Performance exceeded expectations on both the
top and bottom lines
Comparable sales up 62.5% vs. 2020 on an owned
basis; up 63.9% vs. 2020 on an owned plus licensed basis
Diluted EPS of $0.32 and Adjusted diluted EPS
of $0.39
Company continues momentum as a digitally led
omnichannel retailer with digital sales growth of 34% vs. 2020
Raises full-year guidance, bolstered by
improved macroeconomic trends and strength of Polaris strategy
execution
Macy’s, Inc. (NYSE: M) today reported results for the first
quarter of 2021 and raised guidance for fiscal 2021.
“In our first quarter we outperformed sales expectations across
all three of our brands: Macy’s, Bloomingdale’s and Bluemercury. We
built on our momentum from the fourth quarter and our sales trend
continued to improve throughout the first quarter,” said Jeff
Gennette, chairman and chief executive officer of Macy’s, Inc.
“These results were driven by the positive effects of the
government stimulus program and expanding vaccine rollout, coupled
with the accelerated execution of our Polaris strategy, including
investments in our digital platforms. Macy's remains a fashion and
style source for customers as a digitally led omnichannel
retailer.”
“As consumers seek to re-engage with each other, we are seeing
promising signs that our core customers are shopping again, and we
continue to attract new customers, who increasingly begin their
shopping experience with us online,” continued Gennette. “Customers
are shopping categories that have been strong throughout the
pandemic, including home, fine jewelry and watches, fragrance and
luxury items. And we’re encouraged by the improvement we’re seeing
in special occasion categories as customers begin to travel and
return to a pre-pandemic lifestyle. We also have emerging
opportunities in new categories and brands, including toys, health
& wellness, pet and home décor.”
“As we look to the rest of the year, we are hyper-focused on
meeting consumers’ demand for speed, convenience and a seamless
omnichannel shopping experience. We also continue to evolve our
merchandising strategy, and we remain a partner of choice for top
brands with more collaborative and profitable vendor
relationships,” continued Gennette. “With a healthier economy and
the reopening of communities as the backdrop to the execution of
our Polaris strategy, we are well positioned to deliver
sustainable, profitable growth in 2021 and the years beyond.”
First Quarter Highlights
In addition to prior year comparisons, Macy’s, Inc. is providing
comparisons to 2019 to benchmark its performance given the impact
of the pandemic last year.
- Diluted earnings per share of $0.32 and Adjusted diluted
earnings per share of $0.39 both exceeded expectations for the
quarter.
- This compares to $0.44 of both diluted earnings per share and
Adjusted diluted earnings per share in first quarter 2019.
- Excluding asset sale gains, Adjusted diluted earnings per share
for the quarter exceeded first quarter 2019 by $0.04.
- Comparable sales up 62.5% on an owned basis and up 63.9% on an
owned plus licensed basis versus 2020.
- Comparable sales down 10.5% on an owned basis and down 10.0% on
an owned plus licensed basis versus 2019.
- Trend improvement compared to a 17.1% owned plus licensed
comparable sales decline in the fourth quarter of 2020.
- Digital sales grew 34% over first quarter 2020 and grew 32%
over first quarter 2019.
- Digital penetration was 37% of net sales, a 6-percentage point
decline from first quarter 2020 when stores closed, but a
13-percentage point improvement over first quarter 2019.
- The company saw Platinum, Gold and Silver customers in its Star
Rewards Loyalty program re-engage, with the average customer spend
up 10% compared to first quarter 2019 and an 11-percentage point
trend improvement from fourth quarter 2020.
- The company’s Bronze segment, its youngest and most diverse
loyalty tier continued to grow, adding 1.7 million members.
- The company brought 4.6 million new customers into the Macy's
brand, a 23% increase compared to first quarter 2019.
- 47% of new customers came through the digital channel in first
quarter 2021.
- Gross margin for the quarter was 38.6%, up from 17.1% in first
quarter 2020 and up 40 basis points from first quarter 2019.
- Improvement due to increased merchandise margin was largely
driven by inventory productivity and the execution of the Polaris
strategy.
- The first quarter 2020 included an approximately $300 million
inventory write-down from markdowns on fashion merchandise due to
the store closures during first quarter 2020.
- Delivery expense declined approximately 20 basis points from
the first quarter of 2020 and increased 230 basis points from first
quarter 2019, partially due to the higher penetration of digital
sales.
- Inventory was down 23.1% from first quarter 2019.
- Continued strong inventory management discipline from
2020.
- Selling, general and administrative (“SG&A”) expense of
$1.7 billion; increased $150 million from first quarter 2020 and
declined $364 million from first quarter 2019.
- SG&A as a percent of sales was 37.1%, down from 52.9% in
first quarter of 2020 and an improvement of 130 basis points from
first quarter 2019.
- Disciplined expense management, Polaris savings and improved
productivity contributed to the first quarter SG&A
performance.
- Net credit card revenue of $159 million, up $28 million from
first quarter 2020 and down $13 million from first quarter 2019.
- Represented 3.4% of sales, 90 basis points lower than first
quarter 2020 and 30 basis points better than first quarter
2019.
- Approximately $1.8 billion in cash as of the end of the first
quarter due to strong performance and the more efficient use of
capital compared to pre-pandemic.
Revised FY 2021 Guidance
As a result of Macy’s, Inc. outperformance in the first quarter
of 2021 and its improved outlook, the company is raising its full
year 2021 guidance.
“Our achievements in the first quarter, combined with the faster
than anticipated economic recovery, give us the confidence to
update our full-year 2021 guidance,” said Adrian Mitchell, chief
financial officer of Macy’s, Inc. “The momentum and strength of our
digital business is reshaping how we engage with customers as an
omnichannel retailer. As we execute the Polaris strategy, Macy's,
Inc. is well-positioned for long-term, profitable growth.”
Revised Guidance 2021
Prior Guidance 2021
Net sales
$21.73B - $22.23B
$19.75B - $20.75B
Adjusted diluted earnings per
share
$1.71 - $2.12
$0.40 - $0.90
Adjusted EBITDA as a percent of
sales
9% – 9.5%
7% - 7.5%
A full overview of the company’s guidance can be found in the
first quarter 2021 earnings presentation at
www.macysinc.com/investors.
Conference Call and Webcasts
A webcast of Macy's, Inc.’s call with analysts and investors to
report its first quarter 2021 sales and earnings will be held today
(May 18, 2021) 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 in on 1-800-458-4121, passcode
2736880. 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. Additional information
on Macy’s, Inc., including past news releases, is available at
www.macysinc.com/pressroom.
As previously announced, Adrian Mitchell will present at Cowen’s
2nd Annual New Retail Ecosystem CEO Summit: Innovation &
Digitization at 8:15 a.m. ET on May 26, 2021. Media and investors
may access a live audio webcast of the presentation at
www.macysinc.com. A replay of the webcast will also be available on
the company’s website.
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.
Macy’s, Inc. (NYSE: M) is one of the nation’s premier
omnichannel retailers. Headquartered in New York City, the company
comprises three retail brands: Macy’s, Bloomingdale’s and
Bluemercury. With a robust e-commerce business, rich mobile
experience and a national stores footprint, our customers can shop
the way they live — anytime and through any channel. 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 the
effects of the COVID-19 pandemic on Macy's customer demand and
supply chain, as well as its consolidated results of operation,
financial position and cash flows, 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 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 30, 2021. 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 Operations (Unaudited) (Note
1)
(All amounts in millions except
percentages and per share figures)
13 Weeks Ended May 1, 2021
13 Weeks Ended May 2, 2020
% to
% to
$
Net sales
$
Net sales
Net sales
$
4,706
$
3,017
Credit card revenues, net
159
3.4
%
131
4.3
%
Cost of sales
(2,889
)
(61.4
%)
(2,501
)
(82.9
%)
Selling, general and administrative
expenses
(1,748
)
(37.1
%)
(1,598
)
(52.9
%)
Gains on sale of real estate
6
0.1
%
16
0.5
%
Impairment, restructuring and other costs
(Note 2)
(19
)
(0.4
%)
(3,184
)
(105.5
%)
Operating income (loss)
215
4.6
%
(4,119
)
(136.5
%)
Benefit plan income, net
15
9
Interest expense, net
(79
)
(47
)
Losses on early retirement of debt
(11
)
—
Income (loss) before income taxes
140
(4,157
)
Federal, state and local income tax
benefit (expense) (Note 3)
(37
)
576
Net income (loss)
$
103
$
(3,581
)
Basic earnings (loss) per share
$
0.33
$
(11.53
)
Diluted earnings (loss) per share
$
0.32
$
(11.53
)
Average common shares:
Basic
311.6
310.6
Diluted
318.6
310.6
End of period common shares
outstanding
311.0
310.2
Supplemental Financial Measures:
Gross Margin (Note 4)
$
1,817
38.6
%
$
516
17.1
%
Depreciation and amortization expense
$
224
$
237
MACY’S, INC.
Consolidated Balance Sheets (Unaudited) (Note
1)
(millions)
May 1, 2021
January 30, 2021
May 2, 2020
ASSETS:
Current Assets:
Cash and cash equivalents
$
1,798
$
1,679
$
1,523
Receivables
205
276
170
Merchandise inventories
4,230
3,774
4,923
Prepaid expenses and other current assets
(Note 6)
1,007
455
519
Total Current Assets
7,240
6,184
7,135
Property and Equipment – net
5,798
5,940
6,425
Right of Use Assets
2,853
2,878
2,672
Goodwill
828
828
838
Other Intangible Assets – net
436
437
439
Other Assets
926
1,439
1,072
Total Assets
$
18,082
$
17,706
$
18,581
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt
$
294
$
452
$
739
Merchandise accounts payable
2,545
1,978
2,196
Accounts payable and accrued
liabilities
2,616
2,927
2,757
Income taxes
63
—
80
Total Current Liabilities
5,518
5,357
5,772
Long-Term Debt
4,558
4,407
4,918
Long-Term Lease Liabilities
3,166
3,185
2,923
Deferred Income Taxes
868
908
944
Other Liabilities
1,296
1,296
1,327
Shareholders' Equity
2,675
2,553
2,697
Total Liabilities and Shareholders’
Equity
$
18,082
$
17,706
$
18,581
MACY’S, INC.
Consolidated Statements of Cash Flows (Unaudited) (Notes
1 and 5)
(millions)
13 Weeks Ended May 1, 2021
13 Weeks Ended May 2, 2020
Cash flows from operating activities:
Net income (loss)
$
103
$
(3,581
)
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Impairment, restructuring and other
costs
19
3,184
Depreciation and amortization
224
237
Benefit plans
10
12
Stock-based compensation expense
11
6
Gains on sale of real estate
(6
)
(16
)
Deferred income taxes
(43
)
(225
)
Amortization of financing costs and
premium on acquired debt
8
—
Changes in assets and liabilities:
Decrease in receivables
71
236
(Increase) decrease in merchandise
inventories
(457
)
265
(Increase) decrease in prepaid expenses
and other current assets
(56
)
12
Increase in merchandise accounts
payable
674
629
Decrease in accounts payable and accrued
liabilities
(114
)
(531
)
(Increase) decrease in current income
taxes
75
(353
)
Change in other assets and liabilities
(25
)
(39
)
Net cash provided (used) by operating
activities
494
(164
)
Cash flows from investing activities:
Purchase of property and equipment
(61
)
(122
)
Capitalized software
(38
)
(38
)
Disposition of property and equipment
8
21
Other, net
17
26
Net cash used by investing activities
(74
)
(113
)
Cash flows from financing activities:
Debt issued
500
1,500
Debt issuance costs
(9
)
—
Debt repaid
(503
)
(4
)
Debt repurchase premium and expenses
(12
)
Dividends paid
—
(117
)
Decrease in outstanding checks
(276
)
(231
)
Net cash provided (used) by financing
activities
(300
)
1,148
Net increase in cash, cash equivalents and
restricted cash
120
871
Cash, cash equivalents and restricted cash
beginning of period
1,754
731
Cash, cash equivalents and restricted cash
end of period
$
1,874
$
1,602
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 1, 2021 and May 2, 2020 (which do not include the
Christmas season) are not necessarily indicative of such results
for the fiscal year.
(2)
The 13 weeks ended May 2, 2020
included non-cash impairment charges totaling $3.2 billion, which
consisted of $3.1 billion of a non-cash goodwill impairment charge
and $80 million impairment charge on long-lived tangible and right
of use assets.
(3)
The income tax expense of $37
million and the income tax benefit of $576 million, or 26.3% and
13.9% of pretax income and loss, for the 13 weeks ended May 1, 2021
and May 2, 2020, respectively, reflect a different effective tax
rate as compared to the company’s federal income tax statutory rate
of 21%. The income tax effective rate for the 13 weeks ended May 1,
2021 was impacted by the realization of deferred tax assets
associated with the vesting and cancellation of certain stock-based
compensation awards. The income tax effective rate for the 13 weeks
ended May 2, 2020 was impacted by the non-tax deductible component
of the goodwill impairment charge, offset partially by the benefit
of the available carryback of net operating losses as permitted
under the CARES Act.
(4)
Gross margin is defined as net
sales less cost of sales.
(5)
Restricted cash of $76 million
and $79 million have been included with cash and cash equivalents
for the 13 weeks ended May 1, 2021 and May 2, 2020,
respectively.
(6)
Prepaid expenses and other
current assets as of May 2, 2021 include an income tax receivable
of $520 million.
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 (loss) 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 (loss) and diluted earnings (loss) 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 and 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 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 May 2, 2020
Comparable Sales vs. 13 Weeks
Ended May 4, 2019
Increase (decrease) in comparable sales on
an owned basis (Note 7)
62.5
%
(10.5
%)
Comparable sales impact of departments
licensed to third parties (Note 8)
1.4
%
0.5
%
Increase (decrease) in comparable sales on
an owned plus licensed basis
63.9
%
(10.0
%)
Notes:
(7)
Represents the period-to-period
percentage change in net sales from stores in operation during the
13 weeks ended May 1, 2021 and the 13 weeks ended May 2, 2020 and
May 4, 2019, respectively. 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. No stores have been
excluded as a result of the COVID-19 pandemic. Definitions and
calculations of comparable sales may differ among companies in the
retail industry.
(8)
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
(All amounts in millions except
percentages and per share figures)
Earnings (Loss)
before Interest, Taxes, Depreciation and Amortization, Net Income
(Loss) and Diluted Earnings (Loss) Per Share, 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
(loss).
- Adjusted net income (loss) is reconciled to GAAP net income
(loss).
- Adjusted diluted earnings (loss) per share is reconciled to
GAAP diluted earnings (loss) per share.
EBITDA and Adjusted EBITDA
13 Weeks Ended May 1, 2021
13 Weeks Ended May 2, 2020
13 Weeks Ended May 4, 2019
Net income (loss)
$
103
$
(3,581
)
$
136
Interest expense, net
79
47
47
Losses on early retirement of debt
11
—
—
Federal, state and local income tax
expense (benefit)
37
(576
)
27
Depreciation and amortization
224
237
236
EBITDA
454
(3,873
)
446
Impairment, restructuring and other
costs
19
3,184
1
Adjusted EBITDA
$
473
$
(689
)
$
447
MACY’S, INC.
Important
Information Regarding Non-GAAP Financial Measures
(All amounts in millions except
percentages and per share figures)
Adjusted Net Income (Loss) and Adjusted
Diluted Earnings (Loss) Per Share
13 Weeks Ended May 1, 2021
13 Weeks Ended May 2, 2020
13 Weeks Ended May 4, 2019
Net Income
Diluted Earnings Per Share
Net Income (Loss)
Diluted Earnings (Loss) Per
Share
Net Income
Diluted Earnings Per Share
As reported
$
103
$
0.32
$
(3,581
)
$
(11.53
)
$
136
$
0.44
Impairment, restructuring and other
costs
19
0.06
3,184
10.25
1
—
Losses on early retirement of debt
11
0.03
—
—
—
—
Income tax impact of certain items
identified above
(7
)
(0.02
)
(233
)
(0.75
)
—
—
As adjusted to exclude certain items
above
$
126
$
0.39
$
(630
)
$
(2.03
)
$
137
$
0.44
Gains on sale of real estate
(6
)
(0.02
)
(16
)
(0.05
)
(43
)
(0.14
)
Income tax impact of gains on sale of real
estate
1
0.01
4
0.01
12
0.04
As adjusted to exclude gains on sale of
real estate and other certain items identified above
$
121
$
0.38
$
(642
)
$
(2.07
)
$
106
$
0.34
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210518005316/en/
Media - Blair Rosenberg media@macys.com
Investors - Mike McGuire investors@macys.com
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