Macy's Inc · NYSE:M
Macy's — FY2019 Earnings Presentation
18 slides from Macy's's earnings presentation, Feb 25, 2020
Slide 1: Fourth Quarter and Full-Year 2019 Earnings
Fourth Quarter and Full-Year 2019 Earnings Jeff Gennette, Chairman & CEO | Paula Price, CFO February 25, 2020
Slide 2: Safe Harbor Statement
Safe Harbor Statement All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations a
Slide 3: Fourth Quarter and Full-Year Snapshot
Fourth Quarter and Full-Year Snapshot in millions except per share figures and percentages 4Q19 FY19 Net Sales $8,337 $24,560 Comp sales - owned (0.6)% (0.8)% Comp sales - owned + licensed (0.5)% (0.7)% Credit card revenues, net $239 $771 Gross margin $3,071 $9,389 Gross margin rate 36.8% 38.2% SG&A
Slide 4: Fourth Quarter and Full-Year Highlights
Fourth Quarter and Full-Year Highlights • Solid Holiday 2019 performance driven by: • Sales uptick in the 10 days before Christmas • Gifting strategy, with Gifts Under strategy resonating well • Strong execution, specifically in preparing stores, improving seasonal recruitment and enhancing digital
Slide 5: 2019 Strategic Initiatives: Fourth Quarter and Full-Year Update
2019 Strategic Initiatives: Fourth Quarter and Full-Year Update • Growth150 stores • Expanded Backstage to • Ended 2019 with • Improved mobile • Invested in areas that comprise approximately another 50 locations more than 1 million experience through the account for nearly 40% of 50% of Macy’s 2019
Slide 6: Fourth Quarter and Full-Year Highlights
Fourth Quarter and Full-Year Highlights 4Q19 FY19 Notes Transactions (0.5)% 2.2% Items per transaction (1.0)% (1.6)% AUR 1.1% (1.2)% FY19 improvement driven by strong cobrand sales growth from card Credit Revenue $239M $771M transactions outside of Macy’s brands; offset by sales decline, uptick (nea
Slide 7: Consistent Capital Allocation Strategy
Consistent Capital Allocation Strategy VALUE-ENHANCING CAPITAL STRUCTURE CAPITAL RETURNED TO INVESTMENTS SHAREHOLDERS • Investing in the business • Return to 2.5x to 2.8x • Maintain dividend to support growth debt-to-EBITDA leverage • Consider return to stock initiatives ratio buyback once targeted
Slide 8: Cash Flows: Full-Year Highlights
Cash Flows: Full-Year Highlights • Cash flow from operating activities of $1.6 billion, down from $1.7 billion LY • Variance driven primarily by lower earnings and a decrease in accounts payable and accruals, partially offset by lower tax payments and a net improvement in merchandise inventories and
Slide 9: Strategic priorities: customers, fashion, digital, stores, cost base
WILL Strengthen Customer Curate Quality Accelerate Digital Relationships Fashion Growth Optimize Store Reset our Portfolio Cost Base
Slide 10: Factors Impacting 2020
Factors Impacting 2020 • While the consumer environment remains healthy, we expect slower economic growth overall versus prior years, in addition to the following: • The trajectory of our business over the last year • Continued challenged performance in mall-based retail • Some disruption from the s
Slide 11: 2020 Full-Year Guidance
2020 Full-Year Guidance 2020 FULL-YEAR GUIDANCE Net Sales $23.6B to $23.9B Comp sales - owned Approximately 40BPS better than OL Comp sales - owned + licensed (OL) (2.5)% to (1.5)% Credit card revenues, net $700M to $715M Gross margin rate Approximately flat to FY19 SG&A expense rate Approximately f
Slide 12: Polaris Will Stabilize and Grow Gross Margins
Polaris Will Stabilize and Grow Gross Margins Gross margin improvement by function ~ $600 FEBRUARY 2020 Million Incremental Target under Polaris September Productivity Opportunity Supply chain Merchandising Marketing Private Brand 2022 run-rate mix & pricing Sourcing savings Plans broadened to stem
Slide 13: Polaris Will Right-size Our Cost Base
Polaris Will Right-size Our Cost Base SG&A improvement by expense category ~ $900 FEBRUARY 2020 Million Incremental Target under Polaris September Productivity Opportunity Marketing Supply Chain Stores Corporate 2022 run-rate & other savings More resilient and flexible cost structure accelerates tim
Slide 14: Macy's, Inc. Store Count
Macy’s, Inc. Store Count Using store locations combines multi-box stores into a single location, providing a more accurate count of the store fleet End of 3Q19 End of 4Q19 Change in Store Locations Boxes Store Locations Boxes Store Locations Macy's Flagships 16 11 16 11 Macy's Magnets 432 386 431 38
Slide 15: Reconciliation of GAAP to non-GAAP Financial Measures
Reconciliation of GAAP to non-GAAP Financial Measures (All amounts in millions except for percentages) 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 user
Slide 16: Changes in Comparable Sales
Changes in Comparable Sales 13 Weeks Ended 52 Weeks Ended February 1, 2020 February 1, 2020 Decrease in comparable sales on an owned basis (Note 1) (0.6)% (0.8)% Impact of growth in comparable sales of departments licensed to third 0.1% 0.1% parties (Note 2) Decrease in comparable sales on an owned
Slide 17: Diluted earnings per share, excluding certain items and gains on sale of real estate
Diluted earnings per share, excluding certain items and gains on sale of real estate 13 Weeks Ended 13 Weeks Ended February 1, 2020 February 2, 2019 Most comparable GAAP measure: Diluted earnings per share attributable to Macy's, Inc. shareholders $1.09 $2.37 Non-GAAP measure: Diluted earnings per s
Slide 18: Diluted earnings per share, excluding certain items and gains on sale of real estate
Diluted earnings per share, excluding certain items and gains on sale of real estate 52 Weeks Ended 52 Weeks Ended February 1, 2020 February 2, 2019 Most comparable GAAP measure: Diluted earnings per share attributable to Macy's, Inc. shareholders $1.81 $3.56 Non-GAAP measure: Diluted earnings per s