M 8-K
Macy's, Inc. (M)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of Registrant as Specified in its Charter)
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(Address of Principal Executive Offices)
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
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Item 2.02.Results of Operations and Financial Condition.
On November 17, 2022, Macy’s, Inc. (“Macy’s” or the “Company”) issued a press release announcing Macy’s financial condition, results of operations and cash flows as of and for the 13 and 39 weeks ended October 29, 2022. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Macy’s reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The press release referred to above contains non-GAAP financial measures of changes in comparable sales on an owned plus licensed basis, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude certain items that consist of impairment, restructuring and other costs, settlement charges and losses on early retirement of debt. A section has been included at the end of the press release that contains important additional information regarding these non-GAAP financial measures including reconciliation to the most directly comparable GAAP financial measure
Item 9.01.Financial Statements and Exhibits.
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(d) |
Exhibits |
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
MACY'S, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MACY'S, INC. |
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Dated: November 17, 2022 |
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By: |
/s/ Paul Griscom |
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Name: |
Paul Griscom |
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Title: |
Senior Vice President and Controller |
Exhibit 99.1
Macy’s, Inc. Reports Third Quarter 2022 Results
Comparable sales down 3.1% on an owned basis and down 2.7% on an owned-plus-licensed basis
Inventories up 4% versus 2021, reflecting ongoing planning and supply chain discipline
Diluted EPS of $0.39 and Adjusted diluted EPS of $0.52
Reaffirms annual sales guidance and raises Adjusted diluted EPS guidance
NEW YORK—November 17, 2022— Macy’s, Inc. (NYSE: M) today reported financial results for the third quarter of 2022 and updated its annual guidance.
“Our Polaris strategy is working. In the third quarter, we achieved solid top line results and a strong beat to our bottom line guidance. Macy’s brand position as a style and fashion source resonated with our customers, while luxury continued to outperform at Bloomingdale’s and Bluemercury,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “Retail is detail, and our talented and agile team are executing well to compete. We know the consumer is under increasing pressure and has choices on where to spend. As a leading gifting destination with fresh inventory across the value spectrum, we are ready to meet our customers’ needs this holiday season.”
“We are operating from a position of strong financial health – with appropriate levels of inventory, a strong balance sheet with ample liquidity, investment grade credit metrics and fixed interest rate debt in a rising interest rate environment. We have the tools, data-driven processes and talented teams to manage through this uncertain time and are committed to long-term, profitable growth,” added Adrian Mitchell, chief financial officer of Macy’s, Inc.
Third Quarter Highlights
Comparisons are to third quarter 2021 unless noted otherwise. Comparisons to 2019 are provided, where appropriate, to benchmark performance given the impact of the pandemic.
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Diluted earnings per share of $0.39 and Adjusted diluted earnings per share of $0.52. |
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This compares to diluted earnings per share of $0.76 and Adjusted diluted earnings per share of $1.23 in the third quarter of 2021. |
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This compares to diluted earnings per share of $0.01 and Adjusted diluted earnings per share of $0.07 in the third quarter of 2019. |
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Net sales of $5.2 billion, down 3.9% versus the third quarter of 2021; up 1.1% versus the third quarter of 2019. |
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Digital sales decreased 9% versus the third quarter of 2021; up 35% versus the third quarter of 2019. |
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Brick-and-mortar sales decreased 1% versus the third quarter of 2021; down 9% versus the third quarter of 2019. |
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Comparable sales down 3.1% on an owned basis and down 2.7% on an owned-plus-licensed basis; up 5.6% and 6.0%, respectively, versus the third quarter of 2019. |
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Highlights of the company's nameplates include: |
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Macy’s comparable sales were down 4.4% on an owned basis and down 4.0%, on an owned-plus-licensed basis. |
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43.6 million active customers shopped the Macy’s brand, on a trailing twelve-month basis, a 2% increase compared to the prior year. |
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Star Rewards program members made up approximately 70% of the total Macy's brand owned-plus-licensed sales on a trailing twelve-month basis, up approximately 5 percentage points versus the prior year. |
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The company continued to see strength in occasion-based categories, including career and tailored sportswear, fragrances, shoes, dresses and luggage. |
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Bloomingdale’s comparable sales on an owned basis were up 5.3% and on an owned-plus-licensed basis were up 4.1%. |
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4.1 million active customers shopped the Bloomingdale’s brand, on a trailing twelve-month basis, a 9% increase over the prior year. |
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Results were driven by strength across women’s, men’s and kid’s contemporary and dressy apparel, women’s shoes as well as luggage. |
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Bluemercury comparable sales were up 14.0% on an owned and owned-plus-licensed basis. |
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Approximately 650,000 active customers shopped the Bluemercury brand, on a trailing twelve-month basis, a 15% increase over the prior year. |
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Inventory turnover, on a trailing twelve-month basis, was relatively flat to 2021 and improved 15% over 2019. |
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Inventory was up 4% year-over-year and down 12% versus 2019, reflecting disciplined inventory management in an environment of continued supply chain volatility and industry-wide elevated inventory levels, as well as lean inventory levels experienced in 2021. The company strategically brought in seasonal merchandise earlier to strengthen its competitive position for Holiday and has the added capacity to chase in-season trends. |
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Gross margin for the quarter was 38.7%, down from 41.0% in the third quarter of 2021. |
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Merchandise margin decline was driven by a year-over-year increase in promotional and permanent markdowns within the Macy’s brand, as the company sold through slower moving categories including casual apparel, soft home, and warmer weather seasonal goods. |
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Delivery expense as a percent of net sales was relatively consistent with the prior year. Higher fuel costs more than offset the impact of a 2-percentage point decline in digital penetration and reductions in cost-per-package. |
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Selling, general and administrative (“SG&A”) expense of $2.1 billion, a $84 million increase. |
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SG&A expense as a percent of sales was 39.3%, 300 basis points higher compared to the third quarter of 2021 and an improvement of 330 basis points compared to the third quarter of 2019. |
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The prior year quarter benefited from a significant number of open positions due to the tight labor market. The positions have since largely been filled. |
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The company is adjusting colleague compensation to remain competitive and attract the best talent, while simultaneously remaining disciplined in its SG&A productivity efforts. |
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Net credit card revenue of $206 million, down $7 million. |
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Represented 3.9% of sales, in line with the prior year period. |
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Performance driven by lower-than-expected bad debt levels, larger balances within the portfolio as well as higher-than-expected spend on co-brand credit cards. |
Financial Highlights
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All amounts in millions except percentages and per share figures |
Third Quarter |
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2022 |
2021 |
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Net sales |
$5,230
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$5,440 |
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Comparable Sales |
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Owned |
(3.1%)
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Owned plus licensed |
(2.7%)
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Net Income |
$108
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$239 |
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Earnings before interest, taxes, depreciation and amortization (EBITDA) |
$392 |
$757 |
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Diluted earnings per share (EPS) |
$0.39 |
$0.76
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Adjusted Net income |
$143 |
$386
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Adjusted EBITDA |
$439 |
$765
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Adjusted Diluted EPS |
$0.52 |
$1.23
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2022 Guidance
The company is reaffirming its annual 2022 sales guidance and raising its earnings guidance to account for improved expectations for credit card revenue and interest expense, lower benefit plan income, and updated shares outstanding estimates. The full update to guidance can be found in the presentation posted to macysinc.com/investors.
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Guidance as of November 17, 2022 |
Guidance as of August 23, 2022 |
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Net sales |
unchanged |
$24,340 million to $24,580 million |
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Adjusted EBITDA as a percent of sales |
unchanged |
Approximately 10.5% |
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Adjusted diluted earnings per share* |
$4.07 - $4.27 |
$4.00 - $4.20 |
* Adjusted diluted EPS does not consider the impact of any potential future share repurchases associated with the company’s current share repurchase authorization.
Conference Call and Webcasts
A webcast of Macy's, Inc.’s call with analysts and investors to report its third quarter 2022 sales and earnings will be held today (November 17, 2022) at 8:00 a.m. ET. 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/investors. Analysts and investors may call 1-866-580-3963, using passcode 2252807. A replay of the conference call will be available on the company’s website or by calling 1-866-583-1035 (using the same passcode) about two hours after the conclusion of the call. Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/pressroom.
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.
At Macy’s, Inc. (NYSE: M), we are a trusted source for quality brands at great values from off-price to luxury. Across our iconic nameplates, including Macy’s, Bloomingdale’s and Bluemercury, we help our customers express their unique style
and celebrate special moments, big and small. Headquartered in New York City, we operate one of retail’s largest e-commerce businesses integrated with a nationwide footprint to deliver the most convenient and seamless shopping experience. Our purpose is to create a brighter future with bold representation – so we can realize the full potential of every one of us. 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 Polaris strategy, including the ability to realize the anticipated benefits within the expected time frame or at all, 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 intangible assets, including goodwill, 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, labor shortages, the amount and timing of future dividends and share repurchases 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 January 29, 2022. 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.
Media – Chris Grams
Investors – Pamela Quintiliano
MACY’S, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
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13 Weeks Ended October 29, 2022 |
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13 Weeks Ended October 30, 2021 |
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% to |
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% to |
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$ |
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Net sales |
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$ |
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Net sales |
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Net sales |
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$ |
5,230 |
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$ |
5,440 |
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Credit card revenues, net |
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206 |
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3.9 |
% |
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213 |
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3.9 |
% |
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Cost of sales |
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(3,204 |
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(61.3 |
%) |
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(3,207 |
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(59.0 |
%) |
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Selling, general and administrative expenses |
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(2,057 |
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(39.3 |
%) |
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(1,973 |
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(36.3 |
%) |
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Gains on sale of real estate |
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32 |
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0.6 |
% |
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50 |
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0.9 |
% |
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Impairment, restructuring and other costs |
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(15 |
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(0.3 |
%) |
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— |
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— |
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Operating income |
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192 |
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3.7 |
% |
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523 |
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9.6 |
% |
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Benefit plan income, net |
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7 |
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17 |
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Settlement charges |
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(32 |
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(8 |
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Interest expense, net |
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(42 |
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(53 |
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Losses on early retirement of debt |
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— |
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(185 |
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Income before income taxes |
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125 |
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294 |
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Federal, state and local income tax expense (Note 2) |
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(17 |
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(55 |
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Net income |
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$ |
108 |
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$ |
239 |
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Basic earnings per share |
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$ |
0.40 |
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$ |
0.78 |
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Diluted earnings per share |
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$ |
0.39 |
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$ |
0.76 |
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Average common shares: |
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Basic |
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272.0 |
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306.9 |
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Diluted |
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277.7 |
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313.8 |
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End of period common shares outstanding |
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271.0 |
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299.3 |
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Supplemental Financial Measures: |
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Gross Margin (Note 3) |
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$ |
2,026 |
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38.7 |
% |
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$ |
2,233 |
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41.0 |
% |
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Depreciation and amortization expense |
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$ |
225 |
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$ |
225 |
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MACY’S, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
(All amounts in millions except percentages and per share figures)
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39 Weeks Ended October 29, 2022 |
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39 Weeks Ended October 30, 2021 |
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% to |
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% to |
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$ |
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Net sales |
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$ |
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Net sales |
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Net sales |
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$ |
16,178 |
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$ |
15,794 |
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Credit card revenues, net |
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601 |
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3.7 |
% |
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568 |
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3.6 |
% |
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Cost of sales |
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(9,856 |
) |
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(60.9 |
%) |
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(9,449 |
) |
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(59.8 |
%) |
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Selling, general and administrative expenses |
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(5,918 |
) |
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(36.6 |
%) |
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(5,618 |
) |
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(35.6 |
%) |
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Gains on sale of real estate |
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74 |
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0.5 |
% |
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61 |
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0.4 |
% |
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Impairment, restructuring and other costs |
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(25 |
) |
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(0.2 |
%) |
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(21 |
) |
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(0.1 |
%) |
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Operating income |
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1,054 |
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6.5 |
% |
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1,335 |
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8.5 |
% |
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Benefit plan income, net |
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21 |
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49 |
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Settlement charges |
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(32 |
) |
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|
|
|
|
|
(90 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(131 |
) |
|
|
|
|
|
|
(211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses on early retirement of debt |
|
|
(31 |
) |
|
|
|
|
|
|
(199 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
881 |
|
|
|
|
|
|
|
884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal, state and local income tax expense (Note 2) |
|
|
(213 |
) |
|
|
|
|
|
|
(197 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
668 |
|
|
|
|
|
|
$ |
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
2.43 |
|
|
|
|
|
|
$ |
2.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
2.37 |
|
|
|
|
|
|
$ |
2.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
275.6 |
|
|
|
|
|
|
|
310.3 |
|
|
|
|
|
|
Diluted |
|
|
282.0 |
|
|
|
|
|
|
|
317.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period common shares outstanding |
|
|
271.0 |
|
|
|
|
|
|
|
299.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Financial Measures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin (Note 3) |
|
$ |
6,322 |
|
|
|
39.1 |
% |
|
$ |
6,345 |
|
|
|
40.2 |
% |
|
Depreciation and amortization expense |
|
$ |
638 |
|
|
|
|
|
|
$ |
668 |
|
|
|
|
|
MACY’S, INC.
Consolidated Balance Sheets (Unaudited) (Note 1)
(millions)
|
|
|
October 29, 2022 |
|
|
January 29, 2022 |
|
|
October 30, 2021 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
326 |
|
|
$ |
1,712 |
|
|
$ |
316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables |
|
|
204 |
|
|
|
297 |
|
|
|
212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise inventories |
|
|
6,403 |
|
|
|
4,383 |
|
|
|
6,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets (Note 4) |
|
|
415 |
|
|
|
366 |
|
|
|
922 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
7,348 |
|
|
|
6,758 |
|
|
|
7,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment – net |
|
|
5,831 |
|
|
|
5,665 |
|
|
|
5,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right of Use Assets |
|
|
2,699 |
|
|
|
2,808 |
|
|
|
2,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
828 |
|
|
|
828 |
|
|
|
828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Intangible Assets – net |
|
|
433 |
|
|
|
435 |
|
|
|
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets |
|
|
1,091 |
|
|
|
1,096 |
|
|
|
1,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
18,230 |
|
|
$ |
17,590 |
|
|
$ |
18,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt |
|
$ |
183 |
|
|
$ |
— |
|
|
$ |
140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise accounts payable |
|
|
3,861 |
|
|
|
2,222 |
|
|
|
3,796 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
2,678 |
|
|
|
3,086 |
|
|
|
2,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
21 |
|
|
|
108 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
6,743 |
|
|
|
5,416 |
|
|
|
6,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Debt |
|
|
2,996 |
|
|
|
3,295 |
|
|
|
3,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Lease Liabilities |
|
|
2,988 |
|
|
|
3,098 |
|
|
|
3,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Income Taxes |
|
|
884 |
|
|
|
983 |
|
|
|
970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Liabilities |
|
|
1,144 |
|
|
|
1,177 |
|
|
|
1,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
3,475 |
|
|
|
3,621 |
|
|
|
3,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
$ |
18,230 |
|
|
$ |
17,590 |
|
|
$ |
18,279 |
|
MACY’S, INC.
Consolidated Statements of Cash Flows (Unaudited) (Notes 1 and 5)
(millions)
|
|
|
39 Weeks Ended October 29, 2022 |
|
|
39 Weeks Ended October 30, 2021 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
668 |
|
|
$ |
687 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Impairment, restructuring and other costs |
|
|
25 |
|
|
|
21 |
|
|
Settlement charges |
|
|
32 |
|
|
|
90 |
|
|
Depreciation and amortization |
|
|
638 |
|
|
|
668 |
|
|
Benefit plans |
|
|
15 |
|
|
|
27 |
|
|
Stock-based compensation expense |
|
|
44 |
|
|
|
32 |
|
|
Gains on sale of real estate |
|
|
(74 |
) |
|
|
(61 |
) |
|
Deferred income taxes |
|
|
(70 |
) |
|
|
19 |
|
|
Amortization of financing costs and premium on acquired debt |
|
|
8 |
|
|
|
66 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Decrease in receivables |
|
|
93 |
|
|
|
64 |
|
|
Increase in merchandise inventories |
|
|
(2,019 |
) |
|
|
(2,367 |
) |
|
Increase in prepaid expenses and other current assets |
|
|
(56 |
) |
|
|
(44 |
) |
|
Increase in merchandise accounts payable |
|
|
1,636 |
|
|
|
1,758 |
|
|
Increase (decrease) in accounts payable and accrued liabilities |
|
|
(300 |
) |
|
|
73 |
|
|
Decrease in current income taxes |
|
|
(73 |
) |
|
|
(50 |
) |
|
Change in other assets and liabilities |
|
|
(79 |
) |
|
|
(142 |
) |
|
Net cash provided by operating activities |
|
|
488 |
|
|
|
841 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(655 |
) |
|
|
(230 |
) |
|
Capitalized software |
|
|
(328 |
) |
|
|
(155 |
) |
|
Disposition of property and equipment |
|
|
122 |
|
|
|
118 |
|
|
Other, net |
|
|
(8 |
) |
|
|
64 |
|
|
Net cash used by investing activities |
|
|
(869 |
) |
|
|
(203 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Debt issued |
|
|
1,891 |
|
|
|
975 |
|
|
Debt issuance costs |
|
|
(21 |
) |
|
|
(9 |
) |
|
Debt repaid |
|
|
(1,998 |
) |
|
|
(2,448 |
) |
|
Debt repurchase premium and expenses |
|
|
(29 |
) |
|
|
(152 |
) |
|
Dividends paid |
|
|
(130 |
) |
|
|
(46 |
) |
|
Decrease in outstanding checks |
|
|
(117 |
) |
|
|
(97 |
) |
|
Acquisition of treasury stock |
|
|
(601 |
) |
|
|
(294 |
) |
|
Net cash used by financing activities |
|
|
(1,005 |
) |
|
|
(2,071 |
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(1,386 |
) |
|
|
(1,433 |
) |
|
Cash, cash equivalents and restricted cash beginning of period |
|
|
1,715 |
|
|
|
1,754 |
|
|
Cash, cash equivalents and restricted cash end of period |
|
$ |
329 |
|
|
$ |
321 |
|
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 and 39 weeks ended October 29, 2022 and October 30, 2021 (which do not include the Christmas season) are not necessarily indicative of such results for the fiscal year. |
|
(2) |
The income tax expense of $17 million and $213 million, or 13.6% and 24.2% of pretax income, for the 13 and 39 weeks ended October 29, 2022, respectively, and income tax expense of $55 million and $197 million, or 18.7% and 22.3% of pretax income, for the 13 and 39 weeks ended October 30, 2021, 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 and 39 weeks ended October 29, 2022 and October 30, 2021 were impacted primarily by impact of return-to-provision adjustments that were identified in connection with the filing of the U.S. federal income tax return in the current quarter. |
|
(3) |
Gross margin is defined as net sales less cost of sales. |
|
(4) |
Prepaid expenses and other current assets as of October 30, 2021 included an income tax receivable of $590 million. |
|
(5) |
Restricted cash of $3 million and $5 million have been included with cash and cash equivalents for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively. |
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 basis, which includes adjusting for the impact of comparable sales of departments licensed to third parties, assists in evaluating the company's ability to generate sales growth, whether through owned businesses or departments licensed to third parties, 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 adjusted EBITDA, diluted earnings per share and comparable sales on an owned plus licensed basis 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 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
|
|
|
Comparable Sales vs. 13 Weeks Ended October 30, 2021 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Macy's, Inc. |
|
|
Macy's |
|
|
Bloomingdale's |
|
|
Bluemercury |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in comparable sales on an owned basis (Note 6) |
|
|
(3.1 |
%) |
|
|
(4.4 |
%) |
|
|
5.3 |
% |
|
|
14.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of departments licensed to third parties (Note 7) |
|
|
0.4 |
% |
|
|
0.4 |
% |
|
|
(1.2 |
%) |
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in comparable sales on an owned plus licensed basis |
|
|
(2.7 |
%) |
|
|
(4.0 |
%) |
|
|
4.1 |
% |
|
|
14.0 |
% |
|
|
|
Comparable Sales vs. 39 Weeks Ended October 30, 2021 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Macy's, Inc. |
|
|
Macy's |
|
|
Bloomingdale's |
|
|
Bluemercury |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in comparable sales on an owned basis (Note 6) |
|
|
2.3 |
% |
|
|
0.7 |
% |
|
|
13.4 |
% |
|
|
14.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of departments licensed to third parties (Note 7) |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
|
(1.9 |
%) |
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in comparable sales on an owned plus licensed basis |
|
|
2.3 |
% |
|
|
0.7 |
% |
|
|
11.5 |
% |
|
|
14.9 |
% |
|
|
|
Comparable Sales vs. 13 Weeks Ended November 2, 2019 |
|
|
|
|
|
|
|
|
|
|
|
Macy's, Inc. |
|
|
|
|
|
|
|
|
|
Increase in comparable sales on an owned basis (Note 6) |
|
|
5.6 |
% |
|
|
|
|
|
|
|
Impact of departments licensed to third parties (Note 7) |
|
|
0.4 |
% |
|
|
|
|
|
|
|
Increase in comparable sales on an owned plus licensed basis |
|
|
6.0 |
% |
Notes:
|
(6) |
Represents the period-to-period percentage change in net sales from stores in operation during the 13 and 39 weeks ended October 29, 2022, and the 13 and 39 weeks ended October 30, 2021 and the 13 weeks ended November 2, 2019. Such calculation includes all digital sales and excludes commissions from departments licensed to third parties. 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 in the calculation of comparable sales. The company licenses third parties to operate certain departments in its stores and online and receives commissions from these third parties based on a percentage of their net sales. In its financial statements |
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prepared in conformity with GAAP, the company includes these commissions (rather than sales of the departments licensed to third parties) in its net sales. The company does not, however, include any amounts in respect of licensed department 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 are not material to its net sales for the periods presented. |
Non-GAAP financial measures, excluding certain items below, are reconciled to the most directly comparable GAAP measure as follows:
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• |
EBITDA and adjusted EBITDA are reconciled to GAAP net income. |
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• |
Adjusted net income is reconciled to GAAP net income. |
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• |
Adjusted diluted earnings per share is reconciled to GAAP diluted earnings per share. |
EBITDA and Adjusted EBITDA
|
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13 Weeks Ended October 29, 2022 |
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13 Weeks Ended October 30, 2021 |
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||
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
108 |
|
|
$ |
239 |
|
|
|
|
|
|
|
|
|
|
|
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Interest expense, net |
|
|
42 |
|
|
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
Losses on early retirement of debt |
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|
— |
|
|
|
185 |
|
|
|
|
|
|
|
|
|
|
|
|
Federal, state and local income tax expense |
|
|
17 |
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
225 |
|
|
|
225 |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
392 |
|
|
|
757 |
|
|
|
|
|
|
|
|
|
|
|
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Impairment, restructuring and other costs |
|
|
15 |
|
|
|
— |
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|
|
|
|
|
|
|
|
|
|
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Settlement charges |
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|
32 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
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Adjusted EBITDA |
|
$ |
439 |
|
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$ |
765 |
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|
|
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39 Weeks Ended October 29, 2022 |
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39 Weeks Ended October 30, 2021 |
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||
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
668 |
|
|
$ |
687 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
131 |
|
|
|
211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses on early retirement of debt |
|
|
31 |
|
|
|
199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal, state and local income tax expense |
|
|
213 |
|
|
|
197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
638 |
|
|
|
668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
1,681 |
|
|
|
1,962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and other costs |
|
|
25 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Settlement charges |
|
|
32 |
|
|
|
90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Adjusted EBITDA |
|
$ |
1,738 |
|
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$ |
2,073 |
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Adjusted Net Income and Adjusted Diluted Earnings Per Share
|
|
|
13 Weeks Ended October 29, 2022 |
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13 Weeks Ended October 30, 2021 |
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13 Weeks Ended November 2, 2019 |
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|||||||||||||||
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|
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Net Income |
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|
Diluted Earnings Per Share |
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|
Net Income |
|
|
Diluted Earnings Per Share |
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|
Net Income |
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|
Diluted Earnings Per Share |
|
||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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As reported |
|
$ |
108 |
|
|
|
0.39 |
|
|
$ |
239 |
|
|
$ |
0.76 |
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|
$ |
2 |
|
|
$ |
0.01 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and other costs |
|
|
15 |
|
|
|
0.05 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement charges |
|
|
32 |
|
|
|
0.12 |
|
|
|
8 |
|
|
|
0.03 |
|
|
|
12 |
|
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses on early retirement of debt |
|
|
— |
|
|
|
— |
|
|
|
185 |
|
|
|
0.59 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impact of certain items identified above |
|
|
(12 |
) |
|
|
(0.04 |
) |
|
|
(46 |
) |
|
|
(0.15 |
) |
|
|
(6 |
) |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted to exclude certain items above |
|
$ |
143 |
|
|
$ |
0.52 |
|
|
$ |
386 |
|
|
$ |
1.23 |
|
|
$ |
21 |
|
|
$ |
0.07 |
|
|
|
|
39 Weeks Ended October 29, 2022 |
|
|
39 Weeks Ended October 30, 2021 |
|
|
||||||||||
|
|
|
Net Income |
|
|
Diluted Earnings Per Share |
|
|
Net Income |
|
|
Diluted Earnings Per Share |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported |
|
$ |
668 |
|
|
|
2.37 |
|
|
$ |
687 |
|
|
$ |
2.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment, restructuring and other costs |
|
|
25 |
|
|
|
0.09 |
|
|
|
21 |
|
|
|
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement charges |
|
|
32 |
|
|
|
0.11 |
|
|
|
90 |
|
|
|
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses on early retirement of debt |
|
|
31 |
|
|
|
0.11 |
|
|
|
199 |
|
|
|
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax impact of certain items identified above |
|
|
(22 |
) |
|
|
(0.08 |
) |
|
|
(73 |
) |
|
|
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted to exclude certain items above |
|
$ |
734 |
|
|
$ |
2.60 |
|
|
$ |
924 |
|
|
$ |
2.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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