CINCINNATI — There's no doubt Macy's is disappointed with its performance this year and still takes some heat from loyalists of Marshall Field's, one of several regional nameplates that two years ago were converted to Macy's.
That was evident at the Macy's annual meeting here Friday, where chairman, chief executive and president Terry Lundgren stressed that merchandise exclusives, sharpening the local focus through the new My Macy's structure, as well as developing talent and taking Macy's and Bloomingdale's abroad, would help the 850-unit chain climb out of its hole. Business is being impacted by the poor economy, soaring gas and food prices and particularly weak sales in women's apparel.
"This is the time to embrace change, to innovate," Lundgren told shareholders. "This is how we will meet our financial goals, including maintaining our investment grade rating and returning our earnings before interest, taxes, depreciation and amortization to our historic high of 14 to 15 percent of sale.
"Customers have not stopped shopping, but they are more discerning in what they buy."
Stressing the importance of developing exclusive merchandise programs, Lundgren said Lush Cosmetics is rolling out departments to 44 Macy's stores by October and to 100 or more in 2009.
He also said that 275 FAO Schwarz shops will open in Macy's stores this fall, and the number will rise to 685 in two years. The leased shops will range from 200 to 3,000 square feet and will take space out of the children's wear departments. Macy's currently sells toys only for the Christmas season at the Herald Square flagship in Manhattan, and on State Street in Chicago, where an FAO Schwarz shop has been tested for the past two seasons.
Such "big initiatives," including Macy's Martha Stewart Collection and Donald Trump merchandise, wouldn't be possible if Macy's were just a regional department store, Lundgren said.
Later, at a press conference, the ceo said he has talked to a number of other suppliers about the idea of having exclusives. "It's a two-way street and we're absolutely committed to more." But nothing appears imminent, he suggested. "There's nothing we are going to announce tomorrow or next week."
Lundgren did say there are product categories, such as toys, where Macy's has no or little offering or expertise, where the company could establish partnerships. He didn't specify any, however.
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