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NEW YORK--(BUSINESS WIRE)--Jun 1, 2023--
Macy’s, Inc. (NYSE: M) today reported financial results for the first quarter of 2023 and updated its annual guidance.
“During the first quarter, we delivered a solid beat on our gross margin rate and bottom line expectations enabled by our disciplined teams, strength of our inventory management and operational efficiencies. We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc.
“We have moved quickly to take the appropriate actions to meet current consumer demand and manage our expenses. Our revised guidance reflects incremental clearance markdowns to address excess spring seasonal merchandise in the second quarter, along with adjustments to the category composition and inventory levels in the back half of the year. Supported by our solid foundation of financial health, we remain focused on strengthening our core business and advancing our five growth vectors – which we believe will drive sustainable and profitable sales growth in the future,” continued Gennette.
First Quarter Highlights
Comparisons are to the first quarter of 2022 unless noted otherwise. Comparisons to 2019 are provided, where appropriate, to benchmark performance. Please refer to note 2 within the financial tables regarding reclassifications of certain prior year metrics.
Financial Highlights
All amounts in millions except percentages and per share figures | FirstQuarter | |||||
|
| 2023 |
| 2022 | ||
Net sales | $ | 4,982 |
| $ | 5,348 |
|
Other revenue | $ | 191 |
| $ | 217 |
|
Comparable Sales | ||||||
Owned |
| (7.9 | %) |
| ||
Owned-plus-licensed |
| (7.2 | %) |
| ||
Gross margin | $ | 1,994 |
| $ | 2,117 |
|
Gross margin rate |
| 40.0 | % |
| 39.6 | % |
Selling, general and administrative expenses | $ | 1,950 |
| $ | 1,905 |
|
Net Income | $ | 155 |
| $ | 286 |
|
Earnings before interest, taxes, depreciation and amortization (EBITDA) | $ | 466 |
| $ | 676 |
|
Diluted earnings per share (EPS) | $ | 0.56 |
| $ | 0.98 |
|
Adjusted Net income | $ | 157 |
| $ | 315 |
|
Adjusted EBITDA | $ | 468 |
| $ | 684 |
|
Adjusted Diluted EPS | $ | 0.56 |
| $ | 1.08 |
|
Merchandise inventories | $ | 4,607 |
| $ | 4,956 |
|
Dividend Declaration
On May 31, 2023, the board of directors of Macy's, Inc. declared its regular quarterly dividend of 16.54 cents per share on Macy's, Inc.’s common stock, payable July 3, 2023, to shareholders of record as of the close of business on June 15, 2023.
2023 Guidance
The company is taking a cautious approach to the remainder of the year and is reducing its annual 2023 sales and earnings guidance to reflect anticipated macroeconomic impacts to the consumer. On the low-end, updated guidance assumes macro pressures on the consumer worsen. The high-end assumes heightened macro pressures experienced in mid-March through April persist. Additionally, it incorporates the second quarter markdown actions the company is taking to clear out spring transitional and early summer categories to support clean end-of-quarter inventories as well as higher annual shortage rate than previously anticipated.
The company’s updated earnings guidance also includes the benefit of an incremental $200 million of cost savings identified as part of ongoing expense management that is expected to impact both gross margin and SG&A expense. The full updated outlook for 2023, presented on a 53-week basis unless otherwise noted, can be found in the presentation posted to macysinc.com/investors.
| Guidance as of June 1, 2023 | Guidance as of March 2, 2023 |
Net sales | $22.8 billion to $23.2 billion | $23.7 billion to $24.2 billion |
Comparable owned-plus-licensed sales change (52 week basis) | Down 7.5% to down 6% versus 2022 | Down 4% to down 2% versus 2022 |
Adjusted diluted earnings per share* | $2.70 - $3.20 | $3.67 - $4.11 |
* Adjusted diluted EPS does not consider the impact of any potential future share repurchases associated with the company’s current share repurchase authorization. |
The company does not provide reconciliations of the forward-looking non-GAAP measures of comparable owned plus licensed 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 2023 sales and earnings will be held today (June 1, 2023) 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. 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 13737454, 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.
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 tocreate 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, 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 January 28, 2023. 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 April 29, 2023 |
| 13 Weeks Ended April 30, 2022 | ||||||||||||||
| $ |
| % to |
| % to |
| $ |
| % to |
| % to | ||||||
Net sales | $ | 4,982 |
|
|
|
|
|
| $ | 5,348 |
|
|
|
|
| ||
Other revenue (Note 2) |
| 191 |
|
| 3.8 | % |
|
|
|
| 217 |
|
| 4.1 | % |
|
|
Total revenue |
| 5,173 |
|
|
|
|
|
|
| 5,565 |
|
|
|
|
| ||
Cost of sales |
| (2,988 | ) |
| (60.0 | %) |
|
|
|
| (3,231 | ) |
| (60.4 | %) |
|
|
Selling, general and administrative expenses |
| (1,950 | ) |
|
|
| (37.7 | %) |
|
| (1,905 | ) |
|
|
| (34.2 | %) |
Gains on sale of real estate |
| 11 |
|
|
|
| 0.2 | % |
|
| 42 |
|
|
|
| 0.8 | % |
Impairment, restructuring and other costs |
| (2 | ) |
|
|
| — | % |
|
| (8 | ) |
|
|
| (0.1 | %) |
Operating income |
| 244 |
|
|
|
| 4.7 | % |
|
| 463 |
|
|
|
| 8.3 | % |
Benefit plan income, net |
| 4 |
|
|
|
|
|
|
| 7 |
|
|
|
|
| ||
Interest expense, net |
| (37 | ) |
|
|
|
|
|
| (47 | ) |
|
|
|
| ||
Losses on early retirement of debt |
| — |
|
|
|
|
|
|
| (31 | ) |
|
|
|
| ||
Income before income taxes |
| 211 |
|
|
|
|
|
|
| 392 |
|
|
|
|
| ||
Federal, state and local income tax expense (Note 3) |
| (56 | ) |
|
|
|
|
|
| (106 | ) |
|
|
|
| ||
Net income | $ | 155 |
|
|
|
|
|
| $ | 286 |
|
|
|
|
| ||
Basic earnings per share | $ | 0.57 |
|
|
|
|
|
| $ | 1.01 |
|
|
|
|
| ||
Diluted earnings per share | $ | 0.56 |
|
|
|
|
|
| $ | 0.98 |
|
|
|
|
| ||
Average common shares: |
|
|
|
|
|
|
|
|
|
|
| ||||||
Basic |
| 273.1 |
|
|
|
|
|
|
| 283.6 |
|
|
|
|
| ||
Diluted |
| 277.8 |
|
|
|
|
|
|
| 290.9 |
|
|
|
|
| ||
End of period common shares outstanding |
| 272.5 |
|
|
|
|
|
|
| 269.7 |
|
|
|
|
| ||
Supplemental Financial Measures: |
|
|
|
|
|
|
|
|
|
|
| ||||||
Gross Margin (Note 4) | $ | 1,994 |
|
| 40.0 | % |
|
|
| $ | 2,117 |
|
| 39.6 | % |
|
|
Depreciation and amortization expense | $ | 218 |
|
|
|
|
|
| $ | 206 |
|
|
|
|
|
MACY’S, INC.
Consolidated Balance Sheets (Unaudited) (Note 1) (millions) | ||||||||
| April 29, |
| January 28, |
| April 30, | |||
ASSETS: |
|
|
|
|
| |||
Current Assets: |
|
|
|
|
| |||
Cash and cash equivalents | $ | 603 |
| $ | 862 |
| $ | 672 |
Receivables |
| 255 |
|
| 300 |
|
| 233 |
Merchandise inventories |
| 4,607 |
|
| 4,267 |
|
| 4,956 |
Prepaid expenses and other current assets |
| 390 |
|
| 424 |
|
| 372 |
Total Current Assets |
| 5,855 |
|
| 5,853 |
|
| 6,233 |
Property and Equipment – net |
| 5,864 |
|
| 5,913 |
|
| 5,601 |
Right of Use Assets |
| 2,715 |
|
| 2,683 |
|
| 2,736 |
Goodwill |
| 828 |
|
| 828 |
|
| 828 |
Other Intangible Assets – net |
| 432 |
|
| 432 |
|
| 434 |
Other Assets |
| 1,174 |
|
| 1,157 |
|
| 1,140 |
Total Assets | $ | 16,868 |
| $ | 16,866 |
| $ | 16,972 |
LIABILITIES AND SHAREHOLDERS’ EQUITY: |
|
|
|
|
| |||
Current Liabilities: |
|
|
|
|
| |||
Merchandise accounts payable | $ | 2,415 |
| $ | 2,053 |
| $ | 2,865 |
Accounts payable and accrued liabilities |
| 2,233 |
|
| 2,750 |
|
| 2,456 |
Income taxes |
| 134 |
|
| 58 |
|
| 222 |
Total Current Liabilities |
| 4,782 |
|
| 4,861 |
|
| 5,543 |
Long-Term Debt |
| 2,996 |
|
| 2,996 |
|
| 2,994 |
Long-Term Lease Liabilities |
| 2,996 |
|
| 2,963 |
|
| 3,030 |
Deferred Income Taxes |
| 916 |
|
| 947 |
|
| 968 |
Other Liabilities |
| 1,008 |
|
| 1,017 |
|
| 1,159 |
Shareholders' Equity |
| 4,170 |
|
| 4,082 |
|
| 3,278 |
Total Liabilities and Shareholders’ Equity | $ | 16,868 |
| $ | 16,866 |
| $ | 16,972 |
MACY’S, INC.
Consolidated Statements of Cash Flows (Unaudited) (Notes 1 and 5) (millions) | |||||||
| 13 Weeks |
| 13 Weeks | ||||
Cash flows from operating activities: |
|
|
| ||||
Net income | $ | 155 |
|
| $ | 286 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
| ||||
Impairment, restructuring and other costs |
| 2 |
|
|
| 8 |
|
Depreciation and amortization |
| 218 |
|
|
| 206 |
|
Benefit plans |
| 2 |
|
|
| 5 |
|
Stock-based compensation expense |
| 14 |
|
|
| 13 |
|
Gains on sale of real estate |
| (11 | ) |
|
| (42 | ) |
Amortization of financing costs and premium on acquired debt |
| 3 |
|
|
| 2 |
|
Deferred income taxes |
| (32 | ) |
|
| (17 | ) |
Changes in assets and liabilities: |
|
|
| ||||
Decrease in receivables |
| 45 |
|
|
| 65 |
|
Increase in merchandise inventories |
| (340 | ) |
|
| (573 | ) |
(Increase) decrease in prepaid expenses and other current assets |
| 32 |
|
|
| (13 | ) |
Increase in merchandise accounts payable |
| 374 |
|
|
| 639 |
|
Decrease in accounts payable and accrued liabilities |
| (415 | ) |
|
| (424 | ) |
Increase in current income taxes |
| 82 |
|
|
| 122 |
|
Change in other assets and liabilities |
| (24 | ) |
|
| (29 | ) |
Net cash provided by operating activities |
| 105 |
|
|
| 248 |
|
Cash flows from investing activities: |
|
|
| ||||
Purchase of property and equipment |
| (215 | ) |
|
| (171 | ) |
Capitalized software |
| (81 | ) |
|
| (90 | ) |
Disposition of property and equipment |
| 25 |
|
|
| 73 |
|
Other, net |
| 1 |
|
|
| (6 | ) |
Net cash used by investing activities |
| (270 | ) |
|
| (194 | ) |
Cash flows from financing activities: |
|
|
| ||||
Debt issued |
| — |
|
|
| 850 |
|
Debt issuance costs |
| — |
|
|
| (21 | ) |
Debt repaid |
| (1 | ) |
|
| (1,139 | ) |
Debt repurchase premium and expenses |
| — |
|
|
| (29 | ) |
Dividends paid |
| (45 | ) |
|
| (45 | ) |
Decrease in outstanding checks |
| (13 | ) |
|
| (126 | ) |
Acquisition of treasury stock |
| (35 | ) |
|
| (584 | ) |
Net cash used by financing activities |
| (94 | ) |
|
| (1,094 | ) |
Net decrease in cash, cash equivalents and restricted cash |
| (259 | ) |
|
| (1,040 | ) |
Cash, cash equivalents and restricted cash beginning of period |
| 865 |
|
|
| 1,715 |
|
Cash, cash equivalents and restricted cash end of period | $ | 606 |
|
| $ | 675 |
|
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 April 29, 2023 and April 30, 2022 (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 due to the reclassification of Macy’s Media Network net revenue from SG&A to Other Revenue. Reclassifications were made to the prior years’ amounts to conform with the classifications of such amounts in the most recent year. | ||||||||||||
(millions) | 13 Weeks Ended |
| 13 Weeks Ended | ||||||||||
| $ |
| % to |
| $ |
| % to | ||||||
Credit card revenues, net | $ | 162 |
| 3.3 | % |
| $ | 191 |
| 3.6 | % | ||
Macy's Media Network revenue, net |
| 29 |
| 0.6 | % |
|
| 26 |
| 0.5 | % | ||
Other Revenue | $ | 191 |
| 3.8 | % |
| $ | 217 |
| 4.1 | % | ||
|
|
|
|
|
|
|
| ||||||
Net Sales | $ | 4,982 |
|
|
| $ | 5,348 |
|
| ||||
| (3) | The income tax expense of $56 million and $106 million, or 26.5% and 27.0% of pretax income, for the 13 weeks ended April 29, 2023 and April 30, 2022, 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 April 29, 2023 and April 30, 2022 were impacted primarily by the effect of state and local taxes and the vesting and cancellations 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 for both the 13 weeks ended April 29, 2023 and April 30, 2022. |
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 comparable owned plus licensed 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.
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 April 30, 2022 | |||||||
| Macy's, Inc. |
| Macy's |
| Bloomingdale's | |||
Increase (decrease) in comparable sales on an owned basis (Note 6) | (7.9 | %) |
| (8.7 | %) |
| (3.9 | %) |
Impact of departments licensed to third parties (Note 7) | 0.7 | % |
| 0.8 | % |
| (0.4 | %) |
Increase (decrease) in comparable sales on an owned-plus-licensed basis | (7.2 | %) |
| (7.9 | %) |
| (4.3 | %) |
Notes: | ||
| (6) | Represents the period-to-period percentage change in net sales from stores in operation for both the entire 13 weeks ended April 29, 2023 and April 30, 2022. 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. Macy’s and Bloomingdale’s license third parties to operate certain departments in their 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 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) 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:
EBITDA and Adjusted EBITDA | |||||
| 13 Weeks |
| 13 Weeks | ||
Net income | $ | 155 |
| $ | 286 |
Interest expense, net |
| 37 |
|
| 47 |
Losses on early retirement of debt |
| — |
|
| 31 |
Federal, state and local income tax expense |
| 56 |
|
| 106 |
Depreciation and amortization |
| 218 |
|
| 206 |
EBITDA |
| 466 |
|
| 676 |
Impairment, restructuring and other costs |
| 2 |
|
| 8 |
Adjusted EBITDA | $ | 468 |
| $ | 684 |
Adjusted Net Income and Adjusted Diluted Earnings Per Share | |||||||||||||
| 13 Weeks Ended April 29, 2023 |
| 13 Weeks Ended April 30, 2022 | ||||||||||
| Net |
| Diluted |
| Net |
| Diluted | ||||||
As reported | $ | 155 |
| $ | 0.56 |
| $ | 286 |
|
| $ | 0.98 |
|
Impairment, restructuring and other costs |
| 2 |
|
| — |
|
| 8 |
|
|
| 0.03 |
|
Losses on early retirement of debt |
| — |
|
| — |
|
| 31 |
|
|
| 0.11 |
|
Income tax impact of certain items identified above |
| — |
|
| — |
|
| (10 | ) |
|
| (0.04 | ) |
As adjusted to exclude certain items above | $ | 157 |
| $ | 0.56 |
| $ | 315 |
|
| $ | 1.08 |
|
View source version on businesswire.com:https://www.businesswire.com/news/home/20230601005451/en/
CONTACT: Media – Chris Grams
communications@macys.com
Investors – Pamela Quintiliano
investors@macys.com
KEYWORD: NEW YORK UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: LUXURY DEPARTMENT STORES OTHER RETAIL CATALOG BRIDAL FASHION JEWELRY RETAIL FOOTWEAR ONLINE RETAIL
SOURCE: Macy’s, Inc.
Copyright Business Wire 2023.
PUB: 06/01/2023 06:55 AM/DISC: 06/01/2023 06:53 AM
http://www.businesswire.com/news/home/20230601005451/en