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In February 2009, Macy's, Inc. announced a series of actions designed to position the company for increased sales, profitability and cash flow. Included were the nationwide rollout of the My Macy's localization strategy; adoption of a unified operating structure to support the Macy's business; appointment of a new Macy's, Inc. executive management team under the continued direction of Terry J. Lundgren, chairman, president and chief executive officer; and a series of actions to increase profitability and cash flow. These included adjustments in workforce, reduction in discretionary spending, and a reduction in the quarterly dividend to shareholders. Through these actions, and even with additional investment in local markets through My Macy's in 2008 and 2009, we have been able to reduce previously planned expenses by more than $500 million per year going forward.

We continued to emphasize the integration of stores and online sites at Macy's and at Bloomingdale's. This has helped us to create a 360-degree view of the customer so we can serve her needs across channels, which in turn drives sales in both stores and online. Our investments in the infrastructure of our online businesses over the past four years are paying off. In fiscal 2009, online sales (macys.com and bloomingdales.com combined) were up 20 percent.

Macy's continued to enhance and differentiate its merchandise assortments through exclusive agreements with well-recognized partners. In 2009, Macy's signed an agreement to become the exclusive department store retailer of Ellen Tracy branded better sportswear, beginning in spring 2010. In addition, Macy's became the exclusive department store with in-store Sunglass Hut locations. In fall 2010, Macy's will become the exclusive department store retailer of Kenneth Cole Reaction men's sportswear and a new juniors line called "Material Girl" being developed in conjunction with Madonna.

Macy's and Bloomingdale's enhanced their presence in social media in 2009 by launching enhanced programs on sites such as Facebook, Twitter and YouTube. Active involvement in social media is key to the company's ability to interact effectively with a new generation of customers. After less than six months of implementation of the new strategy, Macy's ended the year with nearly 250,000 friends on Facebook.

Underscoring our commitment to community involvement, the company partnered with customers to raise more than $34 million for worthwhile causes in 2009 through cause marketing programs. These included Believe (benefiting the Make-A-Wish Foundation) during the holiday season, Come Together (for hunger relief in conjunction with Feeding America) in the fall, Turn Over A New Leaf (for the National Park Foundation) in the spring, and a literacy program (for Reading Is Fundamental) during the back-to-school season, as well as our long-standing relationship with the Go Red For Women movement of the American Heart Association.

The company enhanced its commitment to diversity and inclusion. We created a Macy's, Inc. Executive Diversity Council — chaired by Chairman, President and CEO Terry Lundgren — to accelerate our progress on inclusion. Our objective is to accelerate the progress we've made to ensure that our people, merchandise, marketing, communications and community outreach reflect the multicultural nature of the customers we serve. Lundgren's personal commitment to diversity also includes serving as chairman of the National Minority Supplier Development Council.