After a year of dramatic changes, Macy's
- Completed the integration of Federated Department Stores.
- Changed its name and stock ticker.
- Sold Lord & Taylor, Priscilla of Boston, and the bridal group consisting of David's Bridal and After Hours Formalwear.
Sales were also somewhat slimmer, with comparable-store numbers trending down 2% in the fourth quarter, adjusted for the extra week last year. Inventories ended the year in fine trim, down 5% versus the prior year, showing that management is taking a cautious stance as they head into 2008.
The company did manage to beef up earnings per share from continuing operations, which rose to $1.65 compared to $1.60 last year, excluding a host of unusual items related to the May Department Store acquisition and subsequent business dispositions. This was a pleasant surprise to analysts, who were only expecting $1.60.
Expect Macy's to present an even more svelte profile as it heads into 2008. A few weeks ago, the company announced a reorganization which will eliminate about 2,300 positions in divisional central offices, but will add back talent at the local level -- providing more autonomy to satisfy customer needs in individual markets. The new scheme is expected to generate partial-year savings of $60 million in 2008, growing to $100 million in 2009.
To round out the "slimming down" theme, even Macy's reporting calendar is getting a trim. Following a previous decision to discontinue quarterly earnings guidance, the company will now also discontinue monthly sales releases. The goal of this change is to focus management on longer-term goals (a sage decision).
Department-store competitors like J.C. Penney
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Fool contributor Timothy M. Otte surveys the retail scene from Dallas. He welcomes comments on his articles, but doesn't own shares of any of the companies mentioned in this article. The Fool has a disclosure policy.