Macy’s First 50 locations achieve third
consecutive quarter of positive comparable sales
Company delays third quarter 2024 earnings
release and conference call
Macy’s, Inc. (NYSE: M) today reported preliminary financial
results for the third quarter of 2024.
Preliminary Third Quarter Highlights
- Macy’s First 50 locations delivered third consecutive quarter
of comparable sales growth, up 1.9%.
- Bloomingdale’s reported comparable sales growth of owned and
owned-plus-licensed-plus-marketplace up 1.0% and 3.2%,
respectively.
- Bluemercury reported comparable sales growth of 3.3%.
- Asset sale gains of $66 million were ahead of
expectations.
“We delivered third quarter sales in line with expectations as
we continued to make traction on our Bold New Chapter strategy
initiatives,” said Tony Spring, chairman and chief executive
officer of Macy’s, Inc. “Our Macy's First 50 locations achieved
their third consecutive quarter of comparable sales growth. At the
same time, our luxury brands, Bloomingdale's and Bluemercury,
reported positive comparable sales. Importantly, November
comparable sales are trending ahead of third quarter levels across
nameplates.”
Preliminary Third Quarter Results (comparisons are to the
third quarter of 2023)
Macy’s, Inc. net sales decreased 2.4% to $4.742 billion, with
comparable sales down 2.4% on an owned basis and down 1.3% on an
owned-plus-licensed-plus-marketplace basis. Sales growth at Macy’s
First 50 locations, Bloomingdale’s, and Bluemercury was offset
primarily by weakness in Macy’s other non-First 50 locations as
well as its digital channel and cold weather categories.
Macy’s, Inc. go-forward business1 comparable sales were down
2.0% on an owned basis and down 0.9% on an
owned-plus-licensed-plus-marketplace basis. By nameplate:
- Macy’s net sales were down 3.1%, with comparable sales down
3.0% on an owned basis and down 2.2% on an
owned-plus-licensed-plus-marketplace basis. Fragrances, dresses and
men’s and women’s active apparel were strong. Macy’s go-forward
business1 comparable sales were down 2.6% on an owned basis and
down 1.8% on an owned-plus-licensed-plus-marketplace basis.
- First 50 locations comparable sales were up 1.9% on both an
owned basis and on an owned-plus-licensed basis as investments in
staffing, merchandising, visual presentation and eventing continued
to resonate with the customer.
- Bloomingdale’s net sales were up 1.4%, with comparable sales up
1.0% on an owned basis and up 3.2% on an
owned-plus-licensed-plus-marketplace basis. Key drivers included
strength in contemporary apparel, beauty and digital.
- Bluemercury net sales were up 3.2% and comparable sales were up
3.3% on an owned basis, representing the fifteenth consecutive
quarter of comparable sales growth. Customers continued to respond
well to the breadth of skincare offerings.
Other revenue of $161 million decreased $17 million, or 9.6%.
Within Other revenue:
- Credit card revenues, net decreased $22 million, or 15.5%, to
$120 million. Net credit losses contributed to the year-over-year
decline and were in-line with the company’s expectations.
- Macy’s Media Network revenue, net rose $5 million, or 13.9%, to
$41 million, reflecting higher advertiser and campaign counts.
Asset sale gains of $66 million were $61 million higher than
last year due to the monetization of non-go-forward assets, as part
of the company’s Bold New Chapter strategy. Higher asset sale gains
reflect the pull-forward of the monetization of certain
non-go-forward assets into the third quarter from the fourth
quarter, at better-than-expected valuations.
Preliminary Balance Sheet and Liquidity
Merchandise inventories2 increased 3.9% year-over-year,
reflecting improved inventory composition and supply chain
efficiencies. The conversion to cost accounting was estimated to
account for approximately half of the increase from the prior year.
Entering the fourth quarter, the company believes it has the
appropriate level of newness heading into the holiday season.
The company ended the third quarter of 2024 with cash and cash
equivalents of $315 million and $2.770 billion of available
borrowing capacity under its asset-based credit facility reflecting
current borrowings and letters of credit. Total debt of $2.865
billion included $86 million of short-term borrowings under the
company’s asset-based credit facility and no material long-term
debt maturities until 2027. The company voluntarily retired $220
million of debt during the quarter through a previously disclosed
tender offer.
Other Corporate Developments
The company also reported today that, during the preparation of
its unaudited condensed consolidated financial statements for the
fiscal quarter ended November 2, 2024, it identified an issue
related to delivery expenses in one of its accrual accounts. The
company consequently initiated an independent investigation. As a
result of the independent investigation and forensic analysis, the
company identified that a single employee with responsibility for
small package delivery expense accounting intentionally made
erroneous accounting accrual entries to hide approximately $132 to
$154 million of cumulative delivery expenses from the fourth
quarter of 2021 through fiscal quarter ended November 2, 2024.
During this same time period, the company recognized approximately
$4.36 billion of delivery expenses. There is no indication that the
erroneous accounting accrual entries had any impact on the
company’s cash management activities or vendor payments. The
individual who engaged in this conduct is no longer employed by the
company. The investigation has not identified involvement by any
other employee.
The company is delaying its earnings release and conference call
relating to the third quarter of 2024 to allow for completion of
the independent investigation. The company expects to report its
full third quarter 2024 financial results and hold its earnings
conference call, where it will provide its fourth quarter and full
year outlooks, by December 11, 2024.
Mr. Spring added, “At Macy’s, Inc., we promote a culture of
ethical conduct. While we work diligently to complete the
investigation as soon as practicable and ensure this matter is
handled appropriately, our colleagues across the company are
focused on serving our customers and executing our strategy for a
successful holiday season.”
1: Inclusive of go-forward locations and digital. For Macy’s,
Inc. this reflects go-forward locations and digital across all
three nameplates. 2: Inventories are not directly comparable to the
prior year given the conversion to cost accounting at the beginning
of fiscal 2024.
2024 Guidance
The company will provide an update on its fiscal 2024 outlook
when it reports full third quarter 2024 financial results.
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 a trusted source for quality brands
through our iconic nameplates – Macy’s, Bloomingdale’s and
Bluemercury. Headquartered in New York City, our comprehensive
digital and nationwide footprint empowers us to deliver a seamless
shopping experience for our customers. 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
results of the independent investigation and the finalization of
financial results as of and for the quarter ended November 2, 2024,
Macy’s ability to successfully implement its A Bold New Chapter
strategy, including the ability to realize the anticipated benefits
associated with the strategy, 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 tangible and
intangible assets, including goodwill, declines in credit card
revenues, 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, inventory shortage, and labor shortages, the amount and
timing of future dividends and share repurchases, our ability to
execute on our strategies and achieve expectations related to
environmental, social, and governance matters, 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 February 3, 2024.
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.
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-plus-marketplace basis,
which includes adjusting for the impact of comparable sales of
departments licensed to third parties and marketplace sales,
assists in evaluating the company's ability to generate sales
growth, whether through owned businesses, departments licensed to
third parties or marketplace sales, and in evaluating the impact of
changes in the manner in which certain departments are
operated.
Non-GAAP financial measures should be viewed as supplementing,
and not as an alternative or substitute for, the company's
financial results prepared in accordance with GAAP. Certain of the
items that may be excluded or included in non-GAAP financial
measures may be significant items that could impact the company's
financial position, results of operations or cash flows and should
therefore be considered in assessing the company's actual and
future financial condition and performance. Additionally, the
amounts received by the company on account of sales of departments
licensed to third parties and marketplace sales are limited to
commissions received on such sales. The methods used by the company
to calculate its non-GAAP financial measures may differ
significantly from methods used by other companies to compute
similar measures. As a result, any non-GAAP financial measures
presented herein may not be comparable to similar measures provided
by other companies.
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 Ended November 2, 2024
vs.
13 Weeks Ended October 28,
2023
Macy's, Inc.
Macy's
Decrease in comparable sales on an owned
basis (Note 1)
(2.4
%)
(3.0
%)
Impact of departments licensed to third
parties and marketplace sales (Note 2)
1.1
%
0.8
%
Decrease in comparable sales on an
owned-plus-licensed-plus-marketplace basis
(1.3
%)
(2.2
%)
13 Weeks Ended November 2, 2024
vs.
13 Weeks Ended October 28,
2023
Macy's, Inc.
go-forward
business
Macy's
go-forward
business
Bloomingdale's*
Bluemercury
Increase (decrease) in comparable sales on
an owned basis (Note 1)
(2.0
)%
(2.6
)%
1.0
%
3.3
%
Impact of departments licensed to third
parties and marketplace sales (Note 2)
1.1
%
0.8
%
2.2
%
—
%
Increase (decrease) in comparable sales on
an owned-plus-licensed-plus-marketplace basis
(0.9
%)
(1.8
%)
3.2
%
3.3
%
*Bloomingdale’s excludes one
non-go-forward location.
13 Weeks Ended
November 2, 2024 vs.
13 Weeks Ended
October 28, 2023
Macy's First 50 locations
Increase in comparable sales on an owned
basis (Note 1)
1.9
%
Impact of departments licensed to third
parties (Note 2)
—
%
Increase in comparable sales on an
owned-plus-licensed basis
1.9
%
Notes:
(1)
Represents the period-to-period percentage
change in net sales from stores in operation for one full fiscal
year for the 13 weeks ended November 2, 2024 and October 28, 2023.
Such calculation includes all digital sales and excludes
commissions from departments licensed to third parties and
marketplace. 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.
(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, including marketplace sales,
in the calculation of comparable sales. Macy’s and Bloomingdale’s
license third parties to operate certain departments in its stores
and online and receive commissions from these third parties based
on a percentage of their net sales, while Bluemercury does not
participate in licensed or marketplace businesses. In its financial
statements prepared in conformity with GAAP, the company includes
these commissions (rather than sales of the departments licensed to
third parties and marketplace) in its net sales. The company does
not, however, include any amounts in respect of licensed department
or marketplace 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 and from the digital marketplace are not
material to its net sales for the periods presented.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241124292557/en/
Media – Chris Grams communications@macys.com
Investors – Pamela Quintiliano investors@macys.com
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