Changes Expand Customer Loyalty Program

Taking action to address aspects of the business under our control

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MACY’S, INC. INVESTOR DAY 2020

America is over-malled and over-retailed America loves to shop, but is shopping differently Retail environment moving faster than ever

EXTERNAL FACTORS POLARIS PLAN WILL ADDRESS

1 2 3

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MACY’S, INC. INVESTOR DAY 2020

W I L L

Position Company for Profitable Growth Stabilize Profitability in 2020

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MACY’S, INC. INVESTOR DAY 2020

MACY’S HAS A STRONG FOUNDATION

Healthier stores Best fashion brand partners Growing digital business Loyal customers Strong foundation in Data analytics New in-store experiences Modernized supply chain Shared commitment with mall partners Robust technology agenda

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MACY’S, INC. INVESTOR DAY 2020

AMERICA’S DEPARTMENT STORE

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MACY’S, INC. INVESTOR DAY 2020

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

WE WILL

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MACY’S, INC. INVESTOR DAY 2020

1

STRENGTHEN CUSTOMER RELATIONSHIPS

Build profitable customer lifetime value Expand loyalty program Accelerate personalization & monetization

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MACY’S, INC. INVESTOR DAY 2020

2

CURATE QUALITY FASHION

Drive category roles Best brand destination Balance sales & margin

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MACY’S, INC. INVESTOR DAY 2020

3

ACCELERATE DIGITAL GROWTH

Enhance digital experience Grow omni-channel customer base Improve profitability

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MACY’S, INC. INVESTOR DAY 2020

4

OPTIMIZE STORE PORTFOLIO

Invest in best stores Expand off-mall profitably Test & prove market ecosystem

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MACY’S, INC. INVESTOR DAY 2020

5

RESET COST BASE

Right-size organization & expense base Balance sales & profit Improve productivity of working capital

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MACY’S, INC. INVESTOR DAY 2020

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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

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MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

Store locations Outlet locations

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MACY’S, INC. INVESTOR DAY 2020

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

AGENDA

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STRENGTHEN CUSTOMER RELATIONSHIPS

Rich Lennox

Chief Customer Officer

MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

THE POWER OF BRAND RELATIONSHIPS

GREAT BRANDS ARE BEACONS IN CONSUMERS’ LIVES

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MACY’S, INC. INVESTOR DAY 2020

MACY’S IS A BEACON BRAND

AMERICA’S DEPARTMENT STORE

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MACY’S, INC. INVESTOR DAY 2020

STRONG CUSTOMER FRANCHISE

28M+

STAR REWARDS MEMBERS

40M+

ACTIVE CUSTOMERS ANNUALLY

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MACY’S, INC. INVESTOR DAY 2020

STORE DIGITAL ENGAGEMENT DRIVERS

BOPS/BOSS AT YOUR SERVICE PERSONAL STYLIST

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

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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

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MACY’S, INC. INVESTOR DAY 2020

Engage

Win the emotional high ground

Inspire

Build our fashion & gift authority

Activate

Offer great value Believe, Parade & Fireworks

EVOLVING APPROACH TO BUILDING STRONG, PROFITABLE CUSTOMER RELATIONSHIPS

From buying customers one transaction at a time to Building relationships one customer at a time

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MACY’S, INC. INVESTOR DAY 2020

CROSS CHANNEL: INCREASE ENGAGEMENT IN OMNI ECOSYSTEM

$196

2.4 Visits Per Customer

MCOM-Only Customer Annual Spend

$332

3.5 Visits Per Customer

Store-Only Customer Annual Spend

$502

6.4 Visits Per Customer

Backstage + Store Customer Annual Spend

$741

9.5 Visits Per Customer

Omni-Channel Customer Annual Spend CLV Impact of Brand Engagement

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MACY’S, INC. INVESTOR DAY 2020

+$209

Replenish Beauty Products

+$247

Redeem Star Money

+$340

Open Credit Card / Loyalty

+$128

Purchase BOPS/BOSS

+$128

Mobile Purchases

+$192

Join Loyalty (Bronze)

+$101

Cross-Shop

BUILD CLV: AMPLIFY IMPACT OF BRAND ENGAGEMENT DRIVERS

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MACY’S, INC. INVESTOR DAY 2020

THE ADVOCATES

  • 14% of Sales
  • 1% of Customers
  • 36 visits per year

THE CONVINCED

  • 20% of Sales
  • 5% of Customers
  • 21 visits per year

THE OCCASIONALISTS

  • 53% of Sales
  • 54% of Customers
  • 5 visits per year

THE UNCONVINCED

BRAND ENGAGEMENT CLV

THE RELATIONSHIP MODEL: BEHAVIORAL COHORTS & ATTITUDINAL SEGMENTS

TARGET ATTITUDINAL SEGMENT: FASHIONABLE OPTIMISTS

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MACY’S, INC. INVESTOR DAY 2020

ENTERPRISE INITIATIVES STRENGTHEN RELATIONSHIPS

THE ADVOCATES THE CONVINCED

  • Star Rewards Loyalty Program 1.0 & 2.0
  • Brand Events, Early Access, etc.
  • Proprietary and Co-Brand Credit Card
  • Mobile App Experience
  • Private Label

THE OCCASIONALISTS

  • Star Rewards 3.0: All-Tier Everyday Loyalty Earn
  • Growth Store Investments, Backstage, & New Store Formats
  • Gifting & Fashion Authority
  • Mobile App Download
  • Test and Prove Market Ecosystem

THE UNCONVINCED

  • Star Rewards 3.0: All-Tier Everyday Loyalty Earn
  • U40 Store Pilot
  • Customer-First Media Planning
  • New Store Formats
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MACY’S, INC. INVESTOR DAY 2020

trend change for upward & downward migration

Positive Migration

+1.4-5.3pp +4.4%

total program increase purchase behavior

Purchase Behavior

~15%

Platinum tier increase in purchase behavior

Platinum Members

+28M

total program accounts

Loyalty Accounts

6.6M

Bronze Members

Bronze members program to date

98%

Retention Rate

retention rate for top tier customers

LOYALTY IS THE RISING TIDE AND DRIVES THE BUSINESS

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MACY’S, INC. INVESTOR DAY 2020

Bronze = 1% back Silver = 2% back Gold = 3% back

LOYALTY 3.0 WILL PROVIDE VALUE TO OCCASIONALISTS

Platinum = 5% back

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MACY’S, INC. INVESTOR DAY 2020

5.3M customers “look” like those in our best segments, warranting increased migration focus

MIGRATION STRATEGIES WILL TARGET HIGH- VALUE “LOOKALIKES”

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MACY’S, INC. INVESTOR DAY 2020

MILLENNIAL ACQUISITION ADDRESSING GAPS WITH PROSPECTS

Relevant content and experiences for “unconvinced shoppers”

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MACY’S, INC. INVESTOR DAY 2020

FORENSIC UNDERSTANDING OF OUR CUSTOMER MONETIZATION & SCALE

Monetization On-site (5.6M Daily Visits) & Off-site (Programmatic & Publishing)

LOYALTY 1.0, 2.0, & 3.0

Hug Our Best Customers & Inspire the Rest

PERSONALIZATION AT SCALE

1:Many  1:Few  1:1 In Real Time

THE CUSTOMER RELATIONSHIP ECOSYSTEM: LEVERAGED ACROSS MARKETING

1 2 3 4

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MACY’S, INC. INVESTOR DAY 2020

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STRENGTHEN CUSTOMER RELATIONSHIPS

Build profitable customer lifetime value Expand loyalty program Accelerate personalization & monetization

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CURATE QUALITY FASHION

Patti Ongman

Chief Merchandising Officer

MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

FASHION VALUE CELEBRATION

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MACY’S, INC. INVESTOR DAY 2020

Double down on categories that matter to customers and drive profitability Bring the best brands and fashion to

  • ur customers

Provide the best value to our customers and shareholders

RESHAPING OUR MERCHANDISING STRATEGY

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MACY’S, INC. INVESTOR DAY 2020

OUR PRIORITY: WIN WITH CUSTOMERS PROFITABLY

  • Use data & analytics to define

category strategy that drives profitability

  • Maintain focus on Destination

Businesses

  • Reinvent Ready-to-Wear

CUSTOMER PRODUCT VALUE

  • Build powerful private brands
  • Be the best expression of

America’s favorite brands

  • Deliver consistent stream of

trend product

  • Maintain rigor in

merchandising process and inventory management

  • Create pricing and promotions

that resonate with customers

  • Location-level markdown
  • ptimization

2 1 3

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MACY’S, INC. INVESTOR DAY 2020

CHANGING HOW WE PLAY IN PRIORITY CATEGORIES

Investing to drive growth with exclusive, differentiated product Allocating significant space and marketing Profitably reinforcing role as full-line provider Focusing on elevated product Deepening assortment of styles that drive volume Focusing on volume at reasonable margins Editing to items with high standalone profitability Minimizing space and SKUs; disrupt at key moments Actions Outperform by gaining share and improve contribution margin Drive contribution margin Drive traffic and cross shopping Improve contribution margin and turn Our Goal

PROFIT DRIVERS TRAFFIC DRIVERS HERO OPPORTUNISTIC

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MACY’S, INC. INVESTOR DAY 2020

CURRENT CATEGORY ROLES

KEY Ready to Wear Center Core Men’s and Kids Home Beauty Destination Business

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MACY’S, INC. INVESTOR DAY 2020

DESTINATION BUSINESSES

Represent ~40% of sales and ~50% of contribution margin

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MACY’S, INC. INVESTOR DAY 2020

OUTSIZED SHARE IN OUR DESTINATION BUSINESSES

Sources: Macy’s Consumer Insights, Market Trends, NPD Consumer Data. October 2019 ME. POS data for Beauty, Market rank unavailable. Big Ticket market data unavailable through NPD. Women’s Shoes excludes shoe types sold through licensing agreement with Finish Line (e.g., athletic shoes). Fine Jewelry includes Watches. Beauty represents Department Store and Specialty market.

DRESSES #1

MARKET SHARE $14B Market

8.5% WOMEN’S SHOES

$26B Market

#3

MARKET SHARE

5.2% MEN’S TAILORED

$4B Market

#1

MARKET SHARE

9.5% FINE JEWELRY

$17B Market

#2

MARKET SHARE

6.5% BEAUTY

1/5

OF TOTAL MARKET

POS DATA

$17B Market

20.6%

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MACY’S, INC. INVESTOR DAY 2020

INVESTMENTS IN BEAUTY HAVE PAID OFF

  • +3 pp on total remodels
  • Gained market share

Focused on Beauty in 2020 Achieved positive results in 2019

  • Continue capital investments in

growth stores

  • Evolve beauty advisors to sell

across all brands and categories

  • Invest more in brand awareness

and customer acquisition​ marketing HERO | TRAFFIC DRIVER

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MACY’S, INC. INVESTOR DAY 2020

  • Deliver curated, streamlined core assortment
  • Decrease sales by more than 20% in order to grow

margin by 2-3 pp over next 5 years

  • Reinvest margin growth to be more disruptive during

key times of year

OPPORTUNISTIC

Kitchen electrics

RESETTING KITCHEN ELECTRICS

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MACY’S, INC. INVESTOR DAY 2020

UNDER 40 NEW CUSTOMER ACQUISITION

Relatively underpenetrated within under 40 RTW with opportunity to expand Leading market share in key RTW categories will serve as the platform of our under 40 strategy

Macy’s Penetration: Classifications

40+ Under 40

Rest of Market

~95% market share

Macy’s

~5% market share

Market RTW Penetration vs. Macy’s Macy’s Penetration: Sportswear 50 50 35 65

4% 7%

Sources: Macy’s Consumer Insights, Market Trends, NPD Consumer Data. October 2019 ME. Classifications comprised of Dresses, Coats, Tailored Market (Suits), and Swim. Sportswear comprised of Petites, Plus, Active, and Denim

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MACY’S, INC. INVESTOR DAY 2020

UNDER 40 READY-TO-WEAR REINVENT

Cares about store environment

The Under 40 Customer The Lifestyle Zone

6 stores piloted a Lifestyle Zone based on how she shops Tiered assortment strategy around new and core brands across denim, casual, dressy Curated trend statements – multi-branded, casual and dressy zones Influencer collaborations and new brand partnerships increase social media engagement

Shops for a complete outfit in

  • ne place

Shops across categories; RTW biggest opportunity

Sources: Macy’s Consumer Insights, Primary Research, 2017

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MACY’S, INC. INVESTOR DAY 2020

OUR PRIORITY: WIN WITH CUSTOMERS PROFITABLY

  • Use data & analytics to define

category strategy that drives profitability

  • Maintain focus on Destination

Businesses

  • Reinvent Ready-to-Wear

CUSTOMER PRODUCT VALUE

  • Build powerful private brands
  • Be the best expression of

America’s favorite brands

  • Deliver consistent stream of

trend product

  • Maintain rigor in

merchandising process and inventory management

  • Create pricing and promotions

that resonate with our customers

  • Location-level markdown
  • ptimization

2 1 3

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MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

MACY’S FASHION EXPERTS

READY-TO-WEAR BEAUTY & CENTER CORE MEN’S & KIDS HOME & LEASED BACKSTAGE FASHION OFFICE

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MACY’S, INC. INVESTOR DAY 2020

WE BRING THE BEST BRANDS TO OUR CUSTOMERS

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OUR NEW MEN’S EXPERIENCE IN HERALD SQUARE THE PARK

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MACY’S, INC. INVESTOR DAY 2020

REINVENTING OUR PRIVATE BRANDS

  • Implemented new organizational structure
  • Cleaned up brand DNA
  • Introduced new brands
  • Distinctive, on trend capsule collections
  • 25% private brand sales penetration by 2025
  • Improved margins through better sourcing

and materials management

  • Four $1B brands

Actions Goals

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MACY’S, INC. INVESTOR DAY 2020

BUILDING FOUR $1 BILLION PRIVATE BRANDS

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BUILDING ON OUR SUCCESS: FASHION JEWELRY

Driving continued sales and margin contribution

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MACY’S, INC. INVESTOR DAY 2020

Driving continued sales and margin contribution

BUILDING ON OUR SUCCESS: HOTEL CLASSIC

Hotel Collection Hotel Classic

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GREAT EARLY TRACTION ON INC AND STYLE & CO FOR RTW

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MACY’S, INC. INVESTOR DAY 2020

BRINGING AMERICA’S FAVORITE BRANDS TO OUR CUSTOMERS

  • 25% of sales from our top national brands
  • Represent >20% of many of these brands’

wholesale sales

  • 2 pp higher margin from core vendors
  • 30% core vendor penetration by 2022

through focus on core assortment and shared assets

  • Exclusive and innovative content
  • First at Macy’s launches and exclusive

capsule collections

  • The best expression of their brands
  • Analytics and insights on what customers

want

  • Supply chain and digital synergies

Win-Win Relationships Differentiation

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MACY’S, INC. INVESTOR DAY 2020

ENHANCING ASSORTMENT THROUGH LEASE PARTNERS

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MACY’S, INC. INVESTOR DAY 2020

OUR PRIORITY: WIN WITH CUSTOMERS PROFITABLY

  • Use data & analytics to define

category strategy that drives profitability

  • Maintain focus on Destination

Businesses

  • Reinvent Ready-to-Wear

CUSTOMER PRODUCT VALUE

  • Build powerful private brands
  • Be the best expression of

America’s favorite brands

  • Deliver consistent stream of

trend product

  • Maintain rigor in

merchandising process and inventory management

  • Create pricing and

promotions that resonate with our customers

  • Location-level markdown
  • ptimization

2 1 3

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Implementing new process controls and guidelines Improving our buying tools Streamlining of buying

  • rganization

MORE DISCIPLINED INVENTORY MANAGEMENT APPROACH

OUR GOAL

$200M

Reduction in average stock by 2022

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Rapid test-and-learn campaigns Analytics for optimized POS and coupon planning Dedicated merchandise pricing team Location-level markdown

  • ptimization

PRICING AND MARKDOWN OPTIMIZATION

OUR GOAL

$20M

Gross margin impact by 2020

$100M

Annual gross margin impact by 2022

Increasing margin through more coordinated, data-driven approach:

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2

CURATE QUALITY FASHION

Drive category roles Best brand destination Balance sales & margin

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ACCELERATE DIGITAL GROWTH

Jill Ramsey

Chief Digital Officer

MACY’S, INC. INVESTOR DAY 2020

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MACY’S, INC. INVESTOR DAY 2020

DIGITAL IS GROWING AND CONTRIBUTES TO PROFITABILITY

1 Growth 2010-18 based on non-NSR sales; 2018-19 based on NSR sales; all sales including leased and BOPS 2 Share based on demand sales per device December YTD for 2018 and 2019; includes purchases made on tablets SOURCE: MCOM December ROF (as of January 13, 2019) Data in presentation excludes Bloomingdales and bluemercury digital business

~24%

sales growth 2009-191

  • utpacing retail

ecommerce market

54%

sales through mobile app & web – up from 49% in 20182

$5B+

revenue generated by digital – about 25%

  • f Macy’s brand

3 years

contributions to

  • perating profit
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WE BEGAN UPGRADE OF OUR DIGITAL EXPERIENCE IN 2019

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MACY’S, INC. INVESTOR DAY 2020

2019 EFFORTS DROVE MEASUREABLE RESULTS +56% sales through mobile app

Mobile app

~21% of site sales driven by product recommendations

Product recommendations

+59% sales fulfilled direct from vendors

Vendor direct fulfillment

+162% sales fulfilled via same-day delivery

Same day delivery

+62%

Store pickup

digital sales picked up in stores

Source: MCOM December 2019 YTD actuals for mobile app, VDF; MCOM 2019 ROF as of January 2020 for store pickup and SDD; Product recommendations based on Dec 2019 actuals

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ACCELERATE DIGITAL GROWTH

Enhance digital experience Grow omni-customer base Improve profitability 1 2 3

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MACY’S, INC. INVESTOR DAY 2020

Site and app updates

  • Improve site speed
  • Redesign navigation menu
  • Upgrade search and filter relevancy
  • Enhance checkout process

Enhance omnichannel experience

  • Optimize pickup and return processes
  • Enable and support in-store experience
  • Fast and accurate delivery

IMPROVE THE DIGITAL EXPERIENCE

MACYS.COM IS OUR DIGITAL FLAGSHIP

40%

  • f new customers start
  • n macys.com1

Omnichannel customers are

2.3x more valuable than

macys.com-only customers2

1

1 Based on 12ME December 2019 2 Omnichannel value multiple in reference to MCOM customers with 2+ visits; data from 12ME Q3 2019 SOURCE: Macy’s customer analytics

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Enhance our loyalty experience

  • Increase online engagement
  • Introduce app exclusives for most loyal customers

Increase focus on personalization

  • End-to-end personalization
  • Invest in a consolidated data platform and decision engine

Bring more fashion to customers

  • Innovate on consumer engagement with fashion
  • Customize with made-to-measure
  • Test alternative business models i.e. recommerce

PERSONALIZATION AND INNOVATION WILL DRIVE GROWTH

30%

  • f site users

engage with product recommendations, driving

20%

  • f Macys.com sales

2

GROW OMNI-CUSTOMER BASE

Source: MCOM December 2019 YTD actuals

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NEW WAYS TO BRING FASHION TO CUSTOMERS

2

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MACY’S, INC. INVESTOR DAY 2020

IMPROVE DIGITAL PROFITABILITY

Polaris improvements will benefit digital bottom line

  • Lower fulfillment and delivery cost while improving the customer

experience

  • Better product margins across digital assortment

Focus on macys.com profitability levers

  • Grow store pickup – currently 9%
  • Expand ad-monetization
  • Reduce impact of returns

3

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TRANSFORM DIGITAL TEAM

Strengthen our agile operating model across the organization Consolidate talent centers in New York and Atlanta to integrate teams Enable high velocity delivery and rapid test and learn

Next Generation Digital Team

1 2 3

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MACY’S, INC. INVESTOR DAY 2020

3

ACCELERATE DIGITAL GROWTH

Enhance digital experience Grow omni-channel customer base Improve profitability