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Financial Accounting: Retailers comparison Macy's vs J C Penney
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Financial Accounting: Retailers comparison Macy's vs J C Penney

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EMBA Financial Management Class Presentation Macy's vs JC Penney · www.slideshare.net Group paper and presentation made at UCI Merage School of Business, March 2012. Grade awarded 93% (A).

EMBA Financial Management Class Presentation Macy's vs JC Penney · www.slideshare.net Group paper and presentation made at UCI Merage School of Business, March 2012. Grade awarded 93% (A).

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  • 1. MACY’S VS JC PENNEY SHARON SINGLETON, ALEXANDRA BROOKSTEAM 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 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
  • 4. Business Overview – JCPenney 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 CardRecognition Both record Liability at POS and recognize revenue upon merchandise redemptionBUT, differences in how they treat unredeemedcards Macy’s  Historical Data JC Penney  Escheatment  After 60 months
  • 11. Accounting Policies – RevenueRecognition 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 2.7Net 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

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