CASE 5
Macy’s, Inc.: Will Its Strategy
Allow It to Survive in the
Changing Retail Sector?
Alen Badal
University of Liverpool
T
he retail landscape in the United States in
early 2020 may have been best characterized
as rapidly changing with an uncertain future.
The COVID-19 pandemic and stay-at-home orders by
state and local governments had created unpreced-
ented challenges for all retailers, but traditional brick-
and-mortar retailers had under pressure for at least
a decade. The convenience of shopping for nearly
every type of consumer good at Amazon or other
online retailer sites had radically transformed the
retail industry. Consumer needs continued to allow
for variations in strategy that allowed for distinctive
retailer approaches to meeting customer expecta-
tions. But consumers had become to expect even the
most highly differentiated retailers to have an online
presence in addition to their prestigious brick-and-
mortar locations.
The change in consumer shopping preferences
had especially impacted mall-based department
stores. Nearly all shopping malls relied on strong
department store anchor tenants to draw vast num-
bers of shoppers, who would also patronize smaller
specialized retailers during their visits to a mall.
The transition to online shopping had greatly dam-
aged the business model of many shopping malls as
smaller retailers failed along with department stores,
both of whom had experienced a decline in sales per
square foot resulting from reduced customer traffic.
Macy’s, Inc. had particularly struggled to adapt
its business model to the online shopping environ-
ment with sales declining each year since its record
sales of $28.1 billion generated in 2014. In 2018,
John E. Gamble
Texas A&M University-Corpus Christi
Macy’s turned to 34-year company veteran Jeff
Gennette to lead the company’s turnaround and
transformation as CEO. In early 2020, Gennette
was in the second year of his five-point strategic plan
designed to reinvent the company’s business model
and generate retail innovations. The key feature of
the plan was its Growth50 initiative which strived for
product and merchandising innovations in 50 stores
that would establish a new retailing standard that
could be rolled out to 50 to 100 additional stores per
year. The company also implemented a direct vendor
fulfillment model for online sales that nearly doubled
the number of SKUs offered online since inventory
could be maintained by vendors, not Macy’s.
The third element of the turnaround plan was to
allow customers to order items online and pick up
merchandise in a nearby store location. Gennette
also wished to expand the number of the company’s
off-price Macy’s Backstage stores from approxi-
mately 150 to more than 200. Macy’s management
had determined that the off-price store locations
were less vulnerable to competition from online
retailers than its core Macy’s stores. Expanding the
company’s loyalty plan to encourage repeat business,
making online sales available through its new mobile
app, and better utilizing its strongest product catego-
ries like housewares and women’s apparel to draw
customers to its stores were less sweeping changes
that rounded out the plan.
Copyright ©2021 by Alen Badal and John E. Gamble. All rights
reserved.
C-52 PART 2 Cases in Crafting and Executing Strategy
As of early-2020, the plan had produced few
positive results with some analysts suggesting that
the strategy was better aligned with the retail envi-
ronment of 2010 than of 2020. In February 2020,
Macy’s announced that it would close 125 store
locations. By March 18, the company’s COVID-19
response resulted in it closing all 775 store loca-
tions. The company began reopening stores on May
4 and expected to have 270 stores open by the 2020
Memorial Day Weekend. The combined effect of the
company’s ongoing poor performance and COVID-
19 store closes was expected to result in a first quar-
ter 2020 loss of $905 million to $1.1 billion.
Company Background
Headquartered in Cincinnati, Ohio, Macy’s, Inc. was
the second-largest department store chain with a market
share of approximately 16.3 percent in 2020. The com-
pany operated about 551 Macy’s department stores,
53 Bloomingdales, and 171 Bluemercury businesses
in early-2020, and its retailing portfolio also included
Bloomingdale’s The Outlet, Macy’s Backstage,
and STORY and online businesses macys.com,
bloomingdales.com, and bluemercury.com. The
company also licensed Bloomingdale’s stores in Dubai
and Kuwait for operation by Al Tayer Group.
Beginning in 2018, CEO Gennette and his chief
lieutenants launched a five-point turnaround plan to
improve the company’s performance. The Growth50
initiative was focused on 50 Macy’s department
stores to revitalize in 2018, including store remodels,
improved customer service, and increased product
assortment. The addition of STORY retail locations
in 2018 supported sales growth for the company as
well. STORY locations were much smaller stores
with an inventory assortment that was refreshed with
new items every six to eight weeks. The value propo-
sition of the STORY business was keyed to engaging
consumers through an opportunity to interact with
products and collaborate. The value proposition
for The Market @ Macy’s was similar, but entailed
departments located within select Macy’s stores
rather than operating as standalone locations.
Revitalization of the customer experience at
Bloomingdale’s and Blumercury were also impor-
tant elements of the turnaround efforts. Like
Bloomingdale’s, the Bluemercury business oper-
ated standalone stores but also was comprised of
store-within-store locations inside Macy’s stores. The
Bluemercury division had achieved impressive sales
growth for the company and an addition of 26 stand-
alone locations. Additionally, Bluemercury online sales
increased by greater than 50 percent, accounting for
double-digit increases in total sales. The Bluemercury
division increased its private brands Lune+Aster and
M-61, which accounted for greater than 10 percent of
total sales at Bluemercury per company.
A focus on improvements in the online and mobile
shopping experience was a second primary element of
the plan and resulted in mobile representing the fastest
growing channel for the company. The new practice of
allowing Macy’s customers to make purchases online
and pick-up merchandise in the store or buy online
and ship to a store for pick-up resonated with con-
sumers. The third primary element of the company’s
turnaround plan included an expansion of its loyalty
program to increase customer traffic and average pur-
chase amount. In 2018, Macy’s Platinum customers
generated about 30 percent of store sales, shopped with
more frequency, and spent 10 percent more per store
visit than other customers. The company launched a
new Bronze loyalty level in 2018, which yielded 3 mil-
lion new customers for Macy’s by year-end.
The company’s off-price retail brands Backstage
and Bloomingdale’s The Outlet were the fourth major
element of the turnaround plan because of their abil-
ity to defend against online retailers. Macy’s manage-
ment planned to add up to 50 Backstage locations
within existing Macy’s store locations and construct
seven free-standing stores, all to be opened by 2020.
Direct vendor fulfillment was the fifth major element
of the plan and was directed at reducing distribution
costs across all Macy’s retail operations. Engaging
customers through destination departments such as
housewares, furniture, and women’s apparel were
additional turnaround initiatives designed to keep
customers shopping once inside store locations.
Exhibit 1 presents Macy’s, Inc.’s Income
Statements for 2015 through 2019 and reflect the
company’s difficulty in sustaining a consistent
improvement in performance. The company’s Results
of Operations shown in Exhibit 2 and Balance sheets
shown in Exhibit 3 provide additional operating and
financial results.
Overview of the Department
Store Industry
The department store industry was under pres-
sure not only from e-commerce, but also from dis-
count retailers whose product lines encroached on
 CASE 5 Macy’s, Inc.: Will Its Strategy Allow It to Survive in the Changing Retail Sector? C-53

EXHIBIT 1 Macy’s, Inc.’s Income Statem ents, 2015–2019

($ in millions, except per sha re amounts)
2019 2018 2017* 2016 2015

Net sales $24,560 $24,971 $24,939 $25,908 $27,079

Gross margin (a) 9,389 9,756 9,758 10,242 10,583
Operating income 970 1,738 1,864 1,371 2,028
Net income 564 1,098 1,555 619 1,070
Net income attributable to Macy’s, Inc. shareholders 564 1,108 1,566 627 1,072
Basic earnings per share attributable to Macy’s, Inc.
shareholders $1.82 $3.6 $5.13 $2.03 $3.26
Diluted earnings per share attributable to Macy’s, Inc.
shareholders $1.81 $3.56 $5.1 $2.02 $3.22
Average number of shares outstanding 309.7 307.7 305.4 308.5 328.4
Cash dividends paid per share $1.51 $1.51 $1.51 $1.49 $1.39
Depreciation and amortization $ 981 $ 962 $ 991 $ 1,058 $ 1,061
Capital expenditures $ 1,157 $ 932 $ 760 $ 912 $ 1,113
Balance Sheet Data (at year end):
Cash and cash equivalents $ 685 $ 1,162 $ 1,455 $ 1,297 $ 1,109
Property and equipment–net 6,633 6,637 6,672 7,017 7,616
Total assets 21,172 19,194 19,583 20,082 20,576
Short-term debt 539 43 22 309 642
Long-term debt 3,621 4,708 5,861 6,562 6,995
Total Shareholders’ equity 6,377 6,436 5,733 4,375 4,253

*53 weeks
Source: Macy’s, Inc. 2019 10-K.

EXHIBIT 2 Macy’s, Inc.’s Results of Ope rations, 2017–2019

($ in millions, except per sha re amounts)
2019 2018 2017

Amount % to Sales Amount % to Sales Amount % to Sales

Net sales $24,560 $24,971 $24,939

Increase (decrease) in comparable sales (0.8)% 1.7% (2.2)%
Credit card revenues, net 771 3.1% 768 3.1% 702 2.8%
Cost of sales (15,171) (61.8)% (15,215) (60.9)% (15,181) (60.9)%
Selling, general and administrative
expenses (8,998) (36.6)% (9,039) (36.2)% (8,954) (35.9)%
Gains on sale of real estate 162 0.6% 389 1.5% 544 2.2%
Restructuring, impairment, store closing
and other costs (354) (1.4)% (136) (0.5)% (186) (0.7)%
Operating income 970 3.9% 1,738 7% 1,864 7.5%
Benefit plan income, net 31 39 57
Settlement charges (58) (88) (105)
Interest expense-net (185) (236) (310)
Gains (losses) on early retirement of debt (30) (33) 10

continued
C-54 PART 2 Cases in Crafting and Executing Strategy

2019 2018 2017

Amount % to Sales Amount % to Sales Amount % to Sales

Income before income taxes 728 1,420 1,516

Federal, state and local income tax benefit
(expense) (164) (322) 39
Net income 564 1,098 1,555
Net loss attributable to noncontrolling
interest — 10 11
Net income attributable to Macy’s, Inc.
shareholders $ 564 2.3% $1,108 4.4% $1,566 6.3%
Diluted earnings per share attributable to
Macy’s, Inc. shareholders $1.81 $3.56 $5.1
Supplemental Financial Measure
Gross margin $ 9,389 38% $ 9,756 39% $ 9,758 39.1%
Digital sales as a percent of comparable
sales on an owned basis 26% 23% 22%
Supplemental Non-GAAP Financial Measures
Increase (decrease) in comparable sales
on an owned plus licensed basis (0.7)% 2% (1.9)%
Adjusted diluted earnings per share
attributable to Macy’s, Inc. shareholders $2.91 $4.18 $3.79
Adjusted EBITDA $ 2,336 $ 2,877 $ 3,109
ROIC 17.1% 19.9% 20.8%

Source: Macy’s, Inc. 2019 10-K.

EXHIBIT 3 Macy’s, Inc.’s Balance Sheets , 2018–2019 ($ in millions)

February 1, 2020 February 2, 2019

ASSETS
Current Assets:
Cash and cash equivalents $ 685 $ 1,162
Receivables 409 400
Merchandise inventories 5,188 5,263
Prepaid expenses and other current assets 528 620
Total Current Assets 6,810 7,445
Property and Equipment–net 6,633 6,637
Right of Use Assets 2,668 —
Goodwill 3,908 3,908
Other Intangible Assets–net 439 478
Other Assets 714 726
Total Assets $21,172 $19,194
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt $ 539 $ 43
Merchandise accounts payable 1,682 1,655
Accounts payable and accrued liabilities 3,448 3,366
Income taxes 81 168
 CASE 5 Macy’s, Inc.: Will Its Strategy Allow It to Survive in the Changing Retail Sector? C-55

February 1, 2020 February 2, 2019

Total Current Liabilities 5,750 5,232

Long-Term Debt 3,621 4,708
Long-Term Lease Liabilities 2,918 —
Deferred Income Taxes 1,169 1,238
Other Liabilities 1,337 1,580
Shareholders’ Equity:
Common stock (309.0 and 307.5 shares outstanding) 3 3
Additional paid-in capital 621 652
Accumulated equity 7,989 8,050
Treasury stock (1,241) (1,318)
Accumulated other comprehensive loss (995) (951)
Total Macy’s, Inc. Shareholders’ Equity 6,377 6,436
Noncontrolling interest — —
Total Shareholders’ Equity 6,377 6,436
Total Liabilities and Shareholders’ Equity $21,172 $19,194

Source: Macy’s, Inc. 2019 10-K.

traditional department store product categories.
Exhibit 4 shows that women’s clothing and foot-
wear and home goods and appliances made up the
two largest categories of products sold in depart-
ment stores in 2019. Drugs and cosmetics made up
the third largest category of department store sales
in 2019. Men’s clothing and footwear, children’s
clothing and footwear, nongrocery food items, and
toys and hobbies were all products that could be
purchased at supercenter discount retailers such
as Walmart and Target or wholesale clubs such as
Sam’s or Costco. The proliferation of such product
categories both online and available in brick-and-
mortar stores required mall-based department stores
to offer a highly differentiated experience or distinc-
tive product line.
The shopping mall experience. The business model
of online-only retailers such as Amazon that involved
low costs for land and buildings, real estate leases,
inventory, store furnishings and merchandise dis-
plays, and personnel put tremendous pricing pres-
sure on brick-and-mortar retailers. The low prices
offered by many online retailers coupled with con-
sumers’ desire for the convenience of online shop-
ping has dramatically altered the value proposition
for shopping malls and resulting customer experi-
ence. Malls, which once were a popular place to visit,
shop, and pass time, were challenged as the closings
of prestigious anchor stores and specialty stores
made shopping at a mall less exciting for consumers.
Physical malls were also expensive to build and
just as costly to remodel as many had been open
for some time. The aging nature of many malls also
decreased consumer desire to visit a mall. There
were some locations that were characterized by
extreme temperatures that made shopping indoors
more appealing, such as the Mall of America in
Minneapolis, Minnesota. The most viable malls in
2020 tended to be upscale outdoor lifestyle malls
that featured beautiful architecture and landscap-
ing along with a strong mix of aspirational luxury
brands. The overall ambiance of such malls recre-
ated the excitement of shopping in a mall that had
been common in the 1970s and 1980s. Other malls
that remained popular in 2020 were outdoor outlet
malls that were located near major highways that
provided deep discounts on such highly sought after
brands as Gucci, North Face, Coach, Abercrombie
& Fitch, Under Armour, Ralph Lauren Polo, and
Tori Burch.
Changing consumer demographics. A declining
birthrate in the United States and many developed
countries resulted in fewer shoppers for an increasing
number of goods. The peak of the baby boom in 1957
saw 122.7 births per 1,000 U.S. women, while the U.S.
birth rate in 2017 had fallen to 60.3 per 1,000 women.
C-56 PART 2 Cases in Crafting and Executing Strategy
Baby boomers had driven sharp demand increases in
industries and products such as mountain bikes, golf
courses and equipment, SUVs and Harley-Davidson
motorcycles in the 1980s and 1990s and still made
up the largest group of consumers in 2020. By 2024,
the 65 and older demographic in the United States
was projected to exceed 65 million consumers. Older
consumers maintained tremendous purchasing power
resulting from decades of career advancements and
savings. The 60+ demographic was the most highly
educated generation and wealthiest generation in
U.S. history. Much of baby boomer spending was on
the purchase of goods and services for their children
and grandchildren, which drove sales of products for
all age demographics. The impact of purchases by
grandparents as gifts to children and grandchildren
had given rise to the term “grandparent economy” by
many in the retail industry.1
Generation X and early- and late-Millennial
shoppers were also important consumer groups with
approximately 40 million to 45 million consumers in
the age groups aged 25–34, 35–44, and 45–54. The
focus by consumers on convenience and low prices
grew stronger as age demographics declined in age.
Online shopping met the discount pricing and 24-hour
availability and convenience desired by Millennial
shoppers. Smartphone applications greatly enhanced
the ability of consumers to make purchases from any
location at any time of the day. Walmart had achieved
considerable success in online and mobile selling by
closely studied demographics when adding services
like Jetblack personal shopping, buy-online-pickup-
in-store and curbside pickup services. Walmart also
recognized the desire of Generation X and Millennial
shoppers to focus on quality and brand prestige even
though low prices remained an important consid-
eration in purchasing decisions. The acquisitions
of Bonobos, Lord & Taylor, and Bobbi Brown were
made by Walmart to improve the quality of products
offered in its stores and online.
Retail sector growth and the impact of COVID-19.
The retail trade sector had grown at an average
annual rate of 0.7 percent in the years 2015–2020
to reach $5.3 trillion in industry revenues. In 2020,
the U.S. retail sector was made up of 2.8 million
enterprises and employed 17.6 million Americans.
Total wages in the industry exceeded $476 billion.
The growth rate in retail trade had also allowed for a
3.1 percent increase in retailer profit margins in 2020
and an 8.9 percent increase in wages as a share of
revenues in 2020.
The onset of the coronavirus in early-2020 was
projected to lead to a 3.3 percent decline in revenues
for the entire 2020 calendar year as retailers were
required to temporarily close stores. Also, the spike
in unemployment resulting from COVID-19 stay-
at-home orders and store closures was projected to
result in an overall decrease in consumer spending
which would harm the U.S. department store indus-
try and other consumer sectors. Analysts believe that
the retail sector would return to a strong 1.8 percent
annual growth rate for 2021 through 2025 as COVID-
19 became contained and mitigated. Industry reve-
nues were projected to increase to nearly $5.9 trillion
by 2025.
The declining sales of the department store segment
of the retail industry. The $100 billion department
store segment of the retail sector had fared far less
well than retailers such as discount supercenters,
wholesale clubs, and specialty retailers during the
mid-2010s. While the entire retail sector had enjoyed
a 0.7 percent annual growth rate between 2015 and
2020, the department store segment of the retail sec-
tor had declined 11 percent annually during those
years. The number of department stores declined
4.9 percent between 2015 and 2020, with COVID-19
hastening the decay of the industry with a projected
27.4 percent decline in department store revenues
and a 3.2 percent decrease in profit margins for the
industry segment. Analysts projected that the depart-
ment store segment of the retail industry would con-
tinue to decline by 7.5 percent annually, falling from
$100 billion in 2020 to $67.7 billion in 2025.
Profiles of the Largest U.S.
Department Store Chains
Target Corporation Target Corporation was the
largest U.S. department store chain in 2020 with
a market share of 50.1 percent and 2019 sales of
$50.1 billion. Target has achieved explosive growth
between 2015 and 2020, allowing its market share
to increase from approximately 34 percent in 2015
to 50 percent in 2020. The company operated 1,868
stores across the United States and recorded sales
of $78.1 billion in fiscal 2020. A large portion of
the company’s sales was comprised of groceries,
which lowered its sales of department store items to
 CASE 5 Macy’s, Inc.: Will Its Strategy Allow It to Survive in the Changing Retail Sector?
$50.1 billion. In fact, the company’s sales of depart-
ment store items had declined at an annual rate of
2.2 percent between 2015 and 2020.
The company had been able to increase overall
sales in its supercenter locations through a reimag-
ing plan that included store remodeling projects and
the introduction of perishable and nonperishable
foods to more store locations. This introduction of
grocery items produced a comparable store sales
growth of 5 percent. Gains in every market category
was achieved coupled with a record high earnings per
share increases.
Key elements of Target Corporation’s retail strat-
egy included:
• Becoming the first U.S. retailer to offer same-day
and drive-up fulfillment capabilities, coast-to-coast.
• Remodeled more than 400 store locations by 2019.
• In 2018, opened more than 24 small-store formats,
with 30 more planned in 2019, in high-traffic
urban locations and college campuses.
• Focused on better guest services: increased mini-
mum wage to $12/hour; raising again in 2019 to $13/
hour, with a goal of $15/hour by the end of 2020.
• Focused on digital channels, where in 2018 com-
parable digital sales grew 36 percent.
• Introduction of more brands, more than doubling
a goal of more than a dozen in 2017, which was
one reason Target Corporation was named by Fast
Company as one of the world’s most innovative
companies.
Nordstrom, Inc. Nordstrom Inc. was the third
largest department store chain in the United States
with 380 total stores in 2020. Nordstrom Inc. had
a diverse mix of retailing formats with 136 fill-
line Nordstrom department stores, 244 off-price
Nordstrom Rack stores, and multiple e-commerce
sites. The company’s greatest store concentration of
Nordstrom department stores was in California with
35 full-price locations followed by Texas with 10.
While Nordstrom was best known for its luxu-
rious department stores, the company’s innovative
online retailing platforms accounted for 46 percent
of Nordstrom Holdings’ total sales of $15.1 billion.
HauteLook was a rapidly growing online retail-
ing site owned by Nordstrom Holdings that was an
online private sales site. Truck Club was another per-
sonalized site that allowed men to purchase personal-
ized clothing. The company had other small-format
C-57
online retailing sites such as The Black Tux that
allowed men to order high-quality, tailored tuxes that
could be tried on at home and returned for further
alterations. The Black Tux rentals could also be taken
to a Nordstrom department store for alterations.
The addition of specialty online retailing sites
had allowed Nordstrom Holdings to achieve over-
all growth, its department store specific sales had
declined by 5.8 percent annually between 2015 and
2020. The profitability of its department stores had
also declined to less than a one percent margin in
fiscal 2020.
Sears Holdings Corporation Sears Holdings
Corporation resulted from the 2005 merger between
Sears Roebuck and Company and Kmart Holding
Corporation. The merger produced a company with
a network of approximately 1,000 Sears department
stores and Kmart discount stores. Sears department
stores were primarily mall-based, and Kmart loca-
tions were largely standalone stores. The merger was
designed to strengthen two retail brands that had
each been declining rapidly for decades. For nearly
100 years, Sears held commanding market shares
in nearly every department store product category,
from women’s, men’s, and children’s apparel to large
appliances and even automobile tires and batteries.
Sears’s loss of sales in the department store industry
began in the 1980s as a result of poor strategic posi-
tioning that prevented it from effectively competing
with cost leaders such as Walmart and Target or with
mid-tier competitors such as Macy’s or J.C. Penny.
Similarly, Kmart had struggled since the 1980s
to effectively compete against Walmart on price and
merchandise availability. The introduction of the
Walmart Supercenter in 1988 exposed problems at
Kmart that included old, small store locations that
were no longer located in high traffic shopping areas,
supply chain inefficiencies and frequent out-of-stock
store inventory, low employee morale, corrupt execu-
tive leadership, and a lack of price competitiveness.
Sears Holdings filed Chapter 11 bankruptcy
in 2018 to contend with its 21 percent annual sales
decline, operating losses estimated at 6.7 percent
of revenues, and outstanding $5 billion debt. Sears
Holdings closed more than 500 store locations in
the first year of its bankruptcy protection and oper-
ated only 182 stores in 2020. The company closed all
stores in April 2020 because of the COVID-19 pan-
demic and had reopened 25 stores in May 2020.
C-58 PART 2 Cases in Crafting and Executing Strategy
J.C. Penny Company, Inc. J.C. Penny Company
operated 846 store locations in the United States
and Puerto Rico and achieved total revenues of
$10.7 billion in fiscal 2019. The company’s sales had
declined steadily from a high of $20 billion in 2006
as a result of poor merchandising strategies and inef-
fective leadership. The company’s descent acceler-
ated during the Great Recession of the late-2000s as
CEO Myron Ullman failed to adapt pricing to the
diminished purchasing power of consumers suffer-
ing the effects of the recession. J.C. Penny’s financial
troubles grew worse under the leadership of former
Apple CEO Ron Johnson who was hired in 2011 to
turnaround the failing company.
CEO Johnson envisioned a J.C. Penny that
would compete with more upscale retailers. His strat-
egy was based on instinct and, without market test-
ing, Johnson change the company’s store designs,
logo, advertisements, and pricing model to appeal
to wealthier shoppers. Under Johnson, the company
dropped its popular private label brands that were
very profitable and had a loyal following among low-
and middle-income customers. Johnson also ended
J.C. Penny’s history of using coupons and clearance
sales to attract shoppers. By 2012, with sales plung-
ing 25 percent and the company deeply in debt, it
was clear that Johnson’s strategy had failed to attract
wealthy customers and had driven away its formerly
loyal customers.
In 2013, J.C. Penny turned to former CEO
Ullman in to begin a turnaround plan and, in 2015,
selected Marvin Ellison as CEO. Ellison had led the
appliance division at Home Depot and expected to
position J.C. Penny to take advantage of the collapse
of Sears to increase sales of appliances at J.C. Penny.
The plan failed to achieve success, with Ellison
leaving to lead Lowe’s. The company continued to
ENDNOTES
1 Pamela N. Danziger, “Four Demographic https://www.forbes.c om/sites/
Trends that Many Retailers Missed, but pamdanziger/2019/0 5/05/ four-
not Walmart,” Forbes, May 5, 2019, demographic-trends- that-m any-retailers-
struggle to develop a value proposition that resonated
with consumers and filed for Chapter 11 bankruptcy
in May 2020. The company’s restructuring plan
would involve the permanent closing of 30 percent
of its store locations, but analysts believe it was quite
possible that J.C. Penny would be liquidated and go
out of business permanently.
Macy’s, Inc. Strategic
Situation in Mid-2020
With the company reporting a year-over-year sales
decline of more than 45 percent from approximately
$5.5 billion in Q1 2019 to approximately $3 billion
in Q1 2020, there was tremendous uncertainty about
the effectiveness of Macy’s turnaround and its abil-
ity to absorb the impact of COVID-19 on the retail
industry. However, in comments to analysts follow-
ing the company’s announcement of its First Quarter
2020 results, CEO Gennette saw several bright spots.
A portion of the company’s loss in Q1 2020 was a
result of a $300 million charge on inventory that
would have been marked down as sale items if stores
had been open. Also, CEO Gennette believed that
the company would be able to right-size its inventory
during the second quarter of 2020 to reduce over-
head. Macy’s management was particularly encour-
aged by the company’s 80 percent increase in online
sales during the month of May 2020 as consum-
ers were forced to shop online during stay-at-home
orders. Gennette had commented to analysts that
while sales might not stabilize until 2021 or 2022, the
company would be able to retire $1 billion in debt by
2022. With so much unpredictability, coupled with
changing consumer wants and needs, the retail arena
was surely one that will continue to be a challenge
moving forward.
missed-but-not-walmart/#17cc4c465c81
(accessed May 29, 2020).