A Bold New Chapter gains traction
Macy’s First 50 locations achieved comparable
owned sales of 3.3% and owned-plus-licensed sales of 3.4%
First quarter 2024 earnings exceeded
outlook
Diluted EPS of $0.22 and Adjusted Diluted EPS
of $0.27
Macy’s, Inc. (NYSE: M) today reported financial results for the
first quarter of 2024 and updated its annual guidance.
“We are encouraged by our customers’ response to our Bold New
Chapter strategy resulting in sales near the high end of our
outlook. Our teams executed with discipline and efficiency, which
contributed to first quarter earnings that exceeded our
expectations,” said Tony Spring, chairman and chief executive
officer of Macy’s, Inc. “At the Macy’s nameplate, go-forward
business performance was led by our First 50 locations, which
achieved comparable sales growth year over year and are a leading
indicator for our go-forward fleet. Although early days, our
investments in product, presentation and experience are gaining
traction and reinforce our belief that longer-term, Macy’s, Inc.
can return to sustainable, profitable growth.”
First Quarter Highlights
- Diluted earnings per share of $0.22 and Adjusted diluted
earnings per share of $0.27.
- Compares to diluted earnings per share of $0.56 and Adjusted
diluted earnings per share of $0.56 in the first quarter of
2023.
- Net sales of $4.8 billion, down 2.7% versus the first
quarter of 2023.
- Comparable sales down 1.2% on an owned basis and down 0.3%
on an owned-plus-licensed-plus-marketplace basis.
- Macy’s, Inc. go-forward business comparable sales, inclusive of
go-forward locations and digital, down 0.9% on an owned basis and
up 0.1% on an owned-plus-licensed-plus-marketplace basis.
- Company's nameplate highlights include:
- Macy’s comparable sales down 1.6% on an owned basis and down
0.4% on an owned-plus-licensed-plus-marketplace basis.
- Macy’s go-forward business comparable sales, inclusive of
Macy’s go-forward locations and digital, down 1.3% on an owned
basis and flat on an owned-plus-licensed-plus-marketplace basis.
- Go-forward locations comparable sales up 0.1% on both an owned
and owned-plus-licensed basis.
- First 50 locations comparable sales, included within go-forward
locations comparable sales, up 3.3% on an owned basis and up 3.4%
on an owned-plus-licensed basis.
- Non-First 50 go-forward locations comparable sales, included
within go-forward locations comparable sales, down 1.2% on an owned
basis and down 1.3% on an owned-plus-licensed basis.
- Macy’s non-go-forward locations comparable sales down 4.5% on
both an owned and owned-plus-licensed basis.
- Bloomingdale’s comparable sales up 0.8% on an owned basis
and up 0.3% on an owned-plus-licensed-plus-marketplace
basis.
- Bluemercury comparable sales were up 4.3% on an owned
basis.
- Other revenue of $154 million, a $37 million decrease.
- Represented 3.2% of net sales, a decline of 60 basis points
from the first quarter of 2023.
- Credit card revenues, net declined by $45 million to $117
million. The decline was attributable to the impact of expected
higher delinquency rates and net credit losses within the
portfolio.
- Macy’s Media Network revenue, net rose $8 million to $37
million from increased vendor engagement.
- Merchandise inventories were up 1.7% versus first quarter of
2023.
- Entering the second quarter of 2024, end-of-quarter inventories
are well-positioned for the upcoming summer season.
- Gross margin rate for the quarter was 39.2%, down from 40.0%
in the first quarter of 2023.
- Merchandise margin declined 100 basis points, primarily
reflecting additional discounting for slower-moving warm weather
products.
- Delivery expense as a percent of net sales improved 20 basis
points from the prior year reflecting ongoing efforts to improve
supply chain efficiency.
- Selling, general and administrative (“SG&A”) expense of
$1.9 billion, a $39 million decrease.
- SG&A expense as a percent of total revenue was 38.2%, 50
basis points higher than the first quarter of 2023, reflecting the
year-over-year decline in net sales and credit card revenue.
- SG&A expense dollars benefited from the company’s
commitment to ongoing expense discipline.
2024 Guidance
The company updated its annual sales and earnings outlook to
reflect a portion of first quarter performance along with the
dynamic macro environment. The company continues to view 2024 as a
transition and investment year, reflecting investments in key
customer-focused strategic initiatives, supported by the company’s
strong balance sheet. The updated outlook assumes customers will
continue to be discerning in their discretionary purchases and
provides flexibility to respond to the competitive landscape and
promotional environment.
The full updated outlook for 2024, presented on a 52-week basis,
can be found in the presentation posted to
macysinc.com/investors.
Guidance as of
May 21, 2024
Guidance as of
February 27, 2024
Net sales
$22.3 billion to $22.9
billion
$22.2 billion to $22.9
billion
Comparable
owned-plus-licensed-plus-marketplace sales change (52 week
basis)
Down ~1.0% to up 1.5% versus
2023
Down ~1.5% to up 1.5% versus
2023
Adjusted diluted earnings per share
$2.55 - $2.90
$2.45 - $2.85
Adjusted diluted EPS excludes any potential impact from the
credit card late fee ruling, which was stayed on May 10, 2024.
Additionally, the impact of any potential future share repurchases
associated with the company’s current share repurchase
authorization is also excluded.
The company does not provide reconciliations of the
forward-looking non-GAAP measures of comparable
owned-plus-licensed-plus-marketplace sales change and adjusted
diluted earnings per share to the most directly comparable
forward-looking GAAP measures because the timing and amount of
excluded items are unreasonably difficult to fully and accurately
estimate. For the same reasons, the company is unable to address
the probable significance of the unavailable information, which
could be material to future results. See Important Information
Regarding Financial Measures.
Conference Call and Webcasts
A webcast of Macy's, Inc.’s call with analysts and investors to
report its first quarter of 2024 sales and earnings will be held
today (May 21, 2024) at 8:00 a.m. EDT. Macy’s, Inc.’s webcast,
along with the associated presentation, is accessible to the media
and general public via the company's website at www.macysinc.com.
Analysts and investors may call 1-877-407-0832. A replay of the
conference call will be available on the company’s website or by
calling 1-877-660-6853, using passcode 13745966, about three hours
after the conclusion of the call. Additional information on Macy’s,
Inc., including past news releases, is available at
www.macysinc.com/newsroom.
Important Information Regarding Financial Measures
Please see the final pages of this news release for important
information regarding the calculation of the company’s non-GAAP
financial measures.
About Macy’s, Inc.
Macy’s, Inc. (NYSE: M) is a trusted source for quality brands
through our iconic nameplates – Macy’s, Bloomingdale’s and
Bluemercury. Headquartered in New York City, our comprehensive
digital and nationwide footprint empowers us to deliver a seamless
shopping experience for our customers. For more information, visit
macysinc.com.
Forward-Looking Statements
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 Macy’s
ability to successfully implement its A Bold New Chapter strategy,
including the ability to realize the anticipated benefits
associated with the strategy, conditions to, or changes in the
timing of proposed real estate and other transactions, prevailing
interest rates and non-recurring charges, the effect of potential
changes to trade policies, store closings, competitive pressures
from specialty stores, general merchandise stores, off-price and
discount stores, manufacturers’ outlets, the Internet and catalogs
and general consumer spending levels, including the impact of the
availability and level of consumer debt, possible systems failures
and/or security breaches, the potential for the incurrence of
charges in connection with the impairment of tangible and
intangible assets, including goodwill, declines in credit card
revenues, Macy’s reliance on foreign sources of production,
including risks related to the disruption of imports by labor
disputes, regional or global health pandemics, and regional
political and economic conditions, the effect of weather,
inflation, inventory shortage, and labor shortages, the amount and
timing of future dividends and share repurchases, our ability to
execute on our strategies and achieve expectations related to
environmental, social, and governance matters, and other factors
identified in documents filed by the company with the Securities
and Exchange Commission, including under the captions
“Forward-Looking Statements” and “Risk Factors” in the company’s
Annual Report on Form 10-K for the year ended February 3, 2024.
Macy’s disclaims any intention or obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
MACY’S, INC.
Consolidated Statements of Income (Unaudited) (Note
1)
(All amounts in millions except
percentages and per share figures)
13 Weeks Ended
May 4, 2024
13 Weeks Ended
April 29, 2023
$
% to Net sales
% to Total revenue
$
% to Net sales
% to Total revenue
Net sales
$
4,846
$
4,982
Other revenue (Note 2)
154
3.2
%
191
3.8
%
Total revenue
5,000
5,173
Cost of sales
(2,946
)
(60.8
%)
(2,988
)
(60.0
%)
Selling, general and administrative
expenses
(1,911
)
(38.2
%)
(1,950
)
(37.7
%)
Gains on sale of real estate
1
—
%
11
0.2
%
Impairment, restructuring and other
costs
(19
)
(0.4
%)
(2
)
—
%
Operating income
125
2.5
%
244
4.7
%
Benefit plan income, net
4
4
Interest expense, net
(31
)
(37
)
Income before income taxes
98
211
Federal, state and local income tax
expense (Note 3)
(36
)
(56
)
Net income
$
62
$
155
Basic earnings per share
$
0.22
$
0.57
Diluted earnings per share
$
0.22
$
0.56
Average common shares:
Basic
276.1
273.1
Diluted
281.0
277.8
End of period common shares
outstanding
276.4
272.5
Supplemental Financial Measures:
Gross Margin (Note 4)
$
1,900
39.2
%
$
1,994
40.0
%
Depreciation and amortization expense
$
216
$
218
MACY’S, INC.
Consolidated Balance Sheets (Unaudited) (Note
1)
(millions)
May 4, 2024
February 3, 2024
April 29, 2023
ASSETS:
Current Assets:
Cash and cash equivalents
$
876
$
1,034
$
603
Receivables
257
293
255
Merchandise inventories
4,687
4,361
4,607
Prepaid expenses and other current
assets
442
401
390
Total Current Assets
6,262
6,089
5,855
Property and Equipment – net
5,295
5,308
5,864
Right of Use Assets
2,358
2,305
2,715
Goodwill
828
828
828
Other Intangible Assets – net
429
430
432
Other Assets
1,277
1,286
1,174
Total Assets
$
16,449
$
16,246
$
16,868
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Merchandise accounts payable
$
2,347
$
1,913
$
2,415
Accounts payable and accrued
liabilities
2,088
2,434
2,233
Income taxes
115
83
134
Total Current Liabilities
4,550
4,430
4,782
Long-Term Debt
2,998
2,998
2,996
Long-Term Lease Liabilities
3,034
2,986
2,996
Deferred Income Taxes
749
745
916
Other Liabilities
932
950
1,008
Shareholders' Equity
4,186
4,137
4,170
Total Liabilities and Shareholders’
Equity
$
16,449
$
16,246
$
16,868
MACY’S, INC.
Consolidated Statements of Cash Flows (Unaudited) (Notes
1 and 5)
(millions)
13 Weeks Ended May 4, 2024
13 Weeks Ended April 29, 2023
Cash flows from operating activities:
Net income
$
62
$
155
Adjustments to reconcile net income to net
cash provided by operating activities:
Impairment, restructuring and other
costs
19
2
Depreciation and amortization
216
218
Benefit plans
1
2
Stock-based compensation expense
13
14
Gains on sale of real estate
(1
)
(11
)
Amortization of financing costs and
premium on acquired debt
3
3
Deferred income taxes
(10
)
(32
)
Changes in assets and liabilities:
Decrease in receivables
35
45
Increase in merchandise inventories
(273
)
(340
)
(Increase) decrease in prepaid expenses
and other current assets
(49
)
32
Increase in merchandise accounts
payable
401
374
Decrease in accounts payable and accrued
liabilities
(289
)
(415
)
Increase in current income taxes
34
82
Change in other assets and liabilities
(33
)
(24
)
Net cash provided by operating
activities
129
105
Cash flows from investing activities:
Purchase of property and equipment
(154
)
(215
)
Capitalized software
(75
)
(81
)
Disposition of property and equipment
4
25
Other, net
8
1
Net cash used by investing activities
(217
)
(270
)
Cash flows from financing activities:
Debt repaid
(1
)
(1
)
Dividends paid
(48
)
(45
)
Decrease in outstanding checks
(21
)
(13
)
Acquisition of treasury stock
—
(35
)
Net cash used by financing activities
(70
)
(94
)
Net decrease in cash, cash equivalents and
restricted cash
(158
)
(259
)
Cash, cash equivalents and restricted cash
beginning of period
1,037
865
Cash, cash equivalents and restricted cash
end of period
$
879
$
606
MACY’S, INC.
Consolidated Financial Statements (Unaudited)
Notes:
(1)
As a result of the seasonal
nature of the retail business, the results of operations for the 13
weeks ended May 4, 2024 and April 29, 2023 (which do not include
the Christmas season) are not necessarily indicative of such
results for the fiscal year.
(2)
Other Revenue is inclusive of the
following amounts. All amounts in millions except percentages.
13 Weeks Ended
May 4, 2024
13 Weeks Ended
April 29, 2023
$
% to Net sales
$
% to Net sales
Credit card revenues, net
$
117
2.4
%
$
162
3.3
%
Macy's Media Network revenue, net
37
0.8
%
29
0.6
%
Other Revenue
$
154
3.2
%
$
191
3.8
%
Net Sales
$
4,846
$
4,982
(3)
The income tax expense of $36
million and $56 million, or 36.7% and 26.5% of pretax income, for
the 13 weeks ended May 4, 2024 and April 29, 2023, respectively,
reflect a different effective tax rate as compared to the Company’s
federal income tax statutory rate of 21%. The income tax effective
rates for the 13 weeks ended May 4, 2024 and April 29, 2023 were
impacted primarily by the effect of state and local taxes and the
vesting and cancellation of certain stock-based compensation
awards.
(4)
Gross margin is defined as net
sales less cost of sales.
(5)
Restricted cash of $3 million has
been included with cash and cash equivalents as of May 4, 2024 and
April 29, 2023.
MACY’S, INC.
Important Information
Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). However,
management believes that certain non-GAAP financial measures
provide users of the company's financial information with
additional useful information in evaluating operating performance.
Management believes that providing supplemental changes in
comparable sales on an owned-plus-licensed-plus-marketplace basis,
which includes adjusting for the impact of comparable sales of
departments licensed to third parties and marketplace sales,
assists in evaluating the company's ability to generate sales
growth, whether through owned businesses, departments licensed to
third parties or marketplace sales, and in evaluating the impact of
changes in the manner in which certain departments are operated.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) is a non-GAAP financial measure which the company believes
provides meaningful information about its operational efficiency by
excluding the impact of changes in tax law and structure, debt
levels and capital investment. In addition, management believes
that excluding certain items from EBITDA, net income and diluted
earnings per share that are not associated with the company’s core
operations and that may vary substantially in frequency and
magnitude from period-to-period provides useful supplemental
measures that assist in evaluating the company's ability to
generate earnings and to more readily compare these metrics between
past and future periods.
The company does not provide reconciliations of the
forward-looking non-GAAP measures of comparable
owned-plus-licensed-plus-marketplace sales change and adjusted
diluted earnings per share to the most directly comparable
forward-looking GAAP measures because the timing and amount of
excluded items are unreasonably difficult to fully and accurately
estimate. For the same reasons, the company is unable to address
the probable significance of the unavailable information, which
could be material to future results.
Non-GAAP financial measures should be viewed as supplementing,
and not as an alternative or substitute for, the company's
financial results prepared in accordance with GAAP. Certain of the
items that may be excluded or included in non-GAAP financial
measures may be significant items that could impact the company's
financial position, results of operations or cash flows and should
therefore be considered in assessing the company's actual and
future financial condition and performance. Additionally, the
amounts received by the company on account of sales of departments
licensed to third parties and marketplace sales are limited to
commissions received on such sales. The methods used by the company
to calculate its non-GAAP financial measures may differ
significantly from methods used by other companies to compute
similar measures. As a result, any non-GAAP financial measures
presented herein may not be comparable to similar measures provided
by other companies.
MACY’S, INC.
Important
Information Regarding Non-GAAP Financial Measures
(All amounts in millions except
percentages and per share figures)
Changes in Comparable Sales
13 Weeks Ended May 4, 2024 vs. 13
Weeks Ended April 29, 2023
Macy's, Inc.
Macy's
Decrease in comparable sales on an owned
basis (Note 6)
(1.2
%)
(1.6
%)
Impact of departments licensed to third
parties and marketplace sales (Note 7)
0.9
%
1.2
%
Decrease in comparable sales on an
owned-plus-licensed-plus-marketplace basis
(0.3
%)
(0.4
%)
13 Weeks Ended May 4, 2024
vs.
13 Weeks Ended April 29, 2023
Macy's, Inc. go-forward
business
Macy's go-forward business
Bloomingdale's*
Bluemercury
Increase (decrease) in comparable sales on
an owned basis (Note 6)
(0.9
)%
(1.3
)%
0.8
%
4.3
%
Impact of departments licensed to third
parties and marketplace sales (Note 7)
1.0
%
1.3
%
(0.5
%)
—
%
Increase in comparable sales on an
owned-plus-licensed-plus-marketplace basis
0.1
%
—
%
0.3
%
4.3
%
*Bloomingdale’s excludes one
non-go-forward location.
13 Weeks Ended May 4, 2024
vs.
13 Weeks Ended April 29, 2023
Macy's First 50 locations
Macy's Non-First 50 go-forward
locations
Macy's go-forward locations
Macy's non-go-forward
locations
Increase (decrease) in comparable sales on
an owned basis (Note 6)
3.3
%
(1.2
%)
0.1
%
(4.5
%)
Impact of departments licensed to third
parties (Note 7)
0.1
%
(0.1
%)
—
%
—
%
Increase (decrease) in comparable sales on
an owned-plus-licensed basis
3.4
%
(1.3
%)
0.1
%
(4.5
%)
Non-GAAP financial measures, excluding certain items below, are
reconciled to the most directly comparable GAAP measure as
follows:
- EBITDA and adjusted EBITDA are reconciled to GAAP net
income.
- Adjusted net income is reconciled to GAAP net income.
- Adjusted diluted earnings per share is reconciled to GAAP
diluted earnings per share.
EBITDA and Adjusted EBITDA
13 Weeks Ended
May 4, 2024
13 Weeks Ended
April 29, 2023
Net income
$
62
$
155
Interest expense, net
31
37
Federal, state and local income tax
expense
36
56
Depreciation and amortization
216
218
EBITDA
345
466
Impairment, restructuring and other
costs
19
2
Adjusted EBITDA
$
364
$
468
Adjusted Net Income and Adjusted Diluted
Earnings Per Share
13 Weeks Ended
May 4, 2024
13 Weeks Ended
April 29, 2023
Net
Income
Diluted
Earnings
Per Share
Net
Income
Diluted
Earnings
Per Share
As reported
$
62
$
0.22
$
155
$
0.56
Impairment, restructuring and other
costs
19
0.07
2
—
Income tax impact of certain items
identified above
(4
)
(0.02
)
—
—
As adjusted to exclude certain items
above
$
77
$
0.27
$
157
$
0.56
Notes:
(6)
Represents the period-to-period
percentage change in net sales from stores in operation for one
full fiscal year for the 13 weeks ended May 4, 2024 and April 29,
2023. Such calculation includes all digital sales and excludes
commissions from departments licensed to third parties and
marketplace. Stores impacted by a natural disaster or undergoing
significant expansion or shrinkage remain in the comparable sales
calculation unless the store, or material portion of the store, is
closed for a significant period of time. Definitions and
calculations of comparable sales may differ among companies in the
retail industry.
(7)
Represents the impact of
including the sales of departments licensed to third parties
occurring in stores in operation throughout the year presented and
the immediately preceding year and all online sales, including
marketplace sales, in the calculation of comparable sales. Macy’s
and Bloomingdale’s license third parties to operate certain
departments in its stores and online and receive commissions from
these third parties based on a percentage of their net sales, while
Bluemercury does not participate in licensed or marketplace
businesses. In its financial statements prepared in conformity with
GAAP, the company includes these commissions (rather than sales of
the departments licensed to third parties and marketplace) in its
net sales. The company does not, however, include any amounts in
respect of licensed department or marketplace sales (or any
commissions earned on such sales) in its comparable sales in
accordance with GAAP (i.e., on an owned basis). The amounts of
commissions earned on sales of departments licensed to third
parties and from the digital marketplace are not material to its
net sales for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240521018823/en/
Media – Chris Grams communications@macys.com
Investors – Pamela Quintiliano investors@macys.com
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