Macy's, Inc. (NYSE:M) Q2 2020 Earnings Conference Call - Final Transcript

Sep 02, 2020 • 08:00 am ET

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Macy's, Inc. (NYSE:M) Q2 2020 Earnings Conference Call - Final Transcript

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Executive
Jeff Gennette

to purchase, from pickup to delivery, and post-purchase to returns. With this, we need to flex our network and fulfillment strategy, given the acceleration of digital to focus on capacity expansion, cost efficiencies and providing customers with more choice and control over their delivery and returns experience. For instance, we're developing a centralized fulfillment network to demonstrate efficiencies and getting products to stores and customers more quickly. The supply chain redesign that we shared with you in February is moving forward with an early emphasis on capacity planning and centralized fulfillment.

At the start of the COVID-19 pandemic, call center volume and response time was a pain point for us, and we had significant disruption with our offshore partners. Within the US, in the span of two to three weeks, we developed and implemented a work from home option for our call center colleagues, and we are diversifying our geographic footprint to enable us to provide continuity of service to our customers in the event of regional or global resurgences.

The last point of the Polaris strategy is reset the cost base. We will show discipline on cost management and create a culture of continuous assessment to derive the greatest ROI on every dollar spent. In February, we shared that we would reset our cost base, right-size the organization and expense base, balance top line and bottom line growth, and improve productivity and working capital, including faster inventory turns. The current environment has required us to make our organization even more efficient. Our Polaris cost savings target of $1.5 billion that we shared with you in February has now expanded to $2.1 billion now, all by the end of 2022. We will continue our disciplined expense management to allow as much of the $2.1 billion as possible to flow to the bottom line, recognizing this will help mitigate higher costs from our aggressive lean into the digital business over the next two [Phonetic] years and some will be invested in strategies to drive top line growth. Through our continued focus on disciplined expense management, we have created a Macy's that is better positioned to effectively compete today and in the future.

To sum it all up, the updated Polaris strategy continues our work to strengthen customer relationships and build customer lifetime value; hones our merchandise strategy to focus on categories that matter most to customers today and have a long runway for growth; aggressively accelerates digital; optimizes all aspects of our network including stores, supply chain, call centers to deliver the best customer omni-channel experience; and delivers profitable growth on a rewired cost base.

In closing, we are confident that we have the right strategy. We're trying [Phonetic] to on what's important now and in the future. We have resilient brands that will stand the test of time. We have an organization that knows how to execute through uncertainty by listening to our customers, following the data, reading the signs and pivoting quickly. I couldn't be more proud of our