Financial Analysis Report: Macy's Retail Store Performance Review

This report provides a detailed financial analysis of Macy's retail store, examining key success factors such as online sales development, customer base maintenance, and supplier relationships, along with associated non-financial factors like regulatory compliance and employee morale. It identifies significant risks, including economic fluctuations, competition, and employee turnover. The report analyzes Macy's past financial performance, presenting a three-year projection with revenue, cost, and expense breakdowns, highlighting potential declines and the need for strategic modifications. It discusses potential scenarios, emphasizing the importance of proactive management in mitigating risks and improving financial outcomes. The analysis underscores the need for the company to adapt to market changes, improve financial controls, and make strategic changes to enhance sales and overall performance.

Running head: FINANCIAL ANALYSIS
Financial Analysis
Name of the Student:
Name of the University:
Author’s Note:

1
FINANCIAL ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Success Factors and Risks: Priorities..............................................................................................2
Key success factors: non-financial factors......................................................................................3
Success factors and risks: Risks......................................................................................................4
Likely Performance.........................................................................................................................5
Consolidated financial performance................................................................................................6
Modifications...................................................................................................................................7
Discussion........................................................................................................................................8
Reference List..................................................................................................................................9

2
FINANCIAL ANALYSIS
Introduction
Macy’s Retail Store is a departmental store which is a part of Macy’s Inc. This is a
departmental store located in the United States of America and various other nations and mainly
concentrates in products like jewellery, clothing, beauty product, household products, footwear
and furniture. The retail store like the other organizations have been operating in an effective
manner and therefore have constructed plans and policies with the help of which the company
can mitigate their risks and create competitive edge (Anon www.macysinc.com/about-us/ 2018)
This paper would therefore look to assess the key success factors and the risks that are related to
the organization with the help of which the priorities in relation to the success factor and risks
can be known. The success factors that are in relation to the non-financial factors and the
associated risks will be known and the projections in relation to the likely performance will be
known(). The projections of the worst and best scenario will be known and a discussion of the
future projections will be known.
Success Factors and Risks: Priorities
There are several processes and methods that are related to the operational activities of
Macy’s retail store and this section of the paper has the intention of explaining the priorities that
are associated with the departmental store. One of the biggest priorities that is faced by the retail
store is the development of the online sales for the retail store The retail store has currently
established the online shopping process and therefore the organization has been looking to plan
strategies and policies with the help of which the organization is able to increase their online
sales. The key success factor for the company in accordance to the online sales and shopping has
been the attractive discounts and the plans that have been constructed with the help of which the
retail store is able to raise their level of sales (Dewachter et al., 2015). The other priority that is

3
FINANCIAL ANALYSIS
associated with the retail store is the maintenance of the customer base and thereby make plans
to increase the level of customers for the retail store (Chu et al., 2017). There are several plans
and strategies that are related to the increase in the extent of customer base but Macy’s Retail
Store store has kept their prices lower than the market in order to attain sales maximisation and
thereby increase and maintain their customer base (Erdogan et al., 2015) The other priority of the
company has been to maintain cordial relationship with their suppliers with the help of which
they can gain products and services from their suppliers with ease without any sort of issues and
problems. These have been the key success factors related to the priority of the company with the
help of which the organization can attain their desired goals and objectives (Colclough, S., &
Griffiths 2016).
Key success factors: non-financial factors
There are several non-financial factors that are related to the company and it is essential
to have an understanding of these factors with the help of which an idea can be attained with
respect to which the competitive edge and the profit of the company is attainable. The retail store
with their plans and policies looks to stay in line with the current legislations (Rigamonti et al.,
2015). However, the company looks to anticipate the future frameworks and regulations that
would be implemented by the government. The projections and the anticipations of the company
with regards to the strategies and the operational plan that would be incorporated is based on the
future regulations and the policies that would be constructed by Macy’s retail store.
The company looks to enhance and improve the morale of the employees with the help of
various rewards and recognition programs with the help of which the employees would get
motivated and thereby the retention of the employees and the recruitment of new employees
would increase. Macy’s retail store looks to maintain the industrial benchmark and the standards

4
FINANCIAL ANALYSIS
that have been put forth with the help of which they are able to understand the real scenario of
the company and thereby construct strategies that would improve the same (Nesticò, & Pipolo
2015). Macy’s retail shop being a departmental store has to communicate with various suppliers
and customers and therefore always tries to maintain a cordial relationship with the suppliers and
the customers with the help of which the discrepancies and the complaints that are existent can
be known and accordingly steps can be taken in order to mitigate the issues and maintain a
precise and effective operational process (Grossmeier et al., 2016). One of the key successful
non-financial factors has been the enhancement of the reputation of the business that is
operational and even maintain proper and healthy relationship with the local society and the
community so that their demands and their requests can be known and thereby plans and policies
can be created with the help of which development of the company is possible (Yoder et al.,
2015). The capabilities of the business like the development of the skills and the experiences in
the new aspects is a goal of company and thereby these elements are helpful in the development
of a better and effective management process within the company. The risks have played a
significant role in the development of the company and therefore predicting and managing the
future risks like the safeguard of the intellectual property against the probable rivalry have been
the aspects with the help of which Macy’s key success factors have been determined.
Success factors and risks: Risks
There are numerous risks that are observed by the company and one of the significant
risk has been the economic risk that takes place due to rise in the rate of inflation and the
changes in the GDP of the company. The changes in the rate of inflation can have affects the
sales and the revenue of the company and therefore changes in the operational plan are made
with the help of which these risks can be mitigated (Kosinova et al., 2016). The effective

5
FINANCIAL ANALYSIS
management structure is the main reason with the help of which these risks have been
overlooked and mitigated. The other risk that have been observed is the rise in new competitors
and departmental stores that are offering new and attractive discounts and various promotional
activities with the help of which customers get attracted and thereby decrease the actual sales
(Kallala et al., 2015). The political and the legal attributes of the country where the company
operates have a key role to play and changes in the political activities and the legal frameworks
can have an impact on the key operational plans and strategies of the company. The employee
retention and turnover is another risk that is faced by the company because of the fact that the
employees are prone to leave the company if they are not satisfied with the management and the
operational framework of the company. Hence, it acts as a risk that affects the company (Sultana,
2018). The changes in the technology looks to be susceptible for the business and therefore
cybercrime attacks and other challenges can have an impact. These are the risks that have been
observed for Macy’s retail store and accordingly plans and policies can be formulated.
Likely Performance
The current performance of the company addresses the effectiveness of the operational
plan that the company operates. In the last few years, there has been fall in the sales and revenue
for the company and therefore in the current time period the management of the company looks
to frame plans and policies and amend the current plans so that a rise in the level of profit can be
attained (Kassicieh et al., 2015). The rise in the level of the business and sales has been observed
with the help of new strategies and accordingly competitive edge can be attained. In the current
period, online shopping has gained its significance and therefore the company (Yoder et al.,
2015) has been looking to promote their online shopping process with the help of which
customers can easily purchase products from the store by even not coming at the store and

6
FINANCIAL ANALYSIS
receiving the real product. The performance of the company in accordance to the operations of
the skilled employees determines the efficiency of the company and therefore the rise in the level
of sales has been possible due to these aspects. The operational incorporated by the banks
Consolidated financial performance
There have been observations that in the past few years there have been losses for the
company as it is seen that the sales and the revenue of the company has fallen and this has
directly had an impact on the business scenario. This section of the paper is therefore looking to
address the future performance of the company and thereby would be able to understand the
future course of the business. An assessment of the three year future years has been given as
follows:
Particulars 2017 2018 2019
Revenue 25778 24770 21520
Cost of revenue 15621 15321 17325
Gross profit 10157 9449 4195
Operating expense
Sales, general and administration 8265 9565 10210
Other expenses 577 653 770
Total operating expense 8842 10218 10980
Operating income 1315 1502 1625
Interest expense 384 572 711
Other income 21 30 28
Income before income tax 952 1110 1060
Provision for income tax 341 398 402
Minority interest -8 -11 -15
Other income -8 -10 -11
Net income from continuous process 611 3591 3800
Other 8 6 10
Net Income 619 3597 3810

7
FINANCIAL ANALYSIS
The evaluations that have been undertaken for this company in accordance to the coming
three years have addressed that the company would not be performing in an effective manner as
it is seen that the expenses associated to the company will be increasing due to the factors that
have been explained earlier and thereby addressing the company will not been able to live to
their expectations in the year 2017 (www.macysinc.com/about-us/ 2018). In the year 2018, the
company has not been able to improve their financial position because of the fact that with the
rise in the level of competition and changes in the demands of customers, the company has not
made changes in their policies and plans. It is seen that the company has increased their expenses
and has been unable to improve their revenue and income in an effective manner.
In the year 2019, there will not be any financial changes for the company as well because
by looking at the various internal and external aspects, the company will not be able to make
changes as and when necessary. The expenses have increased and the company has not been able
to increase their income in the same manner.
Modifications
There are scope of medication in this circumstances because of the fact that the company
can make changes in their internal policies with the help of which they can enhance their sales
and accordingly can play a key part in the development of the company. The management needs
to take strict actions and controls with the help of which they can administer every aspect and
thereafter can play a handy role in the development of the financial and the non-financial
scenario of the company (Sharma, & Mehra 2017). The worst scenario that can occur to the
company is immense loss which can thereby have an impact on the operational activities of the
business and on the other hand, the best scenario can occur if the management is aware enough
to make drastic changes in accordance to the aspects that have been explained earlier with the

8
FINANCIAL ANALYSIS
help of which the company would recover from their current financial obligations (Johnson et al.,
2015).
Discussion
The assessment of the various aspects that are associated to operations of the concerned
business have explained that there is an existence of various gaps that can create a difference
between the anticipated results and the actual result in the coming time period (Yurttadur et al.,
2017). The transformations in the government policies and frameworks along with the changes in
the economic scenario can make changes to the assumptions that have been made. If the
company assesses the market on a frequent basis and discovers their discrepancies according to
the market and accordingly changes in their operational activities can be undertaken. The
external factors is not in the hands of the company and therefore plans and strategies have to be
constructed but on the other hand the internal factors are dependent on the company itself and
therefore it is the duty of the company to take steps that can make Macy’s retail store much
better and effective than the current scenario.

9
FINANCIAL ANALYSIS
Reference List
Anon, (2018). [online] Available at: https://www.macysinc.com/about-us/ [Accessed 18 Mar.
2018]
Chu, P. L., Vanderghem, C., MacLean, H. L., & Saville, B. A. (2017). Financial analysis and
risk assessment of hydroprocessed renewable jet fuel production from camelina, carinata
and used cooking oil. Applied energy, 198, 401-409.
Colclough, S., & Griffiths, P. (2016). Financial analysis of an installed small scale seasonal
thermal energy store. Renewable energy, 86, 422-428.
Dewachter, H., Iania, L., Lyrio, M., & de Sola Perea, M. (2015). A macro-financial analysis of
the euro area sovereign bond market. Journal of Banking & Finance, 50, 308-325.
Erdogan, E. O., Erdogan, M., & Ömürbek, V. (2015). Evaluating the effects of various financial
ratios on company financial performance: Application in Borsa Istanbul. Business and
Economics Research Journal, 6(1), 35.
Grossmeier, J., Fabius, R., Flynn, J. P., Noeldner, S. P., Fabius, D., Goetzel, R. Z., & Anderson,
D. R. (2016). Linking workplace health promotion best practices and organizational
financial performance: tracking market performance of companies with highest scores on
the HERO scorecard. Journal of occupational and environmental medicine, 58(1), 16-23.
Johnson, S. G., Gruntowicz, D., Chua, T., & Morlock, R. J. (2015). Financial analysis of
CYP2C19 genotyping in patients receiving dual antiplatelet therapy following acute

10
FINANCIAL ANALYSIS
coronary syndrome and percutaneous coronary intervention. Journal of managed care &
specialty pharmacy, 21(7), 552-557.
Kallala, R. F., Vanhegan, I. S., Ibrahim, M. S., Sarmah, S., & Haddad, F. S. (2015). Financial
analysis of revision knee surgery based on NHS tariffs and hospital costs: does it pay to
provide a revision service?. Bone Joint J, 97(2), 197-201.
Kassicieh, S., Ahluwalia, S., & Majadillas, M. A. (2015). Financial analysis in management of
technology programs: links in a clinical approach. Technological Forecasting and Social
Change, 100, 66-77.
Kosinova, N. N., Tolstel, M. S., Sazonov, S. P., & Vaysbeyn, K. D. (2016). Development of
Methodological Approach to Enterprise's Financial Strategy Based on Comprehensive
Evaluation of Its Strategic Potential. European Research Studies, 19(2), 21.4
Nesticò, A., & Pipolo, O. (2015). A protocol for sustainable building interventions: financial
analysis and environmental effects. International Journal of Business Intelligence and
Data Mining, 10(3), 199-212.
Rigamonti, L., Ferreira, S., Grosso, M., & Marques, R. C. (2015). Economic-financial analysis of
the Italian packaging waste management system from a local authority's
perspective. Journal of Cleaner Production, 87, 533-541.
Sharma, A., & Mehra, A. (2017). Financial analysis based sectoral portfolio optimization under
second order stochastic dominance. Annals of Operations Research, 256(1), 171-197.

11
FINANCIAL ANALYSIS
Sultana, R. (2018). Comparative Analysis Between Ngo & Company Financial
Statements. American Scientific Research Journal for Engineering, Technology, and
Sciences (ASRJETS), 39(1), 169-179.
Yoder, J. R., Alexander, C., Ivanic, R., Rosch, S., Tyner, W., & Wu, S. Y. (2015). Risk versus
reward, a financial analysis of alternative contract specifications for the miscanthus
lignocellulosic supply chain. BioEnergy Research, 8(2), 644-656.
Yurttadur, M., Simsek, A., Unlu, M., Cihan, S., & Araci, S. (2017). A RESEARCH ABOUT
THE EFFECT OF THE STRATEGICAL FINANCIAL PLANNING OF THE
COMPANIES IN LOGISTICS SECTOR IN TURKEY ON THE COMPANY
GROWTH. PressAcademia Procedia, 4(1), 114-122.