Terry Lundgren Sales Quotations

We are pleased with our February sales performance. Same-store sales for Macy's and Bloomingdale's locations were encouraging and above our guidance. Non-comparable stores were slightly above plan.

Online sales represent the fastest-growing part of our business and an outstanding opportunity for continued progress as we serve millions of new customers nationwide through our acquisition of May Co..

Our online businesses have performed very well over the past several years, with consistent double-digit sales growth rates and improving profitability. To maintain the momentum, we recognize we need to invest to better serve additional customers who want to shop online for the type of fashion merchandise we sell, especially as Macy's and Bloomingdale's expand their store presence nationwide. We are very serious about capitalizing on this opportunity.

To better serve our customers in this highly competitive retailing environment, we must concentrate on our best national brands and reduce costs so we can deliver outstanding value to shoppers, ... We believe that continuing to build Macy's and Bloomingdale's aggressively across America will accelerate our comp store sales performance and increase profitability, thereby driving shareholder value.

We expect our direct-to-consumer sales to grow to more than $750 million by 2008 from about $450 million in 2005.