Post on 13-May-2015
transcript
MACY’S VS JC PENNEY
SHARON SINGLETON, ALEXANDRA BROOKS
RUBEN PEDROZA, STEVE CHAKYTEAM 3Z
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
Business Overview – Macy’s
150 years old, originally knownas 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
Business Overview – JC Penney
Established beginning of 20th Century 1,100 Stores in all 50 US States and ecommerce Merchandise
Apparel and footwear Accessories, jewelry, and beauty supplies Home Furnishings
Services Styling Salon, optical, portrait photography,
and custom decorating
Major Strategies – Macy’s
Private and Exclusive Label Brands Madonna, Martha Stewart, etc…
Magic Selling Enhance Customer Experience
My Macy’s Localization Strategy
Omni-Channel Integration Store-online-mobile device
Major Strategies – JC Penney
Exclusive Brand Portfolio Increase Online Presence Rebranding Image CustomerFIRST program Merchandise at Regular Price
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
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
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
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
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
Measures of Success
Macy’s**
JC Penney
Industry 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 Margin*
3.63% 3.98% 2.7%*Averages over six years, 2005-2010 ** Averaged over 5 years from 2005-2010, excluding 2008
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
Questions and Answers