Macy's Inc · NYSE:M
Macy's — Q3 2021 Earnings Presentation
38 slides from Macy's's earnings presentation, Nov 18, 2021
Slide 1: Third Quarter 2021 Earnings
Third Quarter 2021 Earnings 52909940 Jeff Gennette, Chairman & CEO Adrian Mitchell, CFO 18 November 2021 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: Third Quarter Results
Third Quarter Results 2
Slide 4: Third Quarter Snapshot
Third Quarter Snapshot millions, except per share figures and percentages 3Q21 3Q20 3Q19 Net Sales $5,440 $3,990 $5,173 Comp sales - owned 37.2% (21.0)% (3.9)% Comp sales - owned + licensed 35.6% (20.2)% (3.5)% Credit card revenues, net $213 $195 $183 Gross margin $2,233 $1,421 $2,067 Gross margin r
Slide 5: 39 Week Snapshot
39 Week Snapshot millions, except per share figures and percentages YTD 3Q21 YTD 3Q20 YTD 3Q19 Net Sales $15,794 $10,566 $16,223 Comp sales - owned 52.4% (33.9%) (1.0%) Comp sales - owned + licensed 52.5% (33.8%) (0.8%) Credit card revenues, net $568 $494 $531 Gross margin $6,345 $2,778 $6,318 Gross
Slide 6: Third Quarter Highlights
Third Quarter Highlights • Adjusted diluted earnings per share of $1.23 exceeded expectations; diluted earnings per share of $0.76 • Comparable sales up 37.2% on an owned basis and up 35.6% on an owned plus licensed basis versus 2020 • Comparable sales up 8.9% on an owned basis and up 8.7% on an own
Slide 7: Third Quarter Financial Highlights
Third Quarter Financial Highlights (Comparison to 3Q19 included below to more appropriately benchmark our performance) millions, except per share figures and percentages 3Q21 Notes Credit Revenue $213 • Good credit health in our customers continuing and resulting in lower bad debt levels Change to 3
Slide 8: Third Quarter Polaris Update
Third Quarter Polaris Update Win with Deliver Clear Excel in Digital Enhance Store Modernize Enable Fashion & Style Value Shopping Experience Supply Chain Transformation Wide assortment of Lower markdowns Announced plan to Added five off-mall, Focused on updating Continuing to brands and driven by l
Slide 9: Third Quarter Credit Card Revenue
Third Quarter Credit Card Revenue Performance Metrics 3Q21 $213M, up $30M from 3Q19; Net Credit Card Revenue 3.9% of sales, +40bps vs 3Q19 Digital new accounts Up 38% vs 3Q19 New accounts 574K, Down 11% to 3Q19 Proprietary card penetration rate 43.0%, Down 530 bps to 3Q19 • Digital new account growt
Slide 10: Strengthening Balance Sheet, Optimizing Capital Allocation and Returning Capital to Shareholders
Strengthening Balance Sheet, Optimizing Capital Allocation and Returning Capital to Shareholders • YTD Free cash flow of $574 million • Cash flow from operating activities of $841 million, up from $172 million in 2019; variance due to EBITDA growth as well as improved working capital – Working Capit
Slide 11: Remaining Long-term Debt Maturities, as of October 30, 2021
Remaining Long-term Debt Maturities, as of October 30, 2021 ($ Millions) 3.24% 6.08% 13 5.28% 4.38% 183 665 81 387 385 3.88% 579 4.30% 294 5.13% 6.85% 6.38% 250 250 74 193 6.79% 133 7.88% 6.90% 7.60% 5 71 12 6 5 5 Fiscal Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Slide 12: Brand and Channel Performance
Brand and Channel Performance 11
Slide 13: Digitally Led Omnichannel Model
Digitally Led Omnichannel Model Committed to delivering a dynamic, seamless integration between physical stores and digital shopping – the most effective way to meet the needs of an omnichannel customer • The Macy’s, Inc. omnichannel ecosystem includes a strong fleet of stores Stores Digital in the
Slide 14: Omnichannel Markets are Growing
Omnichannel Markets are Growing Increasing importance of interplay between digital and physical assets Washington D.C. Phoenix, AZ • Omni sales growth: +4% vs 3Q19 • Omni sales growth: +22% vs 3Q19 • Stores (17 locations): -6% vs 3Q19* • Stores (6 locations): +10% vs 3Q19 • Digital: +41% vs 3Q19 • D
Slide 15: Digital Channel: Third Quarter Highlights
Digital Channel: Third Quarter Highlights Performance Metrics 3Q21 (unless otherwise noted) Sales Up 49% to 3Q19 Penetration 33% of net sales vs. 23% in 3Q19 Sales from Mobile Devices* 60% of digital demand sales Average Number of Visits* 468 million, up 12% to 3Q19 Conversion Rate* 4.25%, up 27% to
Slide 16: Omnichannel Ecosystem Investment Highlights
Omnichannel Ecosystem Investment Highlights Digital • Mobile App: launched a significant refresh and redesign of the Macy’s iOS & Android mobile apps that make it even easier for customers to shop their personal style, price check in-store, build favorites lists, manage their star rewards, and track
Slide 17: Omnichannel Ecosystem Investment Highlights
Omnichannel Ecosystem Investment Highlights Stores • Off-Mall Small Format: potential to expand market share is enhanced by off-mall smaller format stores such as: Backstage, Market by Macy’s and Bloomies • Opened 5 across Dallas, Atlanta and Washington D.C. markets • Seeing a strong sales response
Slide 18: Nameplate Third Quarter Highlights
Nameplate Third Quarter Highlights 3Q21 Comparable sales - owned + licensed Up 8.4% compared to 3Q19; 3.2pt improvement to 2Q21 Digital Penetration 33% 3Q21 Comparable sales - owned + licensed Up 11.2% compared to 3Q19; 0.3pt decrease to 2Q21 Digital Penetration 35% 3Q21 Comparable sales - owned + l
Slide 19: Macy's Merchandising Update
Macy’s Merchandising Update Met and flexed with customer demand supported by wide assortment of categories, products and brands at price points ranging from value to luxury Top Performing Categories • Continued strength in pandemic-driven products and categories • Home, fragrances, jewelry, watches
Slide 20: Macy's Third Quarter: Star Rewards Loyalty Members
Star Rewards Loyalty Members Platinum Gold Silver Bronze Macy’s Third Quarter Sales* $1.5B $660M $421M $745M Customer Profile Active Customers 2.8M 2.8M 3.1M 4.2M Average Spend per Customer $532 $234 $138 $178 Average Visits 4.4 2.5 1.6 1.7 Average Spend per Visit $120 $95 $87 $105 Under 40** 19% 20
Slide 21: Macy's Backstage Highlights
End of Q3 2021 End of Q2 2021 Macy’s Stores Opened 8 6 Backstage Stores within Stores 7 5 Highlights Freestanding 1 1 Total Store Count 270 262 Stores within Stores 262 255 Freestanding 8 7 FY2021 Store Count Goal Achieved • Comparable sales for Backstage store-within-store locations open more than
Slide 22: Bloomingdale's and Bluemercury Highlights
Bloomingdale’s and Bluemercury Highlights • Comparable sales on an owned-plus-licensed basis were up 11.2% compared to 3Q19 • Driven by strong performance in luxury handbags, fine jewelry, home, men’s shoes, and contemporary apparel • Outperformance against 2019 largely driven by growth in Bloomingd
Slide 23: Expectations
Expectations 22
Slide 24: 2021 Expectations
2021 Expectations 2021 EXPECTATIONS 2021 EXPECTATIONS Revised as of 8/19/2021 $24,115 million to $24,275 million $23,550 million to $23,950 million Net sales Increase between ~ 39% and 40% compared to 2020 Increase between ~36% and 38% compared to 2020 Digital Between $8,750 million and $8,800 milli
Slide 25: Fourth Quarter Expectations
Fourth Quarter Expectations 4Q21 EXPECTATIONS Comparable owned and licensed sales Up 2% to 4% from 2019 Gross margin rate 100 to 150 bps lower than 2019 SG&A expense rate Improve approximately 75 bps from 2019 Adjusted diluted EPS $1.67 to $1.87 • Comparable sales increase includes an approximately
Slide 26: Expectations Beyond 2021
Expectations Beyond 2021 • Committed to a long-term Adjusted EBITDA margin target to remain in the low-double digits – beginning next year • Over the next couple of years, expect capital expenditures of approximately $1 billion, annually • Will pay down debt at maturity; target leverage ratio < 2x •
Slide 27: Macy's, Inc. Store Count - As of October 30, 2021
Macy’s, Inc. Store Count - As of October 30, 2021 End of 2Q21 End of 3Q21 Change in Store Locations from 2Q21 Boxes Store Locations Boxes Store Locations Macy's Flagships 16 11 16 11 Macy's Magnets 429 384 429 384 Macy's Core 445 395 445 395 Macy's Neighborhood 62 57 62 57 Macy's Furniture 52 47 52
Slide 28: Appendix
Appendix 27
Slide 29: 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 ad
Slide 30: Changes in Comparable Sales – Macy's Inc.
Changes in Comparable Sales – Macy's Inc. October 30, 2021 versus October 30, 2021 versus 13 weeks ended October 13 weeks ended Macy’s, Inc. 31, 2020 November 2, 2019 Increase in comparable sales on an owned basis (Note 1) 37.2% 8.9% Impact of growth in comparable sales of departments licensed to th
Slide 31: Changes in Comparable Sales- Macy's, Bloomingdale's and Bluemercury
Changes in Comparable Sales- Macy’s brand, Bloomingdale’s brand and Bluemercury brand Versus 13 weeks ended Macy’s November 2, 2019 Increase in comparable sales on an owned basis (Note 1) 9.0% Impact of growth in comparable sales of departments licensed to third parties (Note 2) (0.6%) Increase in c
Slide 32: EBITDA Excluding Certain Items (13 weeks)
Earnings (Loss) Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 13 weeks ended, 13 weeks ended 13 weeks ended In millions October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Net income (loss) $239 $(91) $2 Net sales 5,440 3,990 5,173 Net in
Slide 33: EBITDA Excluding Certain Items (39 weeks)
Earnings (Loss) Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 39 weeks ended, 39 weeks ended 39 weeks ended In million October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Net income (loss) $687 $(4,104) $224 Net sales 15,794 10,566 16,223
Slide 34: Net Income (Loss), Excluding Certain Items and Asset Sale Gains
Net Income (Loss), Excluding Certain Items and Asset Sale Gains 13 weeks ended, 13 weeks ended 13 weeks ended In millions October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Net income (loss) $239 $(91) $2 Non-GAAP measure: Net income (loss) $239 $(91) $2 Impairment, res
Slide 35: Net Income (Loss), Excluding Certain Items and Asset Sale Gains
Net Income (Loss), Excluding Certain Items and Asset Sale Gains 39 weeks ended, 39 weeks ended 39 weeks ended In millions October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Net income (loss) $687 $(4,104) $224 Non-GAAP measure: Net income (loss) $687 $(4,104) $224 Impai
Slide 36: Diluted EPS, Excluding Certain Items and Asset Sale Gains
Diluted Earnings (Loss) Per Share, Excluding Certain Items and Asset Sale Gains 13 weeks ended, 13 weeks ended 13 weeks ended October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Diluted earnings (loss) per share $0.76 $(0.29) $0.01 Non-GAAP measure: Diluted earnings (los
Slide 37: Diluted EPS, Excluding Certain Items and Asset Sale Gains
Diluted Earnings (Loss) Per Share, Excluding Certain Items and Asset Sale Gains 39 weeks ended, 39 weeks ended 39 weeks ended October 30, 2021 October 31, 2020 November 2, 2019 Most comparable GAAP measure: Diluted earnings (loss) per share $2.17 $(13.20) $0.72 Non-GAAP measure: Diluted earnings (lo
Slide 38: Free Cash Flow
Free Cash Flow 39 weeks ended, 39 weeks ended 39 weeks ended In millions October 30, 2021 October 31, 2020 November 2, 2019 Net cash provided (used) by operating activities $841 $244 $172 Purchase of property and equipment (230) (290) (623) Capitalized software (155) (96) (189) Disposition of proper