- Comparable sales growth of 0.6% on an
owned basis; 0.7% on an owned plus licensed basis
- EPS and adjusted EPS of $0.44
- 2019 strategic initiatives on track to
deliver sales growth
- Company reaffirms annual 2019 sales and
earnings guidance
Macy’s, Inc. (NYSE: M) today reported results for the first
quarter 2019 and reaffirmed annual sales and earnings guidance for
fiscal 2019.
Financial Highlights
First Quarter (in millions)
2019 2018 Net sales
$ 5,504 $ 5,541
Comparable sales
Owned 0.6 % Owned plus licensed
0.7 %
As reported Net income
attributable to Macy’s, Inc. shareholders $ 136
$ 139 Earnings before interest, taxes, depreciation
and amortization $ 446 $ 492 Diluted
earnings per share $ 0.44 $ 0.45
As
adjusted* Net income attributable to Macy’s, Inc. shareholders
$ 137 $ 149 Earnings before interest,
taxes, depreciation and amortization $ 447
$ 505 Diluted earnings per share $ 0.44
$ 0.48
*As adjusted reflects the exclusion of certain items from the
respective financial measures. Please see the final pages of this
news release for important information regarding the nature of such
excluded amounts and calculation of the company’s non-GAAP
financial measures.
“Macy’s, Inc. is off to a solid start this year, delivering our
sixth consecutive quarter of comparable sales growth and making
progress against the North Star Strategy. As an omnichannel
retailer, we are focused on growing our customer base by providing
a great experience across all channels and taking market share
category by category. Our brick & mortar sales trend
improved sequentially in the first quarter, supported by the
Growth50 stores and Backstage. We had another quarter of
double-digit growth in our digital business, and mobile continues
to be our fastest-growing channel,” said Jeff Gennette, Macy’s,
Inc. chairman & chief executive officer. “We are pleased
with the progress we are making on our strategic initiatives as
they continue to drive top-line growth, keeping us on track to
reach our 2019 goals. We believe these initiatives, coupled with
productivity improvements, position our company well for long-term
profit growth.”
Asset Sale Gains
Asset sale gains for the first quarter of 2019 totaled $43
million pre-tax, or $31 million after-tax and $0.10 per diluted
share attributable to Macy’s, Inc. shareholders. This compares to
the first quarter of 2018, when asset sale gains totaled $24
million pre-tax, or $18 million after-tax and $0.06 per diluted
share attributable to Macy’s, Inc. shareholders.
Extended and Amended Bank Credit Facility
On May 9, 2019, the company entered into a new $1.5 billion,
five-year Credit Agreement that will mature on May 9, 2024. This
agreement replaces a previous $1.5 billion facility, which was set
to expire in May 2021. Macy’s, Inc. maintains a strong balance
sheet, enabling the company to extend the maturity of the agreement
on similar terms.
Looking Ahead
Macy's, Inc. is reaffirming its previously
provided annual guidance for 2019.
2019 Annual
Guidance Comparable sales
(owned plus licensed)
Flat to up 1% Comparable sales
(owned)
Flat to up 1% Net sales Approximately
flat Diluted EPS excluding settlement charges, impairment and other
costs $3.05 to $3.25 Asset sale gains
Approximately $100 million (or $0.25 per share) Annual tax rate
23%
About Macy's, Inc.
Macy’s, Inc. is one of the nation’s premier retailers, with
fiscal 2018 sales of $24.971 billion and approximately 130,000
employees. The company operates approximately 680 department stores
under the nameplates Macy’s and Bloomingdale’s, and nearly 190
specialty stores that include Bloomingdale’s The Outlet,
Bluemercury, and Macy’s Backstage. Macy’s, Inc. operates stores in
43 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 and potential changes to
trade policies, 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 (May 15, 2019) at 9:30 a.m. ET. The 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 in on 1-888-254-3590, passcode 7241409. A replay
of the conference call and slides 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.
Consolidated
Statements of Income (Unaudited) (Note 1 and Note 2)(All
amounts in millions except percentages and per share figures)
13 Weeks Ended 13 Weeks Ended May 4,
2019 May 5, 2018 $
% toNet sales
$
% toNet sales
Net sales $ 5,504 $ 5,541 Credit card revenues, net
172 3.1 % 157 2.8 % Cost of sales (3,403 ) (61.8 %) (3,382 )
(61.0 %) Selling, general and administrative expenses (2,112
) (38.4 %) (2,083 ) (37.6 %) Gains on sale of real estate 43
0.8 % 24 0.4 % Impairment and other costs (1 ) — % (19 )
(0.3 %) Operating income 203 3.7 % 238 4.3 % Benefit
plan income, net 7 11 Interest expense, net (47 ) (66 )
Income before income taxes 163 183 Federal, state and
local income tax expense (27 ) (52 ) Net income 136 131
Net loss attributable to noncontrolling interest — 8
Net income attributable to Macy's, Inc. shareholders
$ 136 $ 139
Basic earnings per share attributable to
Macy's, Inc. shareholders
$ 0.44 $ 0.45
Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ 0.44 $ 0.45 Average common shares: Basic
309.1 306.6 Diluted 311.4 309.4 End of period common shares
outstanding 308.9 306.4 Supplemental Financial Measures:
Gross Margin (Note 3) $ 2,101 38.2 % $ 2,159 39.0 % Depreciation
and amortization expense $ 236 $ 235
MACY’S, INC.
Consolidated Balance
Sheets (Unaudited) (Note 2)(millions)
May 4,2019
February 2,2019
May 5,2018
ASSETS: Current Assets: Cash and cash equivalents $ 737 $ 1,162 $
1,531 Receivables 237 400 250 Merchandise inventories 5,498 5,263
5,291 Prepaid expenses and other current assets 633 620
638 Total Current Assets 7,105 7,445 7,710
Property and Equipment – net 6,499 6,637 6,575 Right of Use Assets
2,631 — — Goodwill 3,908 3,908 3,908 Other Intangible Assets – net
441 478 486 Other Assets 712 726 889
Total Assets $ 21,296 $ 19,194 $ 19,568
LIABILITIES AND SHAREHOLDERS’ EQUITY: Current Liabilities:
Short-term debt $ 41 $ 43 $ 25 Merchandise accounts payable 1,950
1,655 2,045 Accounts payable and accrued liabilities 2,846 3,366
2,695 Income taxes 182 168 312 Total Current
Liabilities 5,019 5,232 5,077 Long-Term Debt 4,680 4,708
5,857 Long-Term Lease Liability 2,823 — — Deferred Income Taxes
1,193 1,238 1,169 Other Liabilities 1,258 1,580 1,664 Shareholders'
Equity: Macy's, Inc. 6,323 6,436 5,821 Noncontrolling interest —
— (20 ) Total Shareholders' Equity 6,323 6,436
5,801 Total Liabilities and Shareholders’
Equity $ 21,296 $ 19,194 $ 19,568
MACY’S, INC.
Consolidated
Statements of Cash Flows (Unaudited) (Note 2 and Note
4)(millions)
13 WeeksEnded
13 WeeksEnded
May 4, 2019 May 5, 2018 Cash flows from operating activities: Net
income $ 136 $ 131 Adjustments to reconcile net income to net cash
provided (used) by operating activities: Impairment and other costs
1 19 Depreciation and amortization 236 235 Stock-based compensation
expense 14 17 Gains on sale of real estate (43 ) (24 ) Deferred
income taxes 7 19 Benefit plans 8 9 Changes in assets and
liabilities: Decrease in receivables 163 105 Increase in
merchandise inventories (235 ) (115 ) Increase in prepaid expenses
and other current assets (6 ) (20 ) Increase in merchandise
accounts payable 247 415 Decrease in accounts payable and accrued
liabilities (516 ) (453 ) Increase in current income taxes 8 25
Change in other assets and liabilities not separately identified
(58 ) (41 ) Net cash provided (used) by operating activities (38 )
322 Cash flows from investing activities: Purchase of
property and equipment (204 ) (132 ) Capitalized software (60 ) (58
) Disposition of property and equipment 34 23 Other, net (7 ) 11
Net cash used by investing activities (237 ) (156 )
Cash flows from financing activities: Debt repaid (3 ) (3 )
Dividends paid (116 ) (116 ) Decrease in outstanding checks (45 )
(10 ) Issuance of common stock 6 28 Proceeds from noncontrolling
interest — 2 Net cash used by financing activities
(158 ) (99 ) Net increase (decrease) in cash, cash
equivalents and restricted cash (433 ) 67 Cash, cash equivalents
and restricted cash beginning of period 1,248 1,513
Cash, cash equivalents and restricted cash end of period $
815 $ 1,580
MACY’S, INC.
Consolidated Financial
Statements (Unaudited)
Notes:
(1) As a result of the seasonal nature of the retail
business, the results of operations for the 13 weeks ended May 4,
2019 and May 5, 2018 (which do not include the Christmas season)
are not necessarily indicative of such results for the fiscal year.
(2) The results for the 13 weeks ended May 4, 2019 reflect
the adoption of Accounting Standards Update 2016-02 (ASU 2016-02),
Leases, on February 3, 2019, utilizing the modified retrospective
approach which allowed for transition in the period of adoption.
(3) Gross margin is defined as net sales less cost of sales.
(4) Restricted cash of $78 million and $49 million have been
included with cash and cash equivalents for the 13 weeks ended May
4, 2019 and May 5, 2018, respectively. Further, reclassifications
were made to certain 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, 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 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 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 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
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)
Changes in
Comparable Sales
13 Weeks EndedMay 4, 2019
Increase in comparable sales on an owned basis (Note 5) 0.6%
Comparable sales growth impact of departments licensed to
third parties (Note 6) 0.1% Increase in comparable sales on
an owned plus licensed basis 0.7%
Notes:
(5) 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, 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.
(6) 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
Earnings before Interest, Taxes,
Depreciation and Amortization, Net Income and Diluted Earnings Per
Share Attributable to Macy's, Inc. Shareholders, Excluding Certain
Items
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 attributable to Macy’s, Inc.
shareholders.
- Adjusted net income attributable to
Macy’s, Inc. shareholders is reconciled to GAAP net income
attributable to Macy’s, Inc. shareholders.
- Adjusted diluted earnings per share
attributable to Macy’s, Inc. shareholders is reconciled to GAAP
diluted earnings per share attributable to Macy’s, Inc.
shareholders.
Adjusted EBITDA
13 Weeks Ended 13 Weeks Ended May 4, 2019 May 5, 2018 Net
income attributable to Macy's, Inc. shareholders $ 136 $ 139
Interest expense, net 47 66 Federal, state and local income tax
expense 27 52 Depreciation and amortization 236 235 EBITDA
446 492 Impairment and other costs (Note 7) 1 13 Adjusted
EBITDA $ 447 $ 505
Adjusted Net Income and Adjusted Diluted
Earnings Per Share Attributable to Macy's, Inc. Shareholders
13 Weeks Ended 13 Weeks Ended May 4, 2019 May
5, 2018
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
Net IncomeAttributable toMacy's,
Inc.Shareholders
DilutedEarningsPer Share
As reported $ 136 $ 0.44 $ 139 $ 0.45 Impairment and other costs
(Note 7) 1 — 13 0.04 Income tax impact — — (3 ) (0.01
) As adjusted to exclude certain item above $ 137 $ 0.44
$ 149 $ 0.48
Note 7: The above pre-tax adjustment for the 13 weeks ended May
5, 2018 excludes impairment and other costs attributable to the
noncontrolling interest shareholder of $6 million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190515005482/en/
Media – Blair Fasbender
Rosenberg646-429-6032media@macys.comInvestors
– Mike McGuire513-579-7780investors@macys.com
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