Macy's Inc · NYSE:M
Macy's — Q4 2022 Earnings Presentation
51 slides from Macy's's earnings presentation, Mar 2, 2023
Slide 1: Fourth Quarter and Full-Year 2022 Earnings
Fourth Quarter and Full-Year 2022 Earnings 52909940 Jeff Gennette, Chairman & CEO Adrian Mitchell, CFO 2 March 2023 0
Slide 2: Safe Harbor Statement
Safe Harbor Statement All statements in this presentation 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
Slide 3: Modern Department Store Transformation
Modern Department Store Transformation Timeline of significant events and key initiatives from FY19-FY22 Established Bloomingdale’s Private Brand Unveiled capital Refinanced and celebrated 150th Transformation And Now This allocation paid down debt: re- anniversary Office under Chief Formally Launch
Slide 4: Fourth Quarter and Full-Year 2022 Results
Fourth Quarter and Full-Year 2022 Results 3
Slide 5: Fourth Quarter Snapshot
Fourth Quarter Snapshot millions, except per share figures and percentages 4Q22 4Q21 Net Sales $8,264 $8,665 Comp sales - owned (3.3)% 28.3% Comp sales - owned + licensed (2.7)% 27.8% Credit card revenues, net $262 $264 Gross margin $2,814 $3,159 Gross margin rate 34.1% 36.5% Selling, general & admi
Slide 6: Full Year Snapshot
Full Year Snapshot millions, except per share figures and percentages FY22 FY21 Net Sales $24,442 $24,460 Comp sales - owned 0.3% 43.0% Comp sales - owned + licensed 0.6% 42.9% Credit card revenues, net $863 $832 Gross margin $9,136 $9,504 Gross margin rate 37.4% 38.9% SG&A $8,317 $8,047 SG&A rate 3
Slide 7: Fourth Quarter Highlights
Fourth Quarter Highlights • Diluted earnings per share of $1.83 and Adjusted diluted earnings per share of $1.88 • Includes a $46 million discrete income tax benefit, or $0.17 per share, related to the favorable resolution of a state income tax litigation • Net sales of $8,264 million, down 4.6% ver
Slide 8: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights millions, except per share figures and percentages 4Q22 Notes Credit Revenue $262 • Primarily benefited from higher balances in the portfolio and better than expected bad debt levels Change to 4Q21 -$2 • 3.2% of sales versus 3.0% in 4Q21 Gross Margin $2,814 • Merc
Slide 9: Fiscal Year Capital Allocation Highlights
Fiscal Year Capital Allocation Highlights • Free cash flow of $457 million • Cash flow from operating activities of $1.6 billion • Year-over-year decline primarily due to lower earnings and last year’s receipt of $582 million for CARES Act refund in the fourth quarter • Invested $1.3 billion in capi
Slide 10: Capital Allocation Strategy
Capital Allocation Strategy The company will continue to take a balanced approach to capital allocation with an ongoing focus on maintaining a healthy balance sheet, investing in the business and returning capital to shareholders • Well-positioned for access to bank and capital market funding under
Slide 11: Remaining Long-term Debt Maturities, as of January 28, 2023
Remaining Long-term Debt Maturities, as of January 28, 2023 ($M) 6.08% 5.27% 5.92% 6.13% 566 592 5.13% 4.30% 6.85% 435 425 6.38% 250 250 193 6.79% 206 7.60% 6.90% 71 6 13 Fiscal Year 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 - 2033 2033 2034 2035 - 2036 2036 2037 2038 2039 - 2040 2040 2041 -
Slide 12: Fiscal Year Family of Business Sales Penetration
Fiscal Year Family of Business Sales Penetration Disciplined inventory management and open-to-buy reserve enables the company to pivot between categories as consumer demand shifts FY22 FY21 17% 20% 39% 38% 22% 21% 22% 21% Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances Women's
Slide 13: Mission Every One
Mission Every One Macy’s, Inc. brings ESG to life through its social purpose platform, Board of Directors oversee all ESG functions, mandates are included in the Board committee charters People Planet Community Recognize and reward diverse Curate and create sustainable Empower curiosity and communit
Slide 14: Nameplate Performance
Nameplate Performance 13
Slide 15: Nameplate Fourth Quarter Highlights
Nameplate Fourth Quarter Highlights 4Q22 Comparable sales - owned + licensed Down 3.3% compared to 4Q21 Digital Penetration 37% versus 38% in 4Q21 4Q22 Comparable sales - owned + licensed Up 0.6% compared to 4Q21 Digital Penetration 40% versus 42% in 4Q21 4Q22 Comparable sales - owned Up 7.2% compar
Slide 16: Macy's is a Modern Department Store
Macy’s is a Modern Department Store Through Polaris, the retailer is more flexible, agile and enabled by data analytics to meet consumer demand wherever and however they choose to shop Polaris Strategy (as of 4Q21) FY22 Progress Introduced brand platform Own Your Style, reaffirms Macy’s position as
Slide 17: Macy's Omnichannel Ecosystem
Macy’s Omnichannel Ecosystem Digital • The Macy’s omnichannel ecosystem includes a best-in-class e- commerce platform integrated with a nationwide footprint of stores and fulfillment centers to deliver a convenient and seamless shopping experience Merchandising • Well-integrated strategy built on a
Slide 18: Macy's Full-Year Customer Highlights
Macy’s Full-Year Customer Highlights Approximately 42.7M active Approximately 29.8M Star Rewards customers* shopped the Macy’s active member accounts* brand Represented approximately 70% of total Down approximately 4% compared to Macy's brand owned-plus-licensed sales, FY21** +1 ppt compared to FY21
Slide 19: Macy's Omnichannel Market Performance
Macy’s Omnichannel Market Performance Las Vegas, NV sales growth: • Omni: +1% vs 4Q21 New York, NY sales growth: • Stores (5 locations): flat vs 4Q21 • Omni: -3% vs 4Q21 • Digital: +5% vs 4Q21 • Stores (49 locations): flat vs 4Q21 • Digital: -9% vs 4Q21 Phoenix, AZ sales growth: • Omni: +1% vs 4Q21
Slide 20: Omnichannel Ecosystem - Merchandising Highlights
Macy’s Omnichannel Ecosystem - Merchandising Highlights Progress made in data science and predictive analytics, coupled with disciplined inventory management, enable Macy’s to flow fresh and exciting product and quickly respond to trends • Top Performing Categories: gifting and occasion-based catego
Slide 21: Omnichannel Ecosystem - Digital Highlights
Macy’s Omnichannel Ecosystem - Digital Highlights • Macy’s Marketplace: successfully launched in 3Q22, continuing to scale in FY23 • Partnering with Mirakl, an enterprise marketplace technology company to power the platform • Features collection of new brands, products and categories from premier 3
Slide 22: Omnichannel Ecosystem - Stores and Supply Chain Highlights
Macy’s Omnichannel Ecosystem – Stores and Supply Chain Highlights • Full-line Stores: refining in-store shopping experience and repositioning store fleet • As of 4Q22, over 80% of Macy’s full line locations are in A and B centers • Roughly 99% of the company's mall-based stores are profitable on a 4
Slide 23: Omnichannel Ecosystem - Colleague Highlights
Macy’s Omnichannel Ecosystem - Colleague Highlights Colleagues are the company’s number one resource. Macy’s has acquired top talent with specific skills and experiences to satisfy quickly evolving business strategies. • Strategic Investments to Attract and Retain Top Talent • Building and upskillin
Slide 24: Macy's Backstage Highlights
Macy’s Backstage Highlights FY22 Stores Opened 41 Stores within Stores 40 Freestanding 1 Total Store Count 309 Stores within Stores 300 Freestanding 9 • Comparable sales for Backstage store-within-store locations open more than one-year outperformed Macy’s full line doors by 2 percentage points • St
Slide 25: Bloomingdale's Highlights
Bloomingdale’s Highlights Dynamic and of-the-moment luxury retailer with a powerfully loyal customer base, unique brand voice, and cross-category appeal • Growing, Highly Engaged, Multi-Generational Customer Base • Customer remained resilient despite challenging macro environment • In FY22, 4.1 mill
Slide 26: Bluemercury Highlights
Bluemercury Highlights Preferred luxury beauty destination with significant opportunity to gain market share • Customer Highlights • Customer remained resilient despite challenging macro environment • In FY22, approximately 662,000 active customers shopped, a 12% increase over FY21 • Loyalty custome
Slide 27: Guidance
Guidance 26
Slide 28: Five Growth Vectors
Five Growth Vectors Strategic investments designed to fuel future profitable growth Private Brands Reimagination Off-mall Expansion Digital Marketplace Designed to drive customer loyalty, be a Integral role in supporting omnichannel ecosystem. On a multi-year journey with marketplace, keeping differ
Slide 29: 2023 Full-year Guidance
2023 Full-year Guidance (on a 53-week basis unless otherwise noted) 2023 GUIDANCE as of 3/2/2023 $23.7 billion to $24.2 billion Starting in 1Q23, Macy's, Inc will Net sales Approximately down 3% to down 1% from 2022 combine credit card revenues net and Macy's Media Network net monetization Comparabl
Slide 30: First Quarter 2023 Guidance
First Quarter 2023 Guidance First Quarter Net sales $5.0 billion to $5.1 billion 2023 * Adjusted diluted EPS $0.42 to $0.48 Guidance • Gross margin is expected to be down no more than 20 basis points versus the first quarter of 2022. • Reflects expected net impact of lower markdowns and promotions p
Slide 31: Macy's, Inc. Store Count – As of January 28, 2023
Macy’s, Inc. Store Count – As of January 28, 2023 End of 4Q22 Change in Locations from FY21 Boxes Locations Macy's Department Stores 495 441 -5 Macy's Furniture 51 46 -1 Macy's Furniture Clearance 1 1 -1 Freestanding Backstage 9 9 +1 Macy's Small Format 8 8 +3 Stores converted to Fullfilment Centers
Slide 32: Additional Business Metrics
Additional Business Metrics 31
Slide 33: Digital Channel Performance Metrics
Digital Channel Performance Metrics Fourth Quarter 2022 Sales Down 9% to 4Q21, up 24% to 4Q19 Net sales penetration 37% in 4Q22 vs. 39% in 4Q21 and 30% in 4Q19 Sales from Mobile Devices 68% of digital demand sales Number of Visits** 768 million, down 1% to 4Q21, up 5% to 4Q19 Conversion Rate** 4.3%,
Slide 34: Fourth Quarter Credit Card Revenue
Fourth Quarter Credit Card Revenue 4Q22 Notes Net Credit Card Revenue $262M Change to 4Q21 -$2M • Primarily benefited from higher balances in the portfolio and better than expected bad debt levels Net Credit Card Revenue 3.2% • Net credit card revenue as a percent of sales was 3.2% versus 3.0% in 4Q
Slide 35: Appendix
Appendix 34
Slide 36: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to 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 add
Slide 37: Changes in Comparable Sales – Macy's, Inc.
Changes in Comparable Sales – Macy's, Inc. Versus Versus 13 weeks ended 52 weeks ended Macy’s, Inc. January 29, 2022 January 29, 2022 Increase (decrease) in comparable sales on an owned basis (Note 1) (3.3)% 0.3% Impact of growth in comparable sales of departments licensed to third parties (Note 2)
Slide 38: Changes in Comparable Sales – Macy's, Inc.
Changes in Comparable Sales – Macy's, Inc. Versus Versus 13 weeks ended 52 weeks ended Macy’s, Inc. January 30, 2021 January 30, 2021 Increase in comparable sales on an owned basis (Note 1) 28.3% 43.0% Impact of growth in comparable sales of departments licensed to third parties (Note 2) (0.5)% (0.1
Slide 39: Changes in Comparable Sales- Macy's brand and Bloomingdale's brand
Changes in Comparable Sales- Macy’s brand and Bloomingdale’s brand Versus 13 weeks ended Macy’s January 29, 2022 Decrease in comparable sales on an owned basis (Note 1) (3.9)% Impact of growth in comparable sales of departments licensed to third parties (Note 2) 0.6% Decrease in comparable sales on
Slide 40: EBITDA Excluding Certain Items
Earnings Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 13 weeks ended 13 weeks ended In millions January 28, 2023 January 29, 2022 Most comparable GAAP measure: Net income $508 $742 Net sales $8,264 $8,665 Net income as a percent to net sales 6.1 % 8.6 % Non-GAAP mea
Slide 41: EBITDA Excluding Certain Items
Earnings Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 52 weeks ended 52 weeks ended In millions January 28, 2023 January 29, 2022 Most comparable GAAP measure: Net income $1,177 $1,430 Net sales $24,442 $24,460 Net income as a percent to net sales 4.8 % 5.8 % Non-GA
Slide 42: Net Income, Excluding Certain Items
Net Income, Excluding Certain Items 13 weeks ended 13 weeks ended In millions January 28, 2023 January 29, 2022 Most comparable GAAP measure: Net income $508 $742 Non-GAAP measure: Net income $508 $742 Impairment, restructuring and other costs 16 9 Settlement charges 7 6 Income tax impact of certain
Slide 43: Net Income, Excluding Certain Items
Net Income, Excluding Certain Items 52 weeks ended 52 weeks ended In millions January 28, 2023 January 29, 2022 Most comparable GAAP measure: Net income $1,177 $1,430 Non-GAAP measure: Net income $1,177 $1,430 Impairment, restructuring and other costs 41 30 Settlement charges 39 96 Losses on early r
Slide 44: Diluted Earnings Per Share, Excluding Certain Items
Diluted Earnings Per Share, Excluding Certain Items 13 weeks ended January 13 weeks ended 28, 2023 January 29, 2022 Most comparable GAAP measure: Diluted earnings per share $1.83 $2.44 Non-GAAP measure: Diluted earnings per share $1.83 $2.44 Impairment, restructuring and other costs 0.06 0.03 Settle
Slide 45: Diluted Earnings Per Share, Excluding Certain Items
Diluted Earnings Per Share, Excluding Certain Items 52 weeks ended January 52 weeks ended 28, 2023 January 29, 2022 Most comparable GAAP measure: Diluted earnings per share $4.19 $4.55 Non-GAAP measure: Diluted earnings per share $4.19 $4.55 Impairment, restructuring and other costs 0.15 0.10 Settle
Slide 46: Free Cash Flow
Free Cash Flow 52 weeks ended In millions January 28, 2023 Net cash provided by operating activities $1,615 Purchase of property and equipment (888) Capitalized software (407) Disposition of property and equipment 137 Free Cash Flow $457 45
Slide 47: Pro Forma Consolidated Statements of Income and Operations
Pro Forma Consolidated Statements of Income and Consolidated Statement of Operations 2019, 2020, 2021 & 2022 The following pages reflect the proforma consolidated statements of income and operations reflecting the reclass of Macy’s Media Network net monetization revenue from SG&A to Other Revenue an
Slide 48: 2019 Pro Forma Consolidated Statements of Income
2019 Pro Forma Consolidated Statements of Income (All amounts in millions except percentages and per share figures) 1Q19 2Q19 3Q19 4Q19 FY19 Unaudited Unaudited Unaudited Unaudited Audited Unaudited As reported Reclassification Pro Forma As reported Reclassification Pro Forma As reported Reclassific
Slide 49: 2020 Pro Forma Consolidated Statements of Operations
2020 Pro Forma Consolidated Statements of Operations (All amounts in millions except percentages and per share figures) 1Q20 2Q20 3Q20 4Q20 FY20 Unaudited Unaudited Unaudited Unaudited Audited Unaudited As reported Reclassification Pro Forma As reported Reclassification Pro Forma As reported Reclass
Slide 50: 2021 Pro Forma Consolidated Statements of Income
2021 Pro Forma Consolidated Statements of Income (All amounts in millions except percentages and per share figures) 1Q21 2Q21 3Q21 4Q21 FY21 Unaudited Unaudited Unaudited Unaudited Audited Unaudited As reported Reclassification Pro Forma As reported Reclassification Pro Forma As reported Reclassific
Slide 51: 2022 Pro Forma Consolidated Statements of Income
2022 Pro Forma Consolidated Statements of Income (All amounts in millions except percentages and per share figures) 1Q22 2Q22 3Q22 4Q22 FY22 Unaudited Unaudited Unaudited Unaudited Unaudited As reported Reclassification Pro Forma As reported Reclassification Pro Forma As reported Reclassification Pr