During her tenure as Macy’s chief financial officer, Karen Hoguet has presided over many complex financial strategies and hurdles. A 30-year veteran of the company, Hoguet served in a number of executive roles before becoming CFO. As CFO, Hoguet has helped increase Macy’s net income fourfold, and same-store sales growth has topped 4 percent despite competitive pressure from other retailers. Customer spending patterns, disposable income levels, consumer confidence, and the cost of basic goods and necessities continue to keep retail finance professionals like Hoguet on their toes. A highlight of Hoguet’s CFO career has been presiding over the $17 billion acquisition of May Department Stores, which also included a string of divestures and a $3 billion debt repayment. More recently, Hoguet has been involved in corporate brand restructuring, which includes unifying brands under the Macy’s umbrella. After the recent economic slowdown, Macy’s credit ratings have returned to investment grade, a stock buyback program has been executed successfully, and company stock has outperformed that of its retail peers. Year after year, despite an industry highly dependent on the holiday season and general economic conditions, Hoguet and her Macy’s team have developed and implemented successful strategies to keep the retailer financially strong.
Questions
1. Numerous factors beyond the company’s control impact sales. These include, among others, the competitive environment, economic conditions, strategic actions, retail trends, and consumer spending. Provide examples of each factor’s influence on Macy’s sales, and any others you can think of?
2. Macy’s revenues and cash requirements are affected by the seasonal nature of its business, as a disproportionate amount of the company’s revenues occur in the last quarter of the calendar year. Discuss the impact of seasonality on financing decisions, including funding options, sources of funds, and financing requirements.