Comparable sales up 12.8% on an owned basis and
up 12.4% on an owned-plus-licensed basis
Diluted EPS of $0.98 and Adjusted diluted EPS
of $1.08
Increased financial flexibility through a
number of financing transactions
Repurchased $600 million of shares under $2
billion share repurchase program
Reaffirmed annual sales guidance and raised
Adjusted diluted EPS guidance
Macy’s, Inc. (NYSE: M) today reported financial results for the
first quarter of 2022 and updated its annual guidance.
“Our company delivered solid results in the first quarter
despite a challenging operating environment. We delivered strong
earnings, beating our estimates, and sales that were in line with
our expectations. While macroeconomic pressures on consumer
spending increased during the quarter, our customers continued to
shop. We saw a notable shift back to occasion-based apparel and
in-store shopping, as well as continued strength in sales of luxury
goods. Our omnichannel ecosystem, which spans the value spectrum,
has supported our ability to flex our wide assortment of
categories, products and brands to capture consumer demand despite
the volatile environment,” said Jeff Gennette, chairman and chief
executive officer of Macy’s, Inc. “As we look ahead to the rest of
2022, we remain focused on our customers and the successful
execution of our Polaris long-term growth strategy. We believe that
the efficiencies we built into our business enable us to navigate
through the current uncertain macro environment.”
First Quarter Highlights
Comparisons are to first quarter 2021 unless noted otherwise.
Comparisons to 2019 are provided, where appropriate, to benchmark
performance given the impact of the pandemic in 2020.
- Diluted earnings per share of $0.98 and Adjusted diluted
earnings per share of $1.08.
- This compares to diluted earnings per share of $0.32 and
Adjusted diluted earnings per share of $0.39.
- Comparable sales up 12.8% on an owned basis and up 12.4% on
an owned-plus-licensed basis.
- Digital sales increased 2% year-over-year while increasing
34% versus the first quarter of 2019.
- Digital penetration was 33% of net sales, a 4-percentage point
decline from the first quarter of 2021, but a 9-percentage point
improvement over the first quarter of 2019.
- Highlights of the company's nameplates include:
- Macy’s comparable sales were up 10.7% on an owned basis and
up 10.1%, on an owned-plus-licensed basis.
- Approximately 44.4 million active customers shopped the Macy’s
brand, on a trailing twelve-month basis, which was a 14% increase
compared to the prior year.
- Star Rewards program members made up approximately 69% of the
total Macy's brand owned-plus-licensed sales on a trailing
twelve-month basis, up approximately 6 percentage points versus the
prior year.
- Consumer shopping behaviors shifted during the quarter to more
occasion-based apparel. As a result, dresses, women’s shoes,
accessories and men’s tailored had strong sales performance.
- For Macy’s omnichannel markets, more than 88% of the markets
with stores saw omnichannel sales growth over the first quarter of
2021 levels.
- Bloomingdale’s comparable sales on an owned basis were up
28.1% and on an owned-plus-licensed basis were up 26.9%.
- Approximately 4.0 million active customers shopped the
Bloomingdale’s brand, on a trailing twelve-month basis, which was a
21% increase over the prior year.
- The company continued to see strong performance from luxury
throughout the first quarter.
- Results were driven by strong sales of dresses, men's tailored,
men's and women's contemporary apparel and luggage.
- Bluemercury comparable sales were up 25.2% on an owned and
owned-plus-licensed basis.
- The company continued to build on its momentum and saw strong
sales performance during the quarter.
- Results were driven by the increase in store traffic,
better-than-expected growth in its private brands and the increase
in demand for color in lip, face and eye categories.
- Inventory turnover, on a trailing twelve-month basis,
increased 9% over 2021 and 18% over 2019.
- Inventory was up 17% year-over-year and down 10% versus
2019.
- Inventory performance was impacted by the downshift in consumer
demand from active/casual and soft home categories to accelerated
demand at occasion-based apparel, coupled with the loosening in
supply chain constraints resulting in a higher percentage of
receipts than expected.
- The company believes that its pricing science and disciplined
buying behavior puts it in a position to navigate the dynamic
environment.
- Gross margin for the quarter was 39.6%, up from 38.6% in the
first quarter of 2021.
- Merchandise margin improvement was largely due to higher
average unit retail driven by lower promotions on regular price
merchandise, ticket price increases and category mix.
- Delivery expense as a percent of net sales decreased 50 basis
points, due to decreased digital penetration.
- Selling, general and administrative (“SG&A”) expense of
$1.9 billion, a $131 million increase.
- SG&A expense as a percent of sales was 35.1%, an
improvement of 200 basis points.
- The quarter benefited from expense leverage in conjunction with
growing sales driven by disciplined expense management.
- Net credit card revenue of $191 million, up $32 million.
- Represented 3.6% of sales, 20 basis points higher than the
prior year period.
- Performance driven by better-than-expected bad debt levels and
higher sales.
Financial Highlights
All amounts in millions except
percentages and per share figures
First Quarter
2022
2021
Net sales
$5,348
$4,706
Comparable Sales
Owned
12.8%
Owned plus licensed
12.4%
Net Income
$286
$103
Earnings before interest, taxes,
depreciation and amortization (EBITDA)
$676
$454
Diluted earnings per share
(EPS)
$0.98
$0.32
Adjusted Net income
$315
$126
Adjusted EBITDA
$684
$473
Adjusted Diluted EPS
$1.08
$0.39
Capital Allocation
During the first quarter, Macy’s, Inc. took the following
actions to boost its liquidity and financial flexibility as well as
return capital to shareholders:
- On March 8, 2022, the collateral securing the company’s second
lien notes was automatically released and all of the company’s
long-term debt is now unsecured.
- Using the proceeds from the issuance of $850 million in new
unsecured notes along with cash on hand, Macy’s, Inc. redeemed
approximately $1.1 billion of near-term debt that was originally
maturing in 2023 and 2024. The net result of the issuance and
redemptions is an approximately $300 million reduction to total
long-term debt. As a result, the company does not have any material
debt maturities for the next 5 years.
- The company amended its asset-based credit facility, including
extending the maturity of the $3 billion facility to March
2027.
- In addition, the company repurchased $600 million of shares
under its newly authorized $2 billion share repurchase program,
which does not have an expiration date, and paid $45 million in
dividends to shareholders.
“We believe that our first quarter performance reflects the
durability of the Polaris strategy. The actions we took in the
quarter to boost our liquidity and increase our financial
flexibility provides us a long runway to invest further in our
transformation, navigate the unprecedented macroeconomic
environment and return capital to shareholders,” said Adrian
Mitchell, chief financial officer of Macy’s, Inc. “As we move into
the rest of this year, we have confidence in our ability to flex
and pivot quickly in this dynamic environment.”
Additionally, at its last meeting, Macy’s board of directors
declared a regular quarterly dividend of 15.75 cents per share on
Macy’s, Inc. common stock, payable July 1, 2022, to shareholders of
record at the close of business on June 15, 2022.
2022 Guidance
Despite the uncertainty within the macroeconomic environment,
the company is reaffirming its annual 2022 sales guidance and
raising its earnings guidance to account for first quarter 2022
share repurchases as well as improved expectations for credit card
revenue. The company believes this guidance appropriately reflects
its strategic positioning and the associated risks within this
environment. The full update to guidance can be found in the
presentation posted to macysinc.com/investors.
Guidance as of
May 26, 2022
Guidance as of
February 22, 2022
Net sales
$24,460 million to $24,700
million Flat to up 1.0% growth versus 2021
$24,460 million to $24,700
million Flat to up 1.0% growth versus 2021
Adjusted EBITDA as a percent of
sales
11.2% - 11.7%
11.0% - 11.5%
Adjusted diluted earnings per share
(reflecting first quarter share repurchases)
$4.53 - $4.95
$4.13 - $4.52
Conference Call and Webcasts
A webcast of Macy's, Inc.’s call with analysts and investors to
report its first quarter 2022 sales and earnings will be held today
(May 26, 2022) 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
8403658. 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.
The company will participate in a fireside chat at the Evercore
ISI Consumer and Retail Conference at 8:00 a.m. ET on Tuesday, June
7, 2022. Media and investors may access a live audio webcast of the
presentation at www.macysinc.com/investors. 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.
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 to create 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 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, inflation, labor shortages, the amount and
timing of future dividends and share repurchases 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 29, 2022.
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 30, 2022
13 Weeks Ended May 1, 2021
% to
% to
$
Net sales
$
Net sales
Net sales
$
5,348
$
4,706
Credit card revenues, net
191
3.6
%
159
3.4
%
Cost of sales
(3,231
)
(60.4
%)
(2,889
)
(61.4
%)
Selling, general and administrative
expenses
(1,879
)
(35.1
%)
(1,748
)
(37.1
%)
Gains on sale of real estate
42
0.8
%
6
0.1
%
Impairment, restructuring and other
costs
(8
)
(0.1
%)
(19
)
(0.4
%)
Operating income
463
8.7
%
215
4.6
%
Benefit plan income, net
7
15
Interest expense, net
(47
)
(79
)
Losses on early retirement of debt
(31
)
(11
)
Income before income taxes
392
140
Federal, state and local income tax
expense (Note 2)
(106
)
(37
)
Net income
$
286
$
103
Basic earnings per share
$
1.01
$
0.33
Diluted earnings per share
$
0.98
$
0.32
Average common shares:
Basic
283.5
311.6
Diluted
290.7
318.6
End of period common shares
outstanding
269.7
311.0
Supplemental Financial Measures:
Gross Margin (Note 3)
$
2,117
39.6
%
$
1,817
38.6
%
Depreciation and amortization expense
$
206
$
224
MACY’S, INC.
Consolidated Balance Sheets (Unaudited) (Note
1)
(millions)
April 30,
2022
January 29,
2022
May 1,
2021
ASSETS:
Current Assets:
Cash and cash equivalents
$
672
$
1,712
$
1,798
Receivables
233
297
205
Merchandise inventories
4,956
4,383
4,230
Prepaid expenses and other current assets
(Note 4)
372
366
1,007
Total Current Assets
6,233
6,758
7,240
Property and Equipment – net
5,601
5,665
5,798
Right of Use Assets
2,736
2,808
2,853
Goodwill
828
828
828
Other Intangible Assets – net
434
435
436
Other Assets
1,140
1,096
927
Total Assets
$
16,972
$
17,590
$
18,082
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt
$
—
$
—
$
294
Merchandise accounts payable
2,865
2,222
2,545
Accounts payable and accrued
liabilities
2,456
3,086
2,616
Income taxes
222
108
63
Total Current Liabilities
5,543
5,416
5,518
Long-Term Debt
2,994
3,295
4,558
Long-Term Lease Liabilities
3,030
3,098
3,166
Deferred Income Taxes
968
983
868
Other Liabilities
1,159
1,177
1,297
Shareholders' Equity
3,278
3,621
2,675
Total Liabilities and Shareholders’
Equity
$
16,972
$
17,590
$
18,082
MACY’S, INC.
Consolidated Statements of Cash Flows (Unaudited) (Notes
1 and 5)
(millions)
13 Weeks Ended April 30, 2022
13 Weeks Ended May 1, 2021
Cash flows from operating activities:
Net income
$
286
$
103
Adjustments to reconcile net income to net
cash provided by operating activities:
Impairment, restructuring and other
costs
8
19
Depreciation and amortization
206
224
Benefit plans
5
10
Stock-based compensation expense
13
11
Gains on sale of real estate
(42
)
(6
)
Deferred income taxes
(17
)
(43
)
Amortization of financing costs and
premium on acquired debt
2
8
Changes in assets and liabilities:
Decrease in receivables
65
71
Increase in merchandise inventories
(573
)
(457
)
Increase in prepaid expenses and other
current assets
(13
)
(56
)
Increase in merchandise accounts
payable
639
674
Decrease in accounts payable and accrued
liabilities
(424
)
(114
)
Increase in current income taxes
122
75
Change in other assets and liabilities
(29
)
(25
)
Net cash provided by operating
activities
248
494
Cash flows from investing activities:
Purchase of property and equipment
(171
)
(61
)
Capitalized software
(90
)
(38
)
Disposition of property and equipment
73
8
Other, net
(6
)
17
Net cash used by investing activities
(194
)
(74
)
Cash flows from financing activities:
Debt issued
850
500
Debt issuance costs
(21
)
(9
)
Debt repaid
(1,139
)
(503
)
Debt repurchase premium and expenses
(29
)
(12
)
Dividends paid
(45
)
—
Decrease in outstanding checks
(126
)
(276
)
Acquisition of treasury stock
(584
)
—
Net cash used by financing activities
(1,094
)
(300
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(1,040
)
120
Cash, cash equivalents and restricted cash
beginning of period
1,715
1,754
Cash, cash equivalents and restricted cash
end of period
$
675
$
1,874
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 30, 2022 and May 1, 2021 (which do not include the Christmas
season) are not necessarily indicative of such results for the
fiscal year.
(2)
The income tax expense of $106 million and
$37 million, or 27.1% and 26.3% of pretax income, for the 13 weeks
ended April 30, 2022 and May 1, 2021, 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 30, 2022 and May 1, 2021 were impacted
primarily by the effect of state and local taxes and the
realization of deferred tax assets associated with the vesting and
cancellation of certain stock-based compensation awards.
(3)
Gross margin is defined as net sales less
cost of sales.
(4)
Prepaid expenses and other current assets
as of May 1, 2021 included an income tax receivable of $520
million.
(5)
Restricted cash of $3 million and $76
million have been included with cash and cash equivalents for the
13 weeks ended April 30, 2022 and May 1, 2021, respectively.
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 adjusted EBITDA, diluted
earnings per share and comparable sales on an owned plus licensed
basis 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 1, 2021
Macy's, Inc.
Macy's
Bloomingdale's
bluemercury
Increase in comparable sales on an owned
basis (Note 6)
12.8
%
10.7
%
28.1
%
25.2
%
Impact of departments licensed to third
parties (Note 7)
(0.4
%)
(0.6
%)
(1.2
%)
0.0
%
Increase in comparable sales on an owned
plus licensed basis
12.4
%
10.1
%
26.9
%
25.2
%
Notes:
(6)
Represents the period-to-period percentage
change in net sales from stores in operation during the 13 weeks
ended April 30, 2022 and the 13 weeks ended May 1, 2021. 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. 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)
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 April 30, 2022
13 Weeks Ended May 1, 2021
Net income
$
286
$
103
Interest expense, net
47
79
Losses on early retirement of debt
31
11
Federal, state and local income tax
expense
106
37
Depreciation and amortization
206
224
EBITDA
676
454
Impairment, restructuring and other
costs
8
19
Adjusted EBITDA
$
684
$
473
Adjusted Net Income and Adjusted Diluted Earnings Per Share
13 Weeks Ended April 30, 2022
13 Weeks Ended May 1, 2021
Net Income
Diluted Earnings Per Share
Net Income
Diluted Earnings Per Share
As reported
$
286
0.98
$
103
$
0.32
Impairment, restructuring and other
costs
8
0.03
19
0.06
Losses on early retirement of debt
31
0.11
11
0.03
Income tax impact of certain items
identified above
(10
)
(0.04
)
(7
)
(0.02
)
As adjusted to exclude certain items
above
$
315
$
1.08
$
126
$
0.39
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220526005268/en/
Media – Carolyn Ng Cohen media@macys.com
Investors - Mike McGuire investors@macys.com
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