Macy's Files Q1 2024 10-Q Report

TL;DR

Macy's Q1 2024 10-Q is in. Check financials.

AI Summary

Macy's, Inc. filed its 10-Q for the period ending May 4, 2024. The filing covers the first quarter of fiscal year 2024. Key financial data and operational details for this period are presented, reflecting the company's performance and financial position.

Why It Matters

This report provides investors and analysts with a detailed look at Macy's financial health and operational performance during the first quarter of 2024, influencing investment decisions.

Risk Assessment

Risk Level: medium — Quarterly reports can reveal shifts in financial performance, operational challenges, or strategic changes that may impact the company's future outlook.

Key Players & Entities

• Macy's, Inc. (company) — Filer of the 10-Q report
• 20240504 (date) — End of the reporting period
• 20240530 (date) — Date the report was filed
• 151 WEST 34TH STREET (location) — Macy's business and mailing address
• NEW YORK (location) — City of Macy's business and mailing address
• NY (location) — State of Macy's business and mailing address
• 10001 (location) — ZIP code of Macy's business and mailing address

FAQ

Filing Documents

• m-20240504.htm (10-Q) — 673KB
• a2024performancebasedrsuex.htm (EX-10.1) — 97KB
• a2024performancebasedrsuce.htm (EX-10.2) — 77KB
• preferabilityletterex18.htm (EX-18) — 4KB
• m-20240504x10qxexx311.htm (EX-31.1) — 9KB
• m-20240504x10qxexx312.htm (EX-31.2) — 9KB
• m-20240504x10qxexx321.htm (EX-32.1) — 4KB
• m-20240504x10qxexx322.htm (EX-32.2) — 4KB
• m-20240504_g1.gif (GRAPHIC) — 24KB
• 0001628280-24-025853.txt ( ) — 3595KB
• m-20240504.xsd (EX-101.SCH) — 21KB
• m-20240504_cal.xml (EX-101.CAL) — 47KB
• m-20240504_def.xml (EX-101.DEF) — 60KB
• m-20240504_lab.xml (EX-101.LAB) — 333KB
• m-20240504_pre.xml (EX-101.PRE) — 209KB
• m-20240504_htm.xml (XML) — 323KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Statements of Income 3 Consolidated Statements of Comprehensive Income 4 Consolidated Balance Sheets 5 Consolidated Statements of Changes in Shareholders' Equity 6 Consolidated Statements of Cash Flows 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 23 Item 4. Control and Procedures 23

– OTHER INFORMATION

PART II – OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 24 Item 1A.

Risk Factors

Risk Factors 24 Item 5. Other Information 24 Item 6. Exhibits 26

SIGNATURES

SIGNATURES 27 2 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements MACY'S, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (millions, except per share figures) 13 Weeks Ended May 4, 2024 April 29, 2023 Net sales $ 4,846 $ 4,982 Other revenue 154 191 Total revenue 5,000 5,173 Cost of sales ( 2,946 ) ( 2,988 ) Selling, general and administrative expenses ( 1,911 ) ( 1,950 ) Gains on sale of real estate 1 11 Impairment, restructuring and other costs ( 19 ) ( 2 ) Operating income 125 244 Benefit plan income, net 4 4 Interest expense, net ( 31 ) ( 37 ) Income before income taxes 98 211 Federal, state and local income tax expense ( 36 ) ( 56 ) Net income $ 62 $ 155 Basic earnings per share $ 0.22 $ 0.57 Diluted earnings per share $ 0.22 $ 0.56 The accompanying notes are an integral part of these Consolidated Financial Statements. 3 Table of Contents MACY'S, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (millions) 13 Weeks Ended May 4, 2024 April 29, 2023 Net income $ 62 $ 155 Reclassifications to net income: Amortization of net actuarial loss and prior service credit on post employment and postretirement benefit plans included in net income, before tax 1 2 Tax effect related to items of other comprehensive income ( 1 ) ( 1 ) Total other comprehensive income, net of tax effect — 1 Comprehensive income $ 62 $ 156 The accompanying notes are an integral part of these Consolidated Financial Statements. 4 Table of Contents MACY'S, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (millions) May 4, 2024 February 3, 2024 April 29, 2023 ASSETS Current Assets: Cash and cash equivalents $ 876 $ 1,034 $ 603 Receivables 257 293 255 Merchandise inventories 4,687 4,361 4,607 Prepaid expenses and other current assets 442 401 390 Total Current Assets 6,262 6,089 5,855 Property and Equipment - net of accumulated depreciation and amortization of $ 4,410 , $ 4,276 and $ 4,763 5,295 5,308 5,864 Right of Use Assets 2,358 2,305 2,715 Goodwill 8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Summary of Significant Accounting Policies Nature of Operations Macy's, Inc., together with its subsidiaries (the "Company"), is an omni-channel retail organization operating stores, websites and mobile applications under three nameplates (Macy's, Bloomingdale's and Bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and kids'), cosmetics, home furnishings and other consumer goods. The Company has stores in 43 states, the District of Columbia, Puerto Rico and Guam. As of May 4, 2024, the Company's operations and operating segments were conducted through Macy's (both mainbox and small format), Macy's Backstage, Bloomingdale's, Bloomingdale's The Outlet, Bloomie's, and Bluemercury. Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC. A description of the Company's significant accounting policies is included in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (the "2023 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the 2023 10-K. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from reported amounts. The Consolidated Financial Statements for the 13 weeks ended May 4, 2024 and April 29, 2023,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) Comprehensive Income Total comprehensive income represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net income. For the Company, the only other components of total comprehensive income for the 13 weeks ended May 4, 2024 and April 29, 2023 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of income before income taxes in the Consolidated Statements of Income. Amortization reclassifications out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (income) and are included in benefit plan income, net on the Consolidated Statements of Income. See Note 5, "Retirement Plans," for further information. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update enhance segment reporting by expanding the breadth and frequency of segment disclosures required by public entities. Most notable, registrants will be required to disclose: (1) significant segment expenses regularly provided to the Chief Operating Decisions Maker ("CODM") and included within the reported measure(s) of a segment's profit or loss, (2) the amount and composition of other segment items, (3) how the CODM uses the reported measure(s) of a segment's profit or loss to assess segment performance and decide how to allocate resources, (4) on an interim basis, all segment profit or loss and asset disclosures currently required annually by Topic 280, as well as those introduced by the ASU, and (5) the CODM's title and position. ASU 2023-07 is effective for the Company beginning in the fiscal year ending February 1, 2025. The Company is currently evaluating the impacts of the adoption of ASU 2023-07. In December 20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 3. Revenue Net sales, which mainly consist of retail sales but also include merchandise returns, gift cards and loyalty programs, represented 97 % and 96 % of total revenue for the 13 weeks ended May 4, 2024 and April 29, 2023, respectively. Other revenue generating activities consist of credit card revenues as well as Macy's Media Network revenue. 13 Weeks Ended Revenues May 4, 2024 April 29, 2023 (millions) Women's Accessories, Shoes, Cosmetics and Fragrances $ 2,070 $ 2,025 Women's Apparel 1,145 1,150 Men's and Kids' 981 1,018 Home/Other (a) 650 789 Total Net Sales 4,846 4,982 Credit card revenues, net $ 117 $ 162 Macy's Media Network revenue, net (b) 37 29 Other Revenue 154 191 Total Revenue $ 5,000 $ 5,173 (a) Other primarily includes restaurant sales, allowance for merchandise returns adjustments and breakage income from unredeemed gift cards. (b) Macy's Media Network ("MMN") is an in-house media platform supporting both Macy's and Bloomingdale's customers through a broad variety of advertising formats running both on owned and operated platforms as well as offsite. Macy's accounted for 84 % of the Company's net sales for the 13 weeks ended May 4, 2024 and 85 % for the 13 weeks ended April 29, 2023. In addition, digital sales accounted for 32 % of the Company's net sales for each of the 13 weeks ended May 4, 2024 and April 29, 2023. Retail Sales Retail sales include merchandise sales, inclusive of delivery income, licensed department income, Marketplace income, sales of private brand goods directly to third party retailers and sales of excess inventory to third parties. Sales of merchandise are recorded at point of sale for in-store purchases or the time of shipment to the customer for digital purchases and are reported net of estimated merchandise returns and certain customer incentives. Commissions earned on sales generated by licensed departments and Marketplace are

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) Gift Cards and Customer Loyalty Programs The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold or issued, no revenue is recognized; rather, the Company records an accrued liability to customers. The liability is relieved, and revenue is recognized, equal to the amount redeemed at the time gift cards are redeemed for merchandise. The Company records revenue from unredeemed gift cards (breakage) in net sales on a pro-rata basis over the time period gift cards are actually redeemed. At least three years of historical data, updated annually, is used to determine actual redemption patterns. The Company maintains customer loyalty programs in which customers earn points based on their purchases. Under the Macy's Star Rewards loyalty program, points are earned based on customers' spending on Macy's private label and co-branded credit cards as well as non-proprietary cards and other forms of tender. Bloomingdale's Loyallist and Bluemercury BlueRewards programs provide tender neutral points-based programs to their customers. The Company recognizes the estimated net amount of the rewards that will be earned and redeemed as a reduction to net sales at the time of the initial transaction and as tender when the points are subsequently redeemed by a customer. The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $ 349 million, $ 384 million and $ 360 million as of May 4, 2024, February 3, 2024 and April 29, 2023, respectively. Credit Card Revenues In 2005, in connection with the sale of most of the Company's credit card accounts and related receivable balances to Citibank, the Company and Citibank entered into a long-term marketing and servicing alliance pursuant to the terms of a Credit Card Program Agreement ("Credit Card Program")

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 5. Retirement Plans The Company has defined contribution plans that cover substantially all employees who work 1,000 hours or more in a year. In addition, the Company has a funded defined benefit plan ("Pension Plan") and an unfunded defined benefit supplementary retirement plan ("SERP"), which provides benefits, for certain employees, in excess of qualified plan limitations. Effective January 1, 2012, the Pension Plan was closed to new participants, with limited exceptions, and effective January 2, 2012, the SERP was closed to new participants. In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible employees no longer earn future pension service credits after December 31, 2013, with limited exceptions. All retirement benefits attributable to service in subsequent periods are provided through defined contribution plans. In addition, certain retired employees currently are provided with specified health care and life insurance benefits ("Postretirement Obligations"). Eligibility requirements for such benefits vary, but generally state that benefits are available to eligible employees who were hired prior to a certain date and retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated. The defined contribution plan expense and actuarially determined components of the net periodic benefit cost (income) associated with the defined benefit plans are as follows: 13 Weeks Ended May 4, 2024 April 29, 2023 (millions) 401(k) Qualified Defined Contribution Plan $ 23 $ 23 Pension Plan Interest cost $ 18 $ 22 Expected return on assets ( 29 ) ( 34 ) Recognition of net actuarial loss 1 2 $ ( 10 ) $ ( 10 ) Supplementary Retirement Plan Interest cost $ 5 $ 5 Recognition of net actuarial loss 2 2 $ 7 $ 7 Total Retirement Expense $ 20 $ 20 Postretirement Obligations Interest co

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) 6. Fair Value Measurements The Company's financial assets are required to be measured at fair value on a recurring basis, by level within the hierarchy as defined by applicable accounting standards. Level 1: Quoted prices in active markets for identical assets Level 2: Significant observable inputs for the assets Level 3: Significant unobservable inputs for the assets The following table shows the estimated fair value of the Company's marketable equity and debt securities: Fair Value Measurements Total Level 1 Level 2 Level 3 (millions) May 4, 2024 $ 36 $ 36 $ — $ — February 3, 2024 42 42 — — April 29, 2023 36 36 — — Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, certain short-term investments and other assets, short-term debt, merchandise accounts payable, accounts payable and accrued liabilities and long-term debt. With the exception of long-term debt, the carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. The fair values of long-term debt, excluding capitalized leases, are ge

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