Macy’s, Inc. today unveiled an unprecedented, multi-year renovation that will reinvent and elevate the shopping experience at Macy’s flagship store at Herald Square in New York City. The project will fortify Macy’s Herald Square as one of the world’s favorite department stores (it’s already the largest) and a New York City icon.

The company is investing approximately $400 million in capital in the project over the next four years. Additional selling space will be added to allow for expanded assortments and upgraded presentations in key merchandise categories including shoes, handbags, cosmetics and fashion brands for millennial-generation customers.

Work will begin in early spring 2012 and continue in phases through the fall of 2015. The majority of every floor, virtually every department and the exterior of the building will be improved over the life of the project. The store will remain open and operating during construction, with the location of some departments shifting temporarily as work progresses.

“The excitement, size and scale of this remodel reinforces our conviction that Macy’s Herald Square is and will remain a retail store in a class by itself. It is our company’s most productive store, and experience shows that improvements in this location consistently result in higher customer traffic and sales volume. Our upcoming top-to-bottom remodel represents an investment in the future growth of our business as New York City continues to evolve as a world capital and shopping destination,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer.

“Herald Square is a national and international symbol of the Macy’s brand. It already is one of the top tourist attractions in New York City and North America. It is the hub of the annual Macy’s Thanksgiving Day Parade. And generations of fashion designers and celebrities have gravitated to Macy’s Herald Square as a place to launch products and showcase their newest ideas,” Lundgren said.

“While we will be creating a modern, customer-centric shopping experience for customers at Herald Square, we also will be careful to preserve and restore the historical integrity of this landmark building. Macy’s Herald Square is a treasure that we intend to protect and nurture. Blending Macy’s architectural legacy with advanced technology and contemporary design is what makes this project so special,” he added.

Key elements of the remodel project include:

— A 100,000-square-foot expansion of the store’s selling space to a total of 1.2 million square feet by opening up space currently used for stock and offices and extending the mezzanine level in the Broadway Building.

— A new hall of luxury brands, a dazzling series of two- and three-level shops in the Broadway Building. The current Louis Vuitton shop will be updated and enlarged to multiple floors. Other new shops to be announced will be added to provide a robust shopping experience for luxury goods, including handbags and shoes.

— Creating the world’s largest women’s shoe department — a total of 39,000 square feet of continuous selling space (63,000 square feet including stockrooms) on the second floor. The department will offer an unequalled assortment of fashion and luxury footwear (as many as 300,000 pairs of shoes available on any given day), including access to the second level of luxury brand shops. Part of the footwear space will be an all-new concept for a coffee/wine/chocolate bar.

— Dazzling, updated presentations of new and expanded apparel assortments from top fashion brands for which Macy’s is well-known.

— Restoring the first floor “great hall” with an all-new presentation of cosmetics, fragrances and fine jewelry that will incorporate the most advanced thinking on merchandising of the top brands and products for which Macy’s is well-known. The original great hall’s ceiling height will be restored.

— Creating an entirely new Impulse presentation of contemporary apparel and accessories for the millennial customer.

— Creating an entirely new “mstylelab” presentation of juniors and young men’s in the Lower Level. This will be a technology-infused environment of products and services appealing to the social instincts of younger customers. The hottest apparel brands will be complemented by juniors’ accessories, shoes, cosmetics and services such as a nail bar and salon. Also incorporated into the Lower Level will be a complex of casual dining experiences, including concepts created by Macy’s Culinary Council of celebrity chefs and a brew pub that will remain open beyond normal store hours.

— A significant expansion and enhancement of men’s merchandise, which will grow to cover about 200,000 square feet of selling space over seven floors of the Seventh Avenue Building. This will become one of the premier men’s shopping destinations in the world.

— Infusing technology and new media into the shopping experience throughout the store. This includes interactive store directories, a system to stream live video feeds of Macy’s events nationwide, digital product information, an enhanced shoe locator system, new wayfinding signage and a new mobile app to guide customers as they shop. Detailed design of the latter phases of the renovation project are yet to begin so new technologies and ideas may be incorporated as they emerge.

— A new table-service restaurant on the sixth floor with window access along Broadway that will provide stunning views of the Empire State Building and Midtown Manhattan. This all-new restaurant will be among 22 restaurants and foodservice stations throughout the store that will accommodate seating for about 1,100 customers, an increase of nearly 40 percent.

— An entirely new world of home merchandise on the eighth and ninth floors, including an enhanced demonstration kitchen and relocated De Gustibus Cooking School.

— A restoration of the store’s exterior to re-capture its original grandeur and take full advantage of foot traffic along America’s top retailing block. The ornate “Memorial Entrance” on 34th Street will be restored and reopened. Windows along Broadway, 34th Street and Seventh Avenue, which have been covered up over the years, will be reopened. Windows on the upper floors also will be uncovered to allow more natural light into the building. Sidewalks will be replaced, with Macy’s-branded paved “welcome mats” added at every entrance. Awnings and canopies reminiscent of the original building will be added. New exterior lighting will highlight the building’s elegant architectural details.

— Preservation of 42 of 43 historic wooden escalators in the current store — a unique and distinguishing feature of Macy’s Herald Square. (One current wooden escalator will be removed to supply replacement parts for the others.)

— An enhanced Visitors Center on the newly expanded Mezzanine level with technology in nine languages to serve a growing volume of international visitors.

— Expanding and upgrading amenities. Nearly 300 additional fitting rooms will be added over the next four years. Restroom facilities will be added and improved.

— Operating systems to improve environmental sustainability, including a new state-of-the-art energy management system and expanded use of LED lighting, that is expected to reduce annual energy use by 15 to 20 percent.

“Our design of the new Macy’s Herald Square reflects how a new generation of customers prefers to shop. In many cases, product will be organized by lifestyle to help customers create looks and build wardrobes across categories. On every floor and across departments, our shopping environment will be new, fresh, interesting and entertaining,” Lundgren said.

Macy’s Herald Square anchors two of the top retail corners in America — Broadway/34th Street and Seventh Avenue/34th Street. The first portion of the current Macy’s Herald Square store (the majority of the current Broadway Building) was opened in 1902. The store was expanded in three additional phases to its current form by 1931. The current building includes nearly 2.2 million gross square feet.

Over the course of the remodel project, an estimated 1,600 construction-related positions will be created. The total ongoing workforce in the Macy’s Herald Square store is expected to grow steadily as each phase is completed and the level of business accelerates. By fall 2015, Macy’s plans to add about 800 new positions to the store’s existing year-round workforce of about 4,600 persons.

Macy’s, Inc.’s internal planning, design and construction team is leading the Macy’s Herald Square renovation program, with master planning support from STUDIO V Architecture of New York. Component elements were designed by Highland Associates of New York, Kevin Kennon Architects of New York and Charles Sparks + Company of Westchester, IL.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2010 sales of $25 billion. The company operates about 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s, as well as the and websites. The company also operates six Bloomingdale’s Outlet stores.

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy’s management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including conditions to, or changes in the timing of, proposed transactions, prevailing interest rates, changes in expected synergies, cost savings and non-recurring charges, competitive pressures from specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, new and established forms of home shopping (including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.

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