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

5. 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

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

14. Questions and Answers