1. MACY’S VS JC PENNEY
SHARON SINGLETON, ALEXANDRA BROOKS
TEAM RUBEN PEDROZA, STEVE CHAKY
2. Industry
Retail Department Store Market
$60Bn in US, $400Bn Worldwide
Mature and Highly Competitive
Compete with discount department
stores, specialty stores, outlet
stores, internet, and home shopping network.
Sales have declined between 2000-2010
3. Business Overview – Macy’s
150 years old, originally known
as Federated Department Stores
Macy’s Inc. and Bloomingdale’s
Merchandise
Men’s,Women’s, and Children’s Apparel
Accessories, Cosmetics, and Jewelry
Home Furnishings
850 Stores and Ecommerce – macys.com and
bloomingdales.com
4. Business Overview – JC
Penney
Established beginning of 20th Century
1,100 Stores in all 50 US States and
ecommerce
Merchandise
Appareland footwear
Accessories, jewelry, and beauty supplies
Home Furnishings
Services
Styling
Salon, optical, portrait photography, and
custom decorating
6. Major Strategies – JC Penney
Exclusive Brand Portfolio
Increase Online Presence
Rebranding Image
CustomerFIRST program
Merchandise at Regular Price
7. Financial Report – Macy’s
Impact from Omni-Channel
Decrease of Long-Term Debt
Repayment
Internet Business – up 28% 2010
Decrease in Cash and Cash Equivalents
Outflow from Investing Activities Increased
8. Financial Report – JC Penney
Revenue increase from 2009 to 2010
Long term debt decrease
Investing activities decreased from 2009 to
2010
Capital Expenditures
New Stores and Major Renovations
New Sephora Section at Existing Stores
9. Accounting Policies – Inventory
Macy’s - LIFO
$4.7Bn B/S in 2010
JC Penney’s - FIFO
$3.2Bn B/S in 2010
LIFO to FIFO in 2009
$1.8M increase to gross
margin recorded
10. Accounting Policies – Gift Card
Recognition
Both record Liability at POS and recognize
revenue upon merchandise redemption
BUT, differences in how they treat unredeemed
cards
Macy’s
Historical Data
JC Penney
Escheatment
After 60 months
11. Accounting Policies – Revenue
Recognition
Macy’s
Time of delivery
Estimates are established for future
returns based on historical return rates
JC Penney
Merchandise – POS/Customer take possession
Services – Customer receives benefit
Online – Time of shipment
Estimates are established for future returns based on
historical return rates
12. Measures of Success
Macy’s* JC Industry
* Penney Avg.
ROE* 12.28% 17.23% 13.4%
ROA* 3.22% 6.02% 6.2%
Debt/Equity* 2.45 1.74 2.7
Net Profit 3.63% 3.98% 2.7%
Margin*
*Averages over six years, 2005-2010
** Averaged over 5 years from 2005-2010, excluding 2008
13. Summary
Macy’s & JC Penney are leaders in the
industry
Continue to invest in strategic growth
initiatives
Challenges
Economy,Housing Market, Inflation
Ecommerce and competition
Both will need to focus on retaining and
growing market share in a evolving
marketplace