Please use the same tutor and same answer style for previous order #120513
Please read the attached Macy's case first.
You have been asked to prepare an executive summary analysis of Macy’s competitive position in the retail marketplace and the effectiveness of its Polaris strategy. Your report should contain 3 pages of recommendations for improving the company’s strategy execution efforts, overall competitiveness and financial performance. Your executive summary may be accompanied by supporting exhibits such as a competitive strength assessment, an evaluation of its strategy execution efforts, and a financial analysis.8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 1/24 Macy’s, Inc. in 2022: Has the Implementation of Its Polaris Strategy Produced a Successful Turnaround? John E. Gamble Texas A&M University-Corpus Christi 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 2/24 Page 392 Alen Badal Author and Researcher In 2022, Macy’s, Inc. was in the third year of its Polaris turnaround strategy that had been developed to reverse the company’s multiyear decline in revenues. The company’s plateau in annual revenues began in the mid-2000s and ranged from approximately $27 billion in fiscal 2007 to $25 billion in fiscal 2019. The company’s achieved record revenues of $28.1 billion in fiscal 2015. Macy’s stagnant sales largely reflected a change in shopping preferences from mall-based department stores to online retailing. 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 expectations. Consumers had come to expect even the most highly differentiated retailers to have an online presence in addition to their prestigious brick-and-mortar locations. Macy’s had struggled as badly as nearly any retailer in adapting from a brick-and-mortar business model to meeting the needs of consumers favoring online shopping. The company’s revenues collapsed to $18.1 billion in 2020 as the COVID-19 pandemic and stay-at-home orders by state and local governments had created unprecedented challenges for all traditional brick-and-mortar retailers. Macy’s, Inc. turned to 34-year company veteran Jeff Gennette in 2018 to develop a strategy to improve the company’s online retailing experience for consumers. Gennette unveiled a turnaround strategy called Polaris in February 2020, just as the world was learning of a frightening novel SARS-CoV-2, later to become known as COVID-19. The results of the Polaris plan were overshadowed by the decline in brick-and-mortar retail sales globally in 2020 and were difficult to assess in Macy’s 2020 performance. The plan, however, was showing promise in 2022 as the company focused on six key initiatives to transform the company’s operations and marketing approach to meet the needs of consumers. The six key pillars of the Polaris strategy were to: (1) win with fashion and style; (2) deliver clear value; (3) excel in digital shopping; (4) to enhance store experience; (5) modernize supply chain; and (6) enable transformation. The company’s 2021 performance rebounded sharply as shoppers became more comfortable returning to prepandemic routines, including 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 3/24 shopping in malls and department stores. The implementation of Macy’s Polaris strategy was also showing positive results as its revenues from online purchases increased by 45 percent from 2019. The company expected digital sales to grow to $10 billion by year-end 2022. The company’s performance had given investors confidence in the Polaris strategy with the company’s shares increasing from a low of $5.08 in October 2020 to about $24.00 in April 2022. However, the company’s shares were still trading at a fraction of their July 2015 high of $70 (see Exhibit 1). While the Polaris strategy was well-matched to the retail environment of 2022, the company’s implementation of the strategy would determine if Macy’s could sustain its improved competitiveness and financial performance. javascript:void(0); 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 4/24 Page 393 Company History Macy’s, Inc. was the second-largest department store chain with a market share of approximately 13.7 percent in 2021. The company operated about 510 Macy’s department stores, 33 Bloomingdales, 160 Bluemercury stores, and 20 Bloomingdale’s Outlet stores in 2022. Its retailing portfolio also included Macy’s Backstage and STORY along with their online divisions— macys.com, bloomingdales.com, and bluemercury.com. The company also licensed Bloomingdale’s stores in Dubai and Kuwait for operation by Al Tayer Group. The company was founded in 1830 by John Shillito in Cincinnati, Ohio, and had grown to a major department store by 1877 with a major presence in Manhattan. The company moved to Herald Square in New York City in 1902 and was the largest store in the world in 1924 when it hosted the first Macy’s Thanksgiving Day Parade. The company revolutionized retailing in the United States in 1934 when the stores began to arrange garments by size rather than by style and color. The practice quickly became a standard in the industry and has been replicated across the world. Macy’s top leadership took advantage of the appeal of the Macy’s Thanksgiving Day Parade in 1939 when it convinced President Franklin Roosevelt to move the traditional date of Thanksgiving from the last Thursday in November to the fourth Thursday in November. The extended Christmas shopping season was vitally important to retailers, many of which relied on Christmas holiday sales to reach profitability by year-end. In 1939, the company was the first department store to offer extended payment plans to help shoppers purchase necessary items despite the lingering effects of the Great Depression. Macy’s had thrived during the height of the department store era but began to suffer as discounters such as Walmart and Target began to grow rapidly during the 1980s and suffered even more as warehouse clubs such as Sam’s and Costco grew in popularity in the 1990s. The declining appeal of shopping malls also affected the performance of the company during the 1990s. Macy’s ability to adapt to the changing retail market led to the company filing for Chapter 11 bankruptcy protection in 1992. The U.S. Bankruptcy Court approved the acquisition of Macy’s by Federated Department Stores in December 1994. Federated developed a reorganization plan that addressed competitive weaknesses of the Macy’s chain and integrated logistics and other 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 5/24 administrative activities with Federated’s Bloomingdale’s and other retail chains. The company launched the www.macys.com e-commerce site in1996. Federated consolidated all of its department store brands as either Macy’s or Bloomingdale’s in 2005 and formally changed its name from Federated Department Stores to Macy’s Inc. in 2007. The newly named company expanded its lineup of brands with the addition of Bloomingdale’s Outlet in 2010, Macy’s Backstage in 2015, and the acquisition of Bluemercury in 2015. The company’s performance peaked in 2015 with revenues reaching $27.1 billion and the price of its common shares hitting an all-time high of $70. The company’s performance continued to decline through 2018 when longtime Macy’s veteran Jeff Gennette was selected as CEO and tasked with turning around the largely failing company. Gennette and his chief lieutenants developed the company’s Polaris strategy to address the company’s declining competitiveness and financial performance. The company’s results of operations for 2019 through 2021 are presented in Exhibit 2. Macy’s balance sheets for 2020 and 2021 are provided in Exhibit 3. javascript:void(0); javascript:void(0); 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 6/24 EXHIBIT 1 Performance of Macy’s, Inc.’s Stock Price, April 2012 to April 2022 (a) Trend in Macy’s, Inc.’s Common Stock Price javascript:void(0); javascript:void(0); javascript:void(0); 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 7/24 Source: bigcharts.marketwatch.com. (b) Performance of Macy’s, Inc.’s Stock Price Versus the S&P 500 Index javascript:void(0); javascript:void(0); 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 8/24 EXHIBIT 2 Macy’s, Inc.’s Results of Operations, 2019–2021 (millions, except per share amounts) 2021 2020 Net sales $24,460 $17,346 Credit card revenues, net 832 751 Cost of sales (14,956) (12,286) Selling, general and administrative expenses (8,047) (6,767) Gains on sale of real estate 91 60 Restructuring, impairment, store closing and other costs (30) (3,579) Operating income (loss) 2,350 (4,475) Benefit plan income, net 66 54 Settlement charges (96) (84) Interest expense (256) (284) Financing costs 0 (5) Losses on early retirement of debt (199) 0 Interest income 1 4 Income (loss) before income taxes 1,866 (4,790) Federal, state and local income tax benefit (expense) (436) 846 Net income (loss) $1,430 $(3,944) Basic earnings (loss) per share $4.66 $(12.68) Diluted earnings (loss) per share $4.55 $(12.68) Source: Macy’s, Inc. 2021 10-K. 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 9/24 EXHIBIT 3 Macy’s, Inc.’s Balance Sheet, 2020–2021 ($ in mil Current Assets: 2021 (Jan. 29, 2022) 2020 Cash and cash equivalents $1,712 $1,679 Receivables 297 276 Merchandise inventories 4,383 3,774 Prepaid expenses and other current assets 366 455 Total Current Assets 6,758 6,184 Property and Equipment—net 5,665 5,940 Right of Use Assets 2,808 2,878 Goodwill 828 828 Other Intangible Assets—net 435 437 Other Assets 1,096 1,439 Total Assets 17,590 17,706 Current Liabilities: Short-term debt 0 452 Merchandise accounts payable 2,222 1,978 Accounts payable and accrued liabilities 3,086 2,927 Income taxes 108 0 Total Current Liabilities 5,416 5,357 Long-Term Debt 3,295 4,407 Long-Term Lease Liabilities 3,098 3,185 Deferred Income Taxes 983 908 Other Liabilities 1,177 1,296 Shareholders’ Equity: Common stock (292.4 and 310.5 shares outstanding) 3 3 Additional paid-in capital 517 571 Accumulated equity 5,268 3,928 Treasury stock (1,545) (1,161) Accumulated other comprehensive loss (622) (788) Total Shareholders’ Equity 3,621 2,553 Total Liabilities and Shareholders’ Equity $17,590 $17,706 Source: Macy’s, Inc. 2021 10-K. 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 10/24 Overview of the Department Store Industry The department store industry was under pressure not only from e- commerce but also from discount retailers whose product lines encroached on traditional department store product categories. Women’s/men’s clothing and footwear and home goods and appliances made up the two largest categories of products sold in department stores in 2021. Drugs and cosmetics follow up as the next largest category of department store sales in 2021. 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 distinctive product line. 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 11/24 Page 394 Page 395 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, merchandise displays, and personnel put tremendous pricing pressure on brick-and-mortar retailers. The low prices offered by many online retailers coupled with consumers’ desire for the convenience of online shopping has dramatically altered the value proposition for shopping malls and resulting customer experience. 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 were aging, having been opened 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 landscaping along with a strong mix of aspirational luxury brands. The overall ambiance of such malls recreated the excitement of shopping in a mall that had been common in the 1970s and 1980s. Other malls that remained popular in 2022 were outdoor outlet malls 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. 8/10/23, 4:48 PM Macy’s, Inc. in 2022: Has the Implementation of its Polaris Strategy Produced a Successful Turnaround? https://prod.reader-ui.prod.mheducation.com/epub/sn_cffce/data-uuid-ee5ae438d8594fc7be5ca00be4593456#data-uuid-005cb8f92395426a929ea58020342678 12/24 Page 396 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. 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 2022. 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 and wealthiest generation in U.S. history. Much of baby boomer spending was on the purchase of