A
First quarter 2024 earnings exceeded outlook
Diluted EPS of
“We are encouraged by our customers’ response to our
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.
-
Compares to diluted earnings per share of
-
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 ofMacy’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
|
|
Guidance as of
|
Net sales |
|
|
|
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 |
|
|
|
Adjusted diluted EPS excludes any potential impact from the credit card late fee ruling, which was stayed on
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
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
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
Consolidated Statements of Income (Unaudited) (Note 1) (All amounts in millions except percentages and per share figures) |
|||||||||||||||||||
|
|||||||||||||||||||
|
13 Weeks Ended
|
|
13 Weeks Ended
|
||||||||||||||||
|
$ |
|
% to
|
|
% to
|
|
$ |
|
% to
|
|
% to
|
||||||||
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 |
|
|
|
|
|
Consolidated Balance Sheets (Unaudited) (Note 1) (millions) |
||||||||
|
||||||||
|
|
|
|
|
|
|||
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 |
|
|
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 |
Consolidated Statements of Cash Flows (Unaudited) (Notes 1 and 5) (millions) |
|||||||
|
|||||||
|
13 Weeks Ended
|
|
13 Weeks Ended
|
||||
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 |
|
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 |
(2) |
|
Other Revenue is inclusive of the following amounts. All amounts in millions except percentages. |
|
13 Weeks Ended
|
|
13 Weeks Ended
|
||||||||
|
$ |
|
% to
|
|
$ |
|
% to
|
||||
Credit card revenues, net |
$ |
117 |
|
2.4 |
% |
|
$ |
162 |
|
3.3 |
% |
|
|
37 |
|
0.8 |
% |
|
|
29 |
|
0.6 |
% |
Other Revenue |
$ |
154 |
|
3.2 |
% |
|
$ |
191 |
|
3.8 |
% |
|
|
|
|
|
|
|
|
||||
|
$ |
4,846 |
|
|
|
$ |
4,982 |
|
|
(3) |
|
The income tax expense of |
(4) |
|
Gross margin is defined as net sales less cost of sales. |
(5) |
|
Restricted cash of |
Important Information Regarding Non-GAAP Financial Measures
The company reports its financial results in accordance with
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.
Important Information Regarding Non-GAAP Financial Measures (All amounts in millions except percentages and per share figures) |
|||||
|
|||||
Changes in Comparable Sales |
|||||
|
|||||
|
13 Weeks Ended |
||||
|
|
|
|
||
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
13 Weeks Ended |
||||||||||
|
|
|
|
|
|
|
|
||||
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
13 Weeks Ended |
||||||||||
|
|
|
|
|
|
|
|
||||
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
|
|
13 Weeks Ended
|
||
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
|
|
13 Weeks Ended
|
||||||||||
|
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 |
|
|
|
(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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240521018823/en/
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Investors –
investors@macys.com
Source: