What a difference only a few months made. As Ed Finkelsteins tuxedo-clad guests looked on in amazement, a remote-controlled silver flying saucer hugged the ceiling on the main floor at Macys Herald Square. The sight delighted hundreds of cosmetics executives and clothing suppliers who were sipping champagne and enjoying cheese canapés, caviar and lox on brown bread. Also on hand were members of Macys all-star board, including Jimmy Weinberg of Goldman, Sachs & Co.
They gathered in the middle of May 1991 to celebrate Macys remarkable recovery. By now the retailer had purchased $371 million worth of its junk bonds for less than half of face value, slashing its interest obligations. By comparison, one of Macys most vibrant competitors in southern California, Carter Hawley Hale Stores had filed for Chapter 11 bankruptcy protection in February.
As Carter Hawley Hale began a bitter reorganisation, the Macys crowd was partying. After finishing their drinks, Finkelsteins guests took the elevators to the ninth floor, where a small stage, podium, and viewing screen were set up. Tonight, we want to convey to you our excitement and enthusiasm about Macys future, he began. We want you to understand that Macys is back. And Macys is ready.
Moments later, several dozen senior Macys executives and others rose from their chairs in the back row and, to the astonishment of onlookers, burst into song. Although the words have been lost in time, one of those who sheepishly sang that night recalls that the verses were penned by a fellow Macys staffer, and that they praised the vendors who had supported Macys during its recent, turbulent period.
Finkelstein then read the following: Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the grey twilight that knows that not victory nor defeat. The quote was from a speech Theodore Roosevelt gave in Chicago in 1899.
Nodding his head with appreciation, the Macys chief continued. I couldnt agree more with those words. You can either fumble along the fringes, or you can aspire to greatness. And weve always believed that Macys is, and will be, a great store, doing great and daring things.
He then made a series of extraordinarily upbeat predictions. Macys, said Finkelstein, was about to launch an aggressive, five-year expansion programme that would add $3.6 billion of revenue by 1996, bringing Macys total annual revenues to more than $10 billion. The department store company was also investing $65 million in new techno-logy designed to speed recorders with suppliers.
Only a few months earlier, Finkelstein had gambled on a TV campaign.The $150 million effort, which featured singer Melissa Manchester, represented a five-fold increase in what Macys had been spending on TV. The commercials had been prepared by Lintas: New York. It was the first time that Macys had turned to an outside firm to create its advertising.
Our campaign, which kicked off last month, will be massive, Finkelstein added. There wont be a Macys market that is untouched by it. We want the customers and you to know that Macys is back, Macys is ready, and we intend to succeed.
The crowd, impressed and reassured, broke out into spontaneous applause. Then they went downstairs to The Cellar, where Glorious Food was catering a lavish dinner, Ms Manchester entertained, and the Peter Duchin Orchestra played romantic ballads. Macys did business with so many suppliers that it had to play host for two nights that week to avoid bruising anybodys feelings by leaving them out.
The events created massive goodwill and were the talk of New Yorks garment centre. The euphoria, however, lasted barely as long as it took that flying saucer to make its way across Macys main floor. The very next week, Macys revealed that it had lost $101 million on a 7 per cent decline in sales for the third quarter ended May 4, 1991, compared with a $63 million loss a year earlier. It was the largest single quarterly loss in the retailers history, a breathtaking reversal as unexpected as it was disturbing.
Extracted from The Rain on Macys Parade, published by Random House, distributed by IBD, Rs 980, 274 pages
