Macy's Inc · NYSE:M
Macy's — Goldman Sachs Annual Global Retailing Conference 2019
22 slides from Macy's's conference presentation, Sep 5, 2019
Slide 1: Transforming Our Business Operations to Drive Profitable Growth
TRANSFORMING OUR BUSINESS OPERATIONS TO DRIVE PROFITABLE GROWTH Jeff Gennette, Chairman & Chief Executive Officer | Paula Price, Chief Financial Officer | Hal Lawton, President Goldman Sachs Annual Global Retailing Conference September 5, 2019
Slide 2: Safe Harbor Statement
Transforming Our Business Operations To Drive Profitable Growth 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 c
Slide 3: Agenda
Transforming Our Business Operations To Drive Profitable Growth AGENDA • Business overview • Path to profitable growth: defining the productivity program • Productivity program details and timeline 3
Slide 4: Macy's Opportunity as Retail Evolves
Transforming Our Business Operations To Drive Profitable Growth MACY’S OPPORTUNITY AS RETAIL EVOLVES Convenience Experience Value Connection Fashion Discovery 4
Slide 5: True Omnichannel Retailer
Transforming Our Business Operations To Drive Profitable Growth TRUE OMNICHANNEL RETAILER HEALTHY ROBUST GREAT STORES .COM MOBILE EXPERIENCE 5
Slide 6: 4 Steps to Profitable Growth
Transforming Our Business Operations To Drive Profitable Growth STEP 1 4 STEPS TO Comparable sales growth PROFITABLE STEP 2 Take market share GROWTH STEP 3 Healthy customer base STEP 4 Profitability growth 6
Slide 7: Agenda
Transforming Our Business Operations To Drive Profitable Growth AGENDA • Business overview • Path to profitable growth: defining the productivity program • Productivity program details and timeline 7
Slide 8: Need Exists to Pivot to Effectively Compete and Profitably Grow
Transforming Our Business Operations To Drive Profitable Growth NEED EXISTS TO PIVOT TO EFFECTIVELY COMPETE AND PROFITABLY GROW IN EVOLVING ENVIRONMENT HEADWINDS ESSENTIAL TOOLS • Fulfillment pressures • Ongoing disciplined expense o Channel shifts management o Increasing delivery expense o Continue
Slide 9: Multi-Year Productivity Program: Changing the Way We Work
Transforming Our Business Operations To Drive Profitable Growth MULTI-YEAR PRODUCTIVITY PROGRAM: CHANGING THE WAY WE WORK Supply Merchandising Marketing Stores Private Brand Indirect Spend Chain Mix & Pricing Sourcing Procurement • Build a best-in- • Optimize pricing: • Optimize • Offset wage • Redu
Slide 10: Multi-Year Productivity Program: Changing the Way We Work
Transforming Our Business Operations To Drive Profitable Growth MULTI-YEAR PRODUCTIVITY PROGRAM: CHANGING THE WAY WE WORK Supply Merchandising Marketing Stores Private Brand Indirect Spend Chain Mix & Pricing Sourcing Procurement By … We will … • Improving gross margin • Counter macro headwinds • Im
Slide 11: We Will Drive Gross Margin Improvement
Transforming Our Business Operations To Drive Profitable Growth WE WILL DRIVE GROSS MARGIN IMPROVEMENT 400 350 300 $275 million 250 to 200 $375 million 150 100 50 0 Supply Chain Merchandising Mix & Marketing Private Brand Sourcing Total Gross Margin Benefit Merchandising Marketing Private Brand Tota
Slide 12: We Will Drive SG&A Expense Savings
Transforming Our Business Operations To Drive Profitable Growth WE WILL DRIVE SG&A EXPENSE SAVINGS 300 250 $125 million 200 to 150 $175 million 100 50 0 Marketing Stores Indirect Spend Supply Chain Total SG&A Benefit Marketing Stores Indirect Spend Total SG&A Procurement Procurement Offsets Annual s
Slide 13: We Will Drive Improvements in Working Capital
Transforming Our Business Operations To Drive Profitable Growth WE WILL DRIVE IMPROVEMENTS IN WORKING CAPITAL Reduce inventory through improved allocation of fashion inventory as well as rapid restock of replenishment goods Reduce Private Brands costs Improvement of approximately $100 million within
Slide 14: Agenda
Transforming Our Business Operations To Drive Profitable Growth AGENDA • Business overview • Path to profitable growth: defining the productivity program • Productivity program details and timeline 14
Slide 15: Current Supply Chain Designed with Operational Mindset
Transforming Our Business Operations To Drive Profitable Growth CURRENT SUPPLY CHAIN DESIGNED WITH OPERATIONAL MINDSET … TO MINIMIZE COST WITHIN SPECIFIC FUNCTIONS ~630 Macy’s stores 16 Distribution centers 6 Megacenters 3 Merge centers Based on fiscal year 2018 sales: 80% National brands 20% Privat
Slide 16: Future Supply Chain Will Optimize and Prioritize Consumer Demand
Transforming Our Business Operations To Drive Profitable Growth FUTURE SUPPLY CHAIN WILL OPTIMIZE AND PRIORITIZE CONSUMER DEMAND INSTEAD OF OUR ARCHITECTURE C R E AT I N G OPTIMIZING I N C R E AS I N G FLEXIBILITY COST SPEED 16
Slide 17: Hold & Flow Will Deliver Gross Margin Benefits
Transforming Our Business Operations To Drive Profitable Growth HOLD & FLOW WILL DELIVER GROSS MARGIN BENEFITS Current Approach Hold & Flow RESULTS Full inventory Defer portion of allocation • In the pilot, Hold & Flow allocation to flow to locations with product delivered 3% to at start of season g
Slide 18: Fulfillment Logic Will Deliver Gross Margin Benefits
Transforming Our Business Operations To Drive Profitable Growth FULFILLMENT LOGIC WILL DELIVER GROSS MARGIN BENEFITS RESULTS Our Proprietary Fulfillment Logic Determines preferred node, taking • Observing a $0.70 per into account various factors, including: unit increase in margin v. $0.10 per unit
Slide 19: Markdown Optimization Represents Big Opportunity
Transforming Our Business Operations To Drive Profitable Growth MARKDOWN OPTIMIZATION REPRESENTS BIG OPPORTUNITY PAST NEAR TERM FUTURE SOLUTION RESULTS • Proof of concept pilot demonstrated 1.6% sales dollar expansion and 110 basis point gross margin rate • Six pricing • Selectively delay • Proactiv
Slide 20: What to Expect Near- and Long-Term
Transforming Our Business Operations To Drive Profitable Growth WHAT TO EXPECT NEAR- AND LONG-TERM 2019 2020 2021-2023 • Launch Hold & Flow on a small • Scale new capabilities to a larger • Transform and create a best-in- Supply receipt base; enable mega centers receipt base; continue to enhance cla
Slide 21: Significant Savings Expected Through 2023 and Beyond
Transforming Our Business Operations To Drive Profitable Growth SIGNIFICANT SAVINGS EXPECTED THROUGH 2023 AND BEYOND Targeted Savings 600 • Targeting annual $400 million to $550 million of 500 gross margin and SG&A benefits over the next two to four years 400 • $ Millions In addition to $100 million
Slide 22: Today's Key Takeaways
Transforming Our Business Operations To Drive Profitable Growth TODAY’S KEY TAKEAWAYS TRANSFORMING OUR BUSINESS OPERATIONS TO DRIVE PROFITABLE GROWTH • Meaningful opportunity for Macy’s as retail evolves • Clear line of sight into profit stabilization and growth … committed to top- and bottom-line g
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