Technology is playing a larger and increasingly crucial role at Macy's, Inc. as we increase convenience for customers, speed transactions, improve merchandising and operate more efficiently.

Our direct-to-consumer businesses, including macys.com and bloomingdales.com, continue to be the fastest-growing part of the company, with sales expected to top $1 billion in 2008. Our Internet sites are more complete, content-rich and faster than ever before. as a result, we are benefiting from the interaction of our stores and online offerings, which provide customers a seamless shopping experience.

These businesses are supported by two new 600,000-square-foot distribution centers in Portland, TN, and Goodyear, AZ, that are part of a $300 million investment in direct-to-consumer technology and operations in the 2006-2008 period. With these new facilities in place, the company's selling sites can ship 98 percent of its online and mail orders (up to 70,000 a day) within 24 hours. The nationwide distribution center network, supporting Macy's and Bloomingdale's stores, also has been upgraded and reconfigured to reduce the time and costs required to bring fresh goods to the sales floor.

In the stores, Macy's in 2007 began rolling out a network of 50,000 new registers and point-of-sale systems that will be fully in place by the end of 2010. New "smart registers" are allowing sales associates to handle complex tasks more simply, while the supporting software will enable true multi-channel retailing in the years ahead.

Tailoring merchandise by store, part of the My Macy's localization strategy in every Macy's division, is being enabled by a series of new systems and technology being rolled out after two years of development and testing. In part, these systems will allow merchants to more accurately assort each Macy's store with items, brands, garment sizes and colors preferred by customers who shop that specific location.