Macy Incorporation Harvard Case Solution & Analysis

Another Step to Empower Women: Addition of New Executive

On June 23, 2014, Macy Inc. appointed Annie Young-Scrivner as a board member and this addition is supposed to bring new ideas in the business because Annie has been serving in Starbucks as Executive Vice President and she will bring her knowledge and experience of managing Starbucks retail outlets. (CINCINNATI, 2014)

Big Data Analytics

Macy Inc. has launched an analysis tool for analyzing consumers’ buying trends and habits that will reshape the retail industry by enabling merchants to know their customer behaviors and spending habits. (Kross, 2014)

Celebration of "The Star Spangled Banner"

Macy Inc. announced to play national anthem on the celebration of 200th anniversary of the star spangled banner throughout its nationwide branches. Moreover, Macy will join Smithsonian's National Museum in order to celebrate this event. (Macy's Stores Nationwide to Broadcast National Anthem in Salute of Flag Day Celebration for the 200th Anniversary of "The Star Spangled Banner", 2014)

Macy’s Parade and he Reality

Recently pro-family and Christian groups have launched a campaign against Macy Inc. that they are providing gay pride to our societies and they claim that this act is badly affecting our communities, moreover, the activities of gay pride are explicitly sexual (HARVEY, 2014).

Bond Offerings for Debt Repayments and Share Buyback

Macy Inc. has raised $500 million through sales of 10 years bonds at a coupon rate of 3.625% and as per its press release proceeds of bond issue, the company would be used to finance the repayment of notes amounting to $453; Macy’s Inc. has been paying interest of 5.75% on these notes. Moreover, the balance proceeds would be used to buy back its outstanding equity shares (Robinson, 2014).

Funding for Building Schools

In order to calm down the recent propaganda started by the pro-families and Christian groups as well as to enhance its public image and contribution to corporate social responsibility; Macy Inc. has announced to issue $1,000 grant to 100 schools and this grant will be issued on first come first serve basis. This step is expected to build its goodwill and increased brand awareness in local community. (WIRE, 2014)

Financial Statement Summary

Summary of latest financial statements of Macy Inc. for the financial year ended January 31, 2014 has been performed below:

Income Statement

Analysis of current years’ income statement reveals that Macy Inc. was not able secure remarkable growth in sales revenues in comparison with last years’ revenues and during the 12 month, Macy Inc. has generated $27,931/ million. In addition, cost of goods sold has grown by a higher percentage than the growth in revenues. This growth trend shows that Macy Inc. has not been able to control its cost of goods sold and it has generated $11,206 million gross profits. However, the selling and administrative expenses have been $8,440/ million, which resulted in operating profits of around $2,678/- million (Exhibit 2).

Balance Sheet

Macy Inc.’s cash equivalents have increased by 24% during the year and receivables have increased by 18%, however, due to the minor growth in sales revenues, investment in inventory has only been increased by5%. Moreover, the goodwill has not been impaired, which means that Macy Inc.’s goodwill has not been damaged, additionally, during the year no remarkable investment has been made in plant and equipments and they have decreased by 3% in comparison to the last year.

Macy Inc. is trying to lower down the debt financing and in doing so, it has decreased the long term liabilities by 1%. In addition, the working capital has been financed by short term loans and short term loan has increased by 273% in comparison to last year’s figures (Exhibit 3).

Cash Flows

Macy Inc. has generated positive cash flows of $437 million during the current year in comparison to negative cash flows of $991 million last year and majority of the cash has been generated through effective management of working capital that amounts to $2,549 million. However, investing and financing activities has generated negative cash flows of $788 million and $1,324 million respectively.....................................

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