Strong second quarter and first half 2018
driven by improved performance in stores and continued growth of
digital.
Company raises annual sales and earnings
guidance.
Macy’s, Inc. (NYSE:M) today reported results for the second
quarter of 2018 and provided updated annual sales and earnings
guidance for fiscal 2018.
For the second quarter, the company achieved earnings per
diluted share of $0.53, or $0.70 excluding impairment and other
costs, settlement charges and losses on the early retirement of
debt. This compares to $0.36 per share in the second quarter of
2017, or $0.46 excluding settlement charges and gains on the early
retirement of debt. When also excluding asset sale gains, earnings
per diluted share were $0.59 in the second quarter of 2018,
compared to $0.37 per share in the second quarter of 2017.
The company reported comparable sales on an owned basis that
were flat in the second quarter of 2018 compared to the second
quarter of 2017. On an owned plus licensed basis, comparable sales
were up 0.5 percent for the second quarter of 2018. Due to the
53-week calendar in fiscal 2017, there have been some timing
adjustments in the company’s typical promotional calendar,
including the shift in the spring Friends & Family promotion.
As reported earlier, this shift caused a positive impact in the
first quarter of 2018 of approximately 250 basis points. The shift
also caused a negative impact of approximately 240 basis points in
the second quarter, as compared to 2017. Adjusting for this shift,
the company estimates that comparable sales on an owned plus
licensed basis were up 2.9 percent for the second quarter.
When looking at the first half of 2018, comparable sales on an
owned basis were up 1.9 percent compared to the first half of 2017.
On an owned plus licensed basis, comparable sales were up 2.3
percent for the first half of 2018.
“Macy's, Inc. delivered strong performance in the first half of
the year, and we are pleased to report our third consecutive
quarter of comparable sales growth. Macy's, Bloomingdale's and
Bluemercury all performed well. It is encouraging to see the
continued strengthening of our brick & mortar business where we
saw trend improvements across the portfolio, led by our Growth50
stores. The combination of healthy stores, robust e-commerce and a
great mobile experience is Macy's recipe for success. We are
focused on improving our customer journey every step of the way
because we know that our customers expect a great experience
whenever and wherever they engage with our brands,” said Jeff
Gennette, Macy's, Inc. chairman and chief executive officer. “We
also continue to be disciplined with inventory management, which
allows us to give our customers more fashion and freshness, while
increasing sales and improving gross margin.”
“Our strategic initiatives are gaining traction. They
contributed to our first half results and will continue to have a
positive impact on our performance in the back half of the year.
This, combined with continued strong execution and a healthy
consumer spending environment, gives us confidence to raise sales
and earnings guidance for fiscal 2018,” continued Gennette. “We
have momentum in the business, powered by our 130,000 colleagues
who are focused on how best to serve our customers every day.”
Sales
Net sales in the second quarter of 2018 totaled $5.572 billion,
a decrease of 1.1 percent, compared with net sales of $5.636
billion in the second quarter of 2017.
For the first half of 2018, Macy’s, Inc. net sales
totaled $11.112 billion, up 1.1 percent from net sales
of $10.986 billion in the first half of 2017.
Operating Income and Net Income
Macy’s, Inc. operating income for the second quarter of 2018
totaled $303 million, or 5.4 percent of sales, compared to $282
million, or 5.0 percent of sales, for the second quarter of 2017.
Excluding impairment and other costs of $17 million, operating
income for the second quarter of 2018 totaled $320 million, or 5.7
percent of sales. There were no impairment and other costs in the
second quarter of 2017.
For the first half of 2018, Macy’s, Inc. operating income
totaled $541 million, or 4.9 percent of sales, compared
to $501 million, or 4.6 percent of sales, for the first
half of 2017. Excluding impairment and other costs of $36
million, operating income for the first half of 2018
totaled $577 million, or 5.2 percent of sales. There were
no impairment and other costs in the first half of 2017.
Net income attributable to Macy's, Inc. shareholders for the
second quarter of 2018 totaled $166 million, or 3.0 percent of
sales, compared to $111 million, or 2.0 percent of sales, for the
second quarter of 2017. Excluding impairment and other costs,
settlement charges and losses on the early retirement of debt, net
income for the second quarter of 2018 totaled $219 million, or 3.9
percent of sales. Excluding settlement charges and gains on the
early retirement of debt, net income for the second quarter of 2017
totaled $141 million, or 2.5 percent of sales. When also excluding
asset sale gains, net income for the second quarter of 2018 totaled
$185 million, or 3.3 percent of sales, compared to $114 million, or
2.0 percent of sales, in the second quarter of 2017.
For the first half of 2018, Macy’s, Inc. net income
totaled $306 million, or 2.8 percent of sales, compared
to $189 million, or 1.7 percent of sales for the first
half of 2017. Excluding impairment and other costs, settlement
charges and losses on the early retirement of debt, net income for
the first half of 2018 totaled $369 million, or 3.3
percent of sales. Excluding settlement charges and losses on the
early retirement of debt, net income for the first half of 2017
totaled $221 million, or 2.0 percent of sales. When also
excluding asset sale gains, net income for the first half of 2018
totaled $316 million, or 2.8 percent of sales, compared to $152
million or 1.4 percent of sales, in the first half of 2017.
Cash Flow
Net cash provided by operating activities was $544
million in the first half of 2018, compared with $546
million in the first half of 2017. Net cash used by investing
activities in the first half of 2018 was $312 million,
compared with $210 million in the first half of 2017.
Operating cash flows net of investing were $232
million in the first half of 2018, compared with $336
million in the first half of 2017.
The company repurchased approximately $344
million face value of senior notes and debentures in the
second quarter of 2018. The debt repurchases were made in the open
market for a total cost of approximately $354 million,
including premium expenses and other fees related to the
transactions.
In the first half of 2018, the company's asset sales totaled $88
million in cash proceeds, compared with $150 million in the first
half of 2017.
Looking Ahead - Raising Earnings and Sales Guidance
Macy's, Inc. is updating its guidance for fiscal 2018. The
company now expects adjusted earnings per diluted share of $3.95 to
$4.15 in fiscal 2018, excluding anticipated settlement charges
related to the company’s defined benefit plans as well as
impairment and other costs.
Total sales are expected to range from flat to a 0.7 percent
increase in fiscal 2018. Comparable sales on an owned plus licensed
basis are expected to increase between 2.0 and 2.5 percent for the
second half of 2018, which translates to an annual increase of
between 2.1 and 2.5 percent. Comparable sales on an owned basis are
expected to be 20-30 basis points below comparable sales on an
owned plus licensed basis in fiscal 2018, which is consistent with
prior guidance.
Total sales guidance is provided on a 52-week basis in 2018
compared to a 53-week basis in 2017. Comparable sales guidance is
provided on a 52-week basis in both 2018 and 2017.
The company's 2018 results, 2017 results and guidance for fiscal
2018 reflect the new accounting standards related to revenue
recognition and retirement benefits. Macy's, Inc. has recast its
quarterly income statements and balance sheets for 2016 and 2017 to
reflect adoption of these new standards. These documents can be
found on the investor relations page at www.macysinc.com.
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.
Macy’s, Inc. is one of the nation’s premier retailers. With
fiscal 2017 sales of $24.837 billion and approximately 130,000
employees, the company operates approximately 690 department stores
under the nameplates Macy’s and Bloomingdale’s, and more than 170
specialty stores that include Bloomingdale’s The Outlet,
Bluemercury, Macy’s Backstage and STORY. Macy’s, Inc. operates
stores in 44 states, the District of Columbia, Guam and Puerto
Rico, as well as macys.com, bloomingdales.com and bluemercury.com.
Bloomingdale’s stores in Dubai and Kuwait are operated by Al Tayer
Group LLC under license agreements. Macy’s, Inc. has corporate
offices in Cincinnati, Ohio, and New York, New York.
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Macy’s management and are subject to significant risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including
conditions to, or changes in the timing of, proposed real estate
and other transactions, prevailing interest rates and non-recurring
charges, the effect of federal tax reform, store closings,
competitive pressures from specialty stores, general merchandise
stores, off-price and discount stores, manufacturers’ outlets, the
Internet, mail-order catalogs and television shopping and general
consumer spending levels, including the impact of the availability
and level of consumer debt, the effect of weather and other factors
identified in documents filed by the company with the Securities
and Exchange Commission. 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.
NOTE: Additional information on Macy’s, Inc., including past
news releases, is available at www.macysinc.com/pressroom. A
webcast of Macy's, Inc.’s call with analysts and investors will be
held today (August 15, 2018) at 9:30 a.m. ET. The webcast is
accessible to the media and general public via the company's
website at www.macysinc.com. Analysts and investors may call in on
1-800-239-9838, passcode 1925865. A replay of the conference call
can be accessed on the website or by calling 1-888-203-1112 (same
passcode), about two hours after the conclusion of the call.
Macy's, Inc. is scheduled to present at the Goldman Sachs Annual
Global Retailing Conference at 8:05 a.m. ET on Thursday, September
6, 2018, in New York City. Media and investors may access a live
audio webcast of the presentation at www.macysinc.com/ir on
September 6, 2018. A replay of the webcast will be available on the
company’s website.
MACY’S, INC.
Consolidated
Statements of Income (Unaudited) (Note 1)
(All amounts in millions except
percentages and per share figures)
13 Weeks Ended 13 Weeks Ended August 4,
2018 July 29, 2017 $
% toNet sales
$
% toNet sales
Net sales $ 5,572 $ 5,636 Credit card revenues, net
186 3.3 % 167 3.0 % Cost of sales (3,320 ) (59.6 %)
(3,403 ) (60.4 %) Selling, general and administrative
expenses (2,164 ) (38.8 %) (2,161 ) (38.4 %) Gains on sale
of real estate 46 0.8 % 43 0.8 % Impairment and other costs
(Note 2) (17 ) (0.3 %) — — % Operating income 303 5.4
% 282 5.0 % Benefit plan income, net 11 14 Settlement
charges (Note 3) (50 ) (51 ) Interest expense, net (62 ) (79
) Gains (losses) on early retirement of debt (Note 4) (5 ) 2
Income before income taxes 197 168 Federal,
state and local income tax expense (Note 5) (33 ) (60 ) Net
income 164 108 Net loss attributable to noncontrolling
interest 2 3 Net income attributable to
Macy's, Inc. shareholders $ 166 $ 111 Basic
earnings per share attributable to
Macy's, Inc. shareholders
$ .54 $ .36 Diluted earnings per share
attributable toMacy's, Inc. shareholders $ .53 $ .36
Average common shares: Basic 307.7 305.5 Diluted 312.0 306.5
End of period common shares outstanding 307.0 304.6
Depreciation and amortization expense $ 235 $ 244
MACY’S, INC.
Consolidated Statements
of Income (Unaudited)
Notes: (1)
The 13 weeks ended July 29, 2017 have been
recast to reflect the company's retrospective adoption of
Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from
Contracts with Customers, on February 4, 2018. Further, because of
the seasonal nature of the retail business, the results of
operations for the 13 weeks ended August 4, 2018 and July 29, 2017
(which do not include the Christmas season) are not necessarily
indicative of such results for the fiscal year.
(2) For the 13 weeks ended August 4, 2018, impairment and
other costs amounted to $17 million and included costs associated
with the wind-down of Macy's China Limited. The after tax effect of
these charges was $11 million or $0.04 per diluted share
attributable to Macy’s, Inc. (3) Non-cash settlement charges
of $50 million and $51 million, respectively, were recognized
during the 13 weeks ended August 4, 2018 and July 29, 2017. The
after tax effect of these charges during the 13 weeks ended August
4, 2018 was $38 million, or $0.12 per diluted share attributable to
Macy’s, Inc. The after tax effect of these charges during the 13
weeks ended July 29, 2017 was $32 million, or $0.10 per diluted
share attributable to Macy’s, Inc. These charges are the result of
an increase in lump sum distributions associated with store
closings, organizational restructuring, a voluntary separation
program, and periodic distribution activity. (4) The 13
weeks ended August 4, 2018 included losses of $5 million associated
with early retirement of debt. These losses included repurchase
expenses and fees net of the write-off of unamortized debt
premiums. The after tax effect of the losses during the 13 weeks
ended August 4, 2018 was $4 million, or $0.01 per diluted share
attributable to Macy's, Inc. Debt repurchases during the 13 weeks
ended July 29, 2017 resulted in gains of $2 million associated with
early retirement of debt. (5) For the 13 weeks ended August
4, 2018, federal, state and local income taxes differed from the
company's federal income tax statutory rate of 21% because of the
effects of state and local taxes, including the settlement of
various tax issues and tax examinations. Further, the 13 weeks
ended August 4, 2018 and July 29, 2017 included the recognition of
approximately $2 million of net excess tax benefits and $1 million
of net tax deficiencies, respectively, associated with share-based
payment awards. These items as well as the enactment of U.S.
federal tax reform in December 2017 resulted in an effective tax
rate for the 13 weeks ended August 4, 2018 of 16.8% as compared to
35.7% for the 13 weeks ended July 29, 2017.
MACY’S, INC.
Consolidated
Statements of Income (Unaudited) (Note 1)
(All amounts in millions except
percentages and per share figures)
26 weeks ended 26 weeks ended August 4,
2018 July 29, 2017
$
% toNet sales
$
% toNet sales
Net sales $ 11,112 $ 10,986 Credit card revenues, net
343 3.1 % 328 3.0 % Cost of sales (6,701 ) (60.3 %)
(6,706 ) (61.0 %) Selling, general and administrative
expenses (4,247 ) (38.2 %) (4,218 ) (38.4 %) Gains on sale
of real estate 70 0.6 % 111 1.0 % Impairment and other costs
(Note 2) (36 ) (0.3 %) — — % Operating income 541 4.9
% 501 4.6 % Benefit plan income, net 22 27 Settlement
charges (50 ) (51 ) Interest expense, net (128 ) (163 )
Losses on early retirement of debt (Note 3) (5 ) (1 )
Income before income taxes 380 313 Federal, state and local
income tax expense (Note 4) (84 ) (128 ) Net income 296 185
Net loss attributable to noncontrolling interest 10 4
Net income attributable to Macy's, Inc. shareholders
$ 306 $ 189
Basic earnings per share attributable to
Macy's, Inc. shareholders
$ .99 $ .62
Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ .98 $ .62 Average common shares: Basic 307.1
305.2 Diluted 310.7 306.7 End of period common shares
outstanding 307.0 304.6 Depreciation and amortization
expense $ 470 $ 487
MACY’S, INC.
Consolidated Statements
of Income (Unaudited)
Notes: (1)
The 26 weeks ended July 29, 2017 have been
recast to reflect the company's retrospective adoption of
Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from
Contracts with Customers, on February 4, 2018. Further, because of
the seasonal nature of the retail business, the results of
operations for the 26 weeks ended August 4, 2018 and July 29, 2017
(which do not include the Christmas season) are not necessarily
indicative of such results for the fiscal year.
(2) For the 26 weeks ended August 4, 2018, impairment and
other costs amounted to $36 million and included costs associated
with the wind-down of Macy's China Limited. The after tax effect of
these charges was $21 million or $0.08 per diluted share
attributable to Macy’s, Inc. (3) Non-cash settlement charges
of $50 million and $51 million, respectively, were recognized
during the 26 weeks ended August 4, 2018 and July 29, 2017. The
after tax effect of these charges during the 26 weeks ended August
4, 2018 was $38 million, or $0.12 per diluted share attributable to
Macy’s, Inc. The after tax effect of these charges during the 26
weeks ended July 29, 2017 was $32 million, or $0.10 per diluted
share attributable to Macy’s, Inc. These charges are the result of
an increase in lump sum distributions associated with store
closings, organizational restructuring, a voluntary separation
program, and periodic distribution activity. (4) The 26
weeks ended August 4, 2018 and July 29, 2017 included losses of $5
million and $1 million, respectively, associated with the early
retirement of debt. These losses included repurchase expenses and
fees net of the write-off of unamortized debt premiums. The after
tax impact during the 26 weeks ended August 4, 2018 was $4 million,
or $0.01 per diluted share attributable to Macy's, Inc. (5)
For the 26 weeks ended August 4, 2018, federal, state and local
income taxes differed from the company's federal income tax
statutory rate of 21% because of the effects of state and local
taxes, including the settlement of various tax issues and tax
examinations. Further, the 26 weeks ended August 4, 2018 and July
29, 2017 included the recognition of approximately $1 million and
$12 million, respectively, of net tax deficiencies associated with
share-based payment awards. These items as well as the enactment of
U.S. federal tax reform in December 2017 resulted in an effective
tax rate for the 26 weeks ended August 4, 2018 of 22.1% as compared
to 40.9% for the 26 weeks ended July 29, 2017.
MACY’S, INC.
Consolidated Balance
Sheets (Unaudited)
(millions)
August 4,2018
February 3,2018
July 29,2017
ASSETS: Current Assets: Cash and cash equivalents $ 1,068 $ 1,455 $
783 Receivables 261 363 382 Merchandise inventories 4,956 5,178
4,980 Prepaid expenses and other current assets 580 650
571 Total Current Assets 6,865 7,646 6,716
Property and Equipment – net 6,547 6,672 6,822 Goodwill 3,908 3,897
3,897 Other Intangible Assets – net 483 488 493 Other Assets 865
880 810 Total Assets $ 18,668 $
19,583 $ 18,738 LIABILITIES AND SHAREHOLDERS’
EQUITY: Current Liabilities: Short-term debt $ 63 $ 22 $ 16
Merchandise accounts payable 1,795 1,590 1,669 Accounts payable and
accrued liabilities 2,608 3,271 2,939 Income taxes 15 296
52 Total Current Liabilities 4,481 5,179 4,676
Long-Term Debt 5,473 5,861 6,301 Deferred Income Taxes 1,194 1,148
1,549 Other Liabilities 1,626 1,662 1,773 Shareholders' Equity:
Macy's, Inc. 5,916 5,745 4,444 Noncontrolling interest (22 ) (12 )
(5 ) Total Shareholders' Equity 5,894 5,733 4,439
Total Liabilities and Shareholders’ Equity $ 18,668
$ 19,583 $ 18,738
Note: The prior year's amounts reflect the retrospective
adoption of ASU 2014-09 on February 4, 2018.
MACY’S, INC.
Consolidated
Statements of Cash Flows (Unaudited)
(millions)
26 WeeksEnded
26 WeeksEnded
August 4,2018
July 29,2017
Cash flows from operating activities: Net income $ 296 $ 185
Adjustments to reconcile net income to net cash provided by
operating activities: Impairment and other costs 36 — Settlement
charges 50 51 Depreciation and amortization 470 487 Stock-based
compensation expense 31 31 Gains on sale of real estate (70 ) (111
) Amortization of financing costs and premium on acquired debt (5 )
(10 ) Changes in assets and liabilities: Decrease in receivables 88
119 Decrease in merchandise inventories 221 419 Decrease in prepaid
expenses and other current assets 29 59 Increase in merchandise
accounts payable 219 261 Decrease in accounts payable, accrued
liabilities andother items not separately identified (492 ) (604 )
Decrease in current income taxes (271 ) (302 ) Increase in deferred
income taxes 36 26 Change in other assets and liabilities not
separately identified (94 ) (65 ) Net cash provided by operating
activities 544 546 Cash flows from investing
activities: Purchase of property and equipment (275 ) (247 )
Capitalized software (133 ) (125 ) Disposition of property and
equipment 88 150 Other, net 8 12 Net cash used by
investing activities (312 ) (210 ) Cash flows from financing
activities: Debt repaid (357 ) (560 ) Dividends paid (232 ) (230 )
Decrease in outstanding checks (90 ) (64 ) Acquisition of treasury
stock — (1 ) Issuance of common stock 38 2 Proceeds from
noncontrolling interest 5 6 Net cash used by
financing activities (636 ) (847 ) Net decrease in cash,
cash equivalents and restricted cash (404 ) (511 ) Cash, cash
equivalents and restricted cash beginning of period 1,513
1,334 Cash, cash equivalents and restricted cash end
of period $ 1,109 $ 823
Note: The prior period's amounts reflect the retrospective
adoption of ASU 2014-09, ASU 2016-18 (ASU 2016-18), Restricted
Cash, and ASU 2016-15, Classification of Certain Cash Receipts and
Cash Payments, on February 4, 2018. As a result of the adoption of
ASU 2016-18, restricted cash of $41 million and $40 million have
been included with cash and cash equivalents above for the 26 weeks
ended August 4, 2018 and July 29, 2017, respectively. Further,
certain reclassifications were made to the prior period's amounts
to conform with the classifications of such amounts in the most
recent period.
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 growth in comparable sales of departments licensed to
third parties and certain promotional events, 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. In addition, management believes that
excluding certain items from operating income, net income and
diluted earnings per share attributable to Macy's, Inc.
shareholders that are not associated with the company’s core
operations and that may vary substantially in frequency and
magnitude 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. Further, providing cash flow from operating
activities net of cash used in investing activities is a useful
measure in evaluating the company’s ability to generate cash from
operations after giving effect to cash used by investing
activities.
The reconciliation of the forward-looking non-GAAP financial
measure of changes in comparable sales on an owned plus licensed
basis to GAAP comparable sales (i.e., on an owned basis) is in the
same manner as illustrated below, except that the impact of growth
in comparable sales of departments licensed to third parties is the
only reconciling item. In addition, the company does not provide
the most directly comparable forward-looking GAAP measure of net
income and diluted earnings per share attributable to Macy’s, Inc.
shareholders excluding certain items because the timing and amount
of excluded items are unreasonably difficult to fully and
accurately estimate.
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)
Change in Comparable
Sales
13 Weeks EndedAugust 4, 2018
26 Weeks EndedAugust 4, 2018
Increase in comparable sales on an owned basis (Note 1) 0.0%
1.9% Impact of growth in comparable sales of departments
licensed to third parties (Note 2) 0.5% 0.4% Increase in
comparable sales on an owned plus licensed basis 0.5% 2.3%
Impact of quarterly timing shift associated with the Spring 2018
Friends and Family promotional event 2.4% 0.0% Adjusted
increase in comparable sales on an owned plus licensed basis 2.9%
2.3% Notes: (1) Represents the
period-to-period percentage change in net sales from stores in
operation throughout the year presented and the immediately
preceding year and all online sales, excluding 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 is closed for a
significant period of time. Definitions and calculations of
comparable sales differ among companies in the retail industry.
(2) 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 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.
MACY’S, INC.
Important Information
Regarding Non-GAAP Financial Measures
Net Income and Diluted
Earnings Per Share Attributable to Macy's, Inc. Shareholders,
Excluding Certain Items
The following is a reconciliation of the non-GAAP financial
measures of net income and diluted earnings per share attributable
to Macy’s, Inc. shareholders, excluding certain items identified
below, to GAAP net income and diluted earnings per share
attributable to Macy’s, Inc., shareholders, which the company
believes to be the most directly comparable GAAP measures.
13 Weeks Ended 13 Weeks Ended August 4, 2018
July 29, 2017
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
As reported (GAAP) $ 166 $ 0.53 $ 111 $ 0.36 Impairment and other
costs (Note 1) 15 0.05 — — Settlement charges 50 0.16 51 0.17
Losses (gains) on early retirement of debt (Note 2) 5 0.02 (2 ) —
Income tax impact of certain items identified above (17 ) (0.06 )
(19 ) (0.07 ) As adjusted to exclude certain items identified above
$ 219 $ 0.70 $ 141 $ 0.46 Gains
on sale of real estate (46 ) (0.15 ) (43 ) (0.14 ) Income tax
impact of gains on sale of real estate 12 0.04 16
0.05 As adjusted to exclude gains on sale of real
estate and certain other items identified above $ 185 $ 0.59
$ 114 $ 0.37
26 Weeks Ended
26 Weeks Ended
August 4, 2018 July 29, 2017
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
As reported (GAAP) $ 306 $ 0.98 $ 189 $ 0.62 Impairment and other
costs (Note 1) 28 0.09 — — Settlement charges 50 0.16 51 0.17
Losses on early retirement of debt (Note 2) 5 0.02 1 — Income tax
impact of certain items identified above (20 ) (0.06 ) (20 ) (0.07
) As adjusted to exclude certain items identified above $ 369
$ 1.19 $ 221 $ 0.72 Gains on
sale of real estate (70 ) (0.23 ) (111 ) (0.36 ) Income tax impact
of gains on sale of real estate 17 0.06 42
0.14 As adjusted to exclude gains on sale of real estate and
certain other items identified above $ 316 $ 1.02 $
152 $ 0.50 Notes: (1) For
the 13 and 26 weeks ended August 4, 2018, the above pre-tax
adjustments exclude impairment and other costs attributable to the
noncontrolling interest shareholder of $2 million and $8 million,
respectively. (2) The impacts during the 13 and 26 weeks
ended July 29, 2017 represent values less than $0.01 per diluted
share attributable to Macy's, Inc. shareholders.
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version on businesswire.com: https://www.businesswire.com/news/home/20180815005315/en/
Macy’s, Inc.MediaBlair Fasbender Rosenberg,
646-429-6032media@macys.comorInvestorsMonica
Koehler, 513-579-7780investors@macys.com
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