# Macy's, Inc.: Form 10-Q for the period ended Aug 3, 2024

- Company: [Macy's, Inc.](/companies/m.md) (CIK 794367)
- Form: 10-Q
- Filed: 2024-09-04
- Accepted by EDGAR: Sep 4, 2024, 06:51 ET
- Period: 2024-08-03
- Accession: 0001628280-24-039219
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/794367/000162828024039219/m-20240803.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/794367/000162828024039219/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-08-03.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-05-05 to 2024-08-03 | $4.94bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2024-02-04 to 2024-08-03 | $9.78bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-05-05 to 2024-08-03 | $2.94bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2024-02-04 to 2024-08-03 | $5.88bn | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2024-05-05 to 2024-08-03 | $1.97bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-02-04 to 2024-08-03 | $3.88bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-05-05 to 2024-08-03 | $222.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-02-04 to 2024-08-03 | $346.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-05-05 to 2024-08-03 | $45.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-02-04 to 2024-08-03 | $80.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-05-05 to 2024-08-03 | $150.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-02-04 to 2024-08-03 | $212.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-05-05 to 2024-08-03 | $0.53 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-02-04 to 2024-08-03 | $0.75 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-05-05 to 2024-08-03 | $0.54 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-02-04 to 2024-08-03 | $0.77 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-05-05 to 2024-08-03 | 281,600,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-02-04 to 2024-08-03 | 281,300,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-02-04 to 2024-08-03 | $137.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-02-04 to 2024-08-03 | $271.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2024-02-04 to 2024-08-03 | $96.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2024-02-04 to 2024-08-03 | $0 | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-08-03 | $646.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-08-03 | $5.71bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-08-03 | $15.83bn | us-gaap:Assets |
| Current liabilities | at 2024-08-03 | $3.87bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-08-03 | $3.00bn | us-gaap:LongTermDebt |
| Current portion of debt | at 2024-08-03 | $6.0m | us-gaap:DebtCurrent |
| Shareholders' equity | at 2024-08-03 | $4.30bn | us-gaap:StockholdersEquity |
| Shares outstanding | at 2024-08-03 | 277,373,416 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 39,343 characters.

For purposes of the following discussion, all references to "second quarter of 2024" and "second quarter of 2023" are to the Company's 13-week fiscal periods ended August 3, 2024 and July 29, 2023, respectively. References to the "first half of 2024" or "2024" and the "first half of 2023" or "2023" are to the Company's 26-week fiscal periods ended August 3, 2024 and July 29, 2023, respectively.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report, as well as the financial and other information included in the 2023 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report (particularly in "Risk Factors" and in "Forward-Looking Statements") and in the 2023 10-K (particularly in "Risk Factors" and in "Forward-Looking Statements"). This discussion includes Non-GAAP financial measures. For information about these measures, see the disclosure under the caption "Important Information Regarding Non-GAAP Financial Measures".

#### Quarterly Overview

The Company continues to view fiscal 2024 as a transition and investment year as it implements its new strategy, A Bold New Chapter, which is designed to return the Company to enterprise growth, unlock shareholder value, improve the omni-channel experience and better serve its customers. During the second quarter of 2024, the Company continued to make progress on its three-year Bold New Chapter strategy, as follows:

- .Strengthen the Macy's nameplate
- Rationalize store base: At the end of fiscal 2023, the Company announced it had identified approximately 150 underproductive Macy's locations for closure through fiscal 2026 (collectively, the "non-go-forward" locations), which will allow for monetization of these non-go-forward locations and prioritization of investments in the approximately 350 remaining Macy's locations (collectively, the "go-forward" locations) where the Company believes it has the most opportunity to improve square footage productivity. For the non-go-forward Macy's locations and distribution centers, the Company is thoughtfully and strategically approaching monetization to execute accretive deals and is encouraged by the pace and quality of deal activity to date. As a result, the Company now expects to close approximately 55 locations in fiscal 2024 versus its prior expectations of roughly 50.
- Launch of First 50 Stores: The First 50 locations are a key component of the Macy's Bold New Chapter growth strategy as they are an early indicator for go-forward Macy's nameplate growth and ultimately the Macy's, Inc. go-forward business' ability to achieve comparable sales growth. They serve as pilots to test ideas with new product, visual merchandising and staffing initiatives. Initiatives at these locations have gained traction and include:
- Focused staffing in key departments such as shoes, handbags, ready-to-wear as well as fitting room and checkout,
- Enhanced merchandise offerings to emphasize freshness, relevance and inspiration with a focus on variety rather than redundancy by editing existing assortments and adding new brands,
- Modernizing our visual presentations, and
- Offering unique store-level activations and community events.

The First 50 achieved its second consecutive quarter of comparable sales growth. Net Promoter Scores of the First 50 locations increased approximately 600 basis points from the second quarter of 2023 and were over 200 basis points above the other Macy's go-forward locations. The Company plans to implement women's shoes and handbag staffing tests in roughly 100 additional go-forward Macy's locations this fall.

- Revitalize assortment: The Company is focused on offering new product across categories. In the second quarter of 2024, Macy's experienced ongoing sales strength in fragrance and improvement in women’s ready-to-wear apparel compared to the second quarter of 2023. Macy's private brand reimagination is progressing as planned with a positive response from customers in ready-to-wear, including elevated fashion and quality in the Company's heritage labels. The Company has completed the majority of its planned brand exits. Additionally, the Company introduced new market and private brands that more closely align to customer demand.
- Rollout of additional Macy's small format stores: The Company opened five Macy's small format locations during the second quarter of 2024, bringing the total small format location count to 18. The Company continues to plan to bring the total number of Macy's small format locations to an expected 24 by the end of fiscal 2024.
- Grow digital: Digital continues to serve as both a gateway to the Macy's brand and a source of commerce and omni engagement. The Company is making progress on optimizing the customer journey, with a focus on search engine optimization, site enhancements, more transparent pricing and a better mobile experience. Macy's digital visits increased 0.7% while the conversion rate decreased 30 basis points compared to the second quarter of 2023.
- .Accelerate luxury growth
- The Company continues its plans to expand its luxury store footprint by approximately 20% through fiscal 2026.
- Bloomingdale's: The Company expects to open approximately 15 small format (Bloomie's and Bloomingdale's the Outlet) locations through fiscal 2026. Comparable sales at the small format locations outperformed the broader Bloomingdale's fleet. Advanced contemporary market brands were well-received and serve as growth engines for the brand. Net Promoter Scores improved over 250 basis points compared to the second quarter of 2023 and remain a strength for the Bloomingdale's nameplate.
- Bluemercury: Bluemercury opened one new location and completed one remodel in the second quarter of 2024; its 14th consecutive quarter of comparable sales growth driven by continued strength in skincare and the expansion of key brand partners both in skincare and fragrances. The new and remodeled stores elevate Bluemercury's service model, spa integration and product mix and have outperformed the total Bluemercury fleet in the second quarter of 2024.
- .Simplify and modernize end-to-end operations
- The Company is actively advancing on solutions to reduce organizational complexity and generate cost savings to fund growth investments. During the second quarter of 2024, the Company made improvements to its fulfillment network productivity and continued to simplify its technology ecosystem. These investments have improved the customer experience through faster online delivery and higher product in-stocks, while contributing to bottom-line performance and cash flow generation.

Comparable sales highlights for the second quarter of 2024 versus the second quarter of 2023 related to components of the Bold New Chapter strategy are as follows:

- Macy's, Inc. comparable sales declined 4.0% on an owned basis and declined 3.3% on an owned-plus-licensed-plus-marketplace basis.
- Macy's, Inc. go-forward business comparable sales, inclusive of go-forward locations and digital across nameplates, declined 3.8% on an owned basis and declined 3.0% on an owned-plus-licensed-plus-marketplace basis.
- Company's nameplate highlights include:
- Macy's comparable sales declined 4.5% on an owned basis and declined 3.6% on an owned-plus-licensed-plus-marketplace basis.
- Go-forward business comparable sales, inclusive of Macy’s go-forward locations and digital, declined 4.3% on an owned basis and declined 3.3% on an owned-plus-licensed-plus-marketplace basis. Go-forward locations comparable sales declined 2.4% on an owned basis and declined 2.3% on an owned-plus-licensed basis.
- First 50 locations comparable sales, included within go-forward locations comparable sales, increased 0.8% on an owned basis and increased 1.0% on an owned-plus-licensed basis.
- Non-First 50 go-forward locations comparable sales, included within go-forward locations comparable sales, declined 3.8% on an owned basis and declined 3.7% on an owned-plus-licensed basis.
- Macy's non-go-forward locations comparable sales declined 6.5% on both an owned and owned-plus-licensed basis.
- Bloomingdale's comparable sales declined 1.1% on an owned basis and declined 1.4% on an owned-plus-licensed-plus-marketplace basis1.
- Bluemercury comparable sales increased 2.0% on an owned basis.

1 Bloomingdale's excludes one non-go-forward location.

### Results of Operations

#### Comparison of the Second Quarter of 2024 and the Second Quarter of 2023

*(dollars in millions, except per share figures)*

|  | Second Quarter of 2024 Amount | % to Net Sales | % to Total Revenue | Second Quarter of 2023 Amount | % to Net Sales | % to Total Revenue |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $4,937 |  |  | $5,130 |  |  |
| Other revenue | 159 | 3.2% |  | 150 | 2.9% |  |
| Total revenue | 5,096 |  |  | 5,280 |  |  |
| Cost of sales | (2,938) | (59.5)% |  | (3,176) | (61.9)% |  |
| Selling, general and administrative expenses | (1,973) |  | (38.7)% | (1,980) |  | (37.5)% |
| Gains on sale of real estate | 36 |  | 0.7% | 4 |  | 0.1% |
| Impairment, restructuring and other benefits (costs) | 1 |  | —% | (4) |  | (0.1)% |
| Operating income | 222 |  | 4.4% | 124 |  | 2.3% |
| Diluted earnings (loss) per share | $0.53 |  |  | $(0.08) |  |  |
| Supplemental Financial Measures |  |  |  |  |  |  |
| Gross margin2 | $1,999 | 40.5% |  | $1,954 | 38.1% |  |
| Decrease in comparable sales | (4.0)% |  |  | (8.2)% |  |  |
| Supplemental Non-GAAP Financial Measures |  |  |  |  |  |  |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (3.3)% |  |  | (7.3)% |  |  |
| Adjusted diluted earnings per share | $0.53 |  |  | $0.26 |  |  |
| EBITDA | $439 |  |  | $221 |  |  |
| Adjusted EBITDA | $438 |  |  | $347 |  |  |

2 Gross margin is not directly comparable to the prior year given the change in inventory valuation method from LIFO RIM to LIFO cost on February 4, 2024. Gross margin is defined as net sales less cost of sales.

See pages 25 to 28 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Net sales | $4,937 | $5,130 |
| Decrease in comparable sales | (4.0)% | (8.2)% |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (3.3)% | (7.3)% |

Net sales for the second quarter of 2024 decreased $193 million, or 3.8%, compared to the second quarter of 2023. During the quarter, net sales were impacted by ongoing macroeconomic conditions, including inflationary pressures and an increasingly complex news cycle. Macy's experienced strong performance in the First 50 locations, which benefited from enhanced merchandising through elevated product rollouts across top markets and new brands. Performance continued to be strong in fragrances and improved in ready-to-wear. The Company experienced weaknesses in men's apparel, handbags and home.

### MACY'S, INC.

|  | Second Quarter of 2024 $% to Net Sales |  | Second Quarter of 2023 $% to Net Sales |  |
| --- | ---: | ---: | ---: | ---: |
| Credit card revenues, net | $125 | 2.5% | $120 | 2.3% |
| Macy's Media Network, net | 34 | 0.7% | 30 | 0.6% |
| Other revenue | $159 | 3.2% | $150 | 2.9% |

The increase in other revenues included a $5 million increase in credit card revenues. Credit card revenues in the second quarter of 2023 were negatively impacted by a change in net credit loss trends. Macy's Media Network grew $4 million, or 13% from the second quarter of 2023, driven by higher advertiser and campaign counts.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Cost of sales | $(2,938) | (3,176) |
| As a percent to net sales | 59.5% | 61.9% |
| Gross margin | $1,999 | $1,954 |
| As a percent to net sales | 40.5% | 38.1% |

Gross margin rate and merchandise margin rate increased 240 basis points and 210 basis points, respectively, in the second quarter of 2024 compared to the second quarter of 2023. The increase in both gross margin and merchandise margin rates primarily reflected lower year-over-year discounting and favorable shortage due to the Company's asset protection work, and partially offset by the Company's change in inventory valuation method. Delivery expense as a percent of net sales improved 30 basis points from the second quarter of 2023 driven by lower shipped sales volumes and improved delivery expense due to cost savings and process reengineering initiatives.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| SG&A expenses | $(1,973) | $(1,980) |
| As a percent to total revenue | 38.7% | 37.5% |

SG&A expenses decreased $7 million, or 0.4%, in the second quarter of 2024 compared to the second quarter of 2023 due to the Company's appropriate cost controls while it protected customer-facing investments, particularly in First 50 locations. The increase in SG&A expenses as a percent to total revenue in the second quarter of 2024 was due to a decline in total revenue, mainly net sales, compared to the second quarter of 2023.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Gains on sale of real estate | $36 | $4 |

Asset sale gains in the second quarter of 2024 mainly related to the sale of one Macy's store.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Settlement charges | $— | $(122) |

Settlement accounting was not required in the second quarter of 2024. During the second quarter of 2023, the Company recognized a non-cash settlement charge of $122 million associated with the transfer of fully funded pension obligations for certain retirees and beneficiaries through the purchase of a group annuity contract with an insurance company.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Net interest expense | $(31) | $(36) |

The decrease in net interest expense in the second quarter of 2024 compared to the second quarter of 2023 was primarily driven by an increase in interest income on investments.

### MACY'S, INC.

|  | Second Quarter of 2024 | Second Quarter of 2023 |
| --- | ---: | ---: |
| Effective tax rate | 23.1% | 26.7% |
| Federal income statutory rate | 21% | 21% |

The income tax expense of $45 million, or 23.1% of pretax income, for the second quarter of 2024 and the income tax benefit of $8 million, or 26.7% of pretax loss, for second quarter of 2023, reflect a different effective tax rate as compared to the Company’s federal income tax statutory rate of 21%. The income tax effective rates for the second quarter of 2024 and the second quarter of 2023 were impacted primarily by the effect of state and local taxes.

#### Comparison of the 26 Weeks Ended August 3, 2024 and July 29, 2023

*(dollars in millions, except per share figures)*

|  | 26 Weeks Ended August 3, 2024 Amount | % to Net Sales | % to Total Revenue | 26 Weeks Ended July 29, 2023 Amount | % to Net Sales | % to Total Revenue |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $9,783 |  |  | $10,112 |  |  |
| Other revenue | 313 | 3.2% |  | 341 | 3.4% |  |
| Total revenue | 10,096 |  |  | 10,453 |  |  |
| Cost of sales | (5,884) | (60.1)% |  | (6,164) | (61.0)% |  |
| Selling, general and administrative expenses | (3,884) |  | (38.5)% | (3,930) |  | (37.6)% |
| Gains on sale of real estate | 37 |  | 0.4% | 15 |  | 0.1% |
| Impairment, restructuring and other costs | (19) |  | (0.2)% | (6) |  | (0.1)% |
| Operating income | $346 |  | 3.4% | $368 |  | 3.5% |
| Diluted earnings per share | $0.75 |  |  | $0.48 |  |  |
| Supplemental Financial Measures |  |  |  |  |  |  |
| Gross margin2 | $3,899 | 39.9% |  | $3,948 | 39.0% |  |
| Decrease in comparable sales | (2.6)% |  |  | (8.1)% |  |  |
| Supplemental Non-GAAP Financial Measures |  |  |  |  |  |  |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (1.8)% |  |  | (7.2)% |  |  |
| Adjusted diluted earnings per share | $0.80 |  |  | $0.82 |  |  |
| EBITDA | $783 |  |  | $687 |  |  |
| Adjusted EBITDA | $802 |  |  | $815 |  |  |

2 Gross margin is not directly comparable to the prior year given the change in inventory valuation method from LIFO RIM to LIFO cost on February 4, 2024. Gross margin is defined as net sales less cost of sales.

See pages 25 to 28 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net sales | $9,783 | $10,112 |
| Decrease in comparable sales | (2.6)% | (8.1)% |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (1.8)% | (7.2)% |

Net sales for 2024 decreased $329 million, or 3.3%, compared to 2023. Net sales were impacted by ongoing macroeconomic conditions, including inflationary pressures and an increasingly complex news cycle. Macy's experienced strong performance in the First 50 locations, which benefited from various initiatives including, but not limited to, enhanced merchandising through elevated product rollouts across top markets and new brands and staffing.

### MACY'S, INC.

|  | 2024 $% to Net Sales |  | 2023 $% to Net Sales |  |
| --- | ---: | ---: | ---: | ---: |
| Credit card revenues, net | $242 | 2.5% | $282 | 2.8% |
| Macy's Media Network, net | 71 | 0.7% | 59 | 0.6% |
| Other revenue | $313 | 3.2% | $341 | 3.4% |

The decrease in other revenues was driven by a $40 million decrease in credit card revenues. This decrease was primarily driven by higher net credit losses as compared to 2023. Macy's Media Network grew $12 million, or 20%, compared to 2023, due to increased vendor engagement and higher advertiser and campaign counts.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Cost of sales | $(5,884) | $(6,164) |
| As a percent to net sales | 60.1% | 61.0% |
| Gross margin | $3,899 | $3,948 |
| As a percent to net sales | 39.9% | 39.0% |

Gross margin rate and merchandise margin rate increased 90 basis points and 60 basis points, respectively, in 2024 compared to 2023. The increase in both gross margin and merchandise margin rates primarily reflected lower year-over-year discounting and favorable shortage due to the company's asset protection work. Delivery expense as a percent of net sales improved 30 basis points from the first half of 2023 driven by lower shipped sales volumes and improved delivery expense control due to cost savings and process reengineering initiatives.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| SG&A expenses | $(3,884) | $(3,930) |
| As a percent to total revenue | 38.5% | 37.6% |

SG&A expenses decreased 1.2% in 2024 compared to 2023 due to the Company's appropriate cost controls while it protected customer-facing investments, particularly in First 50 locations. The increase in SG&A expenses as a percent to total revenue in 2024 was due to a decline in total revenue compared to 2023.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Gains on sale of real estate | $37 | $15 |

Asset sale gains in the first half of 2024 mainly related to the sale of one Macy's store while asset sale gains in the first half of 2023 mainly related to the sale of a distribution center.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Settlement charges | $— | $(122) |

Settlement accounting was not required in the first half of 2024. During the first half of 2023, the Company recognized a non-cash settlement charge of $122 million associated with the transfer of fully funded pension obligations for certain retirees and beneficiaries through the purchase of a group annuity contract with an insurance company.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net interest expense | $(62) | $(73) |

The decrease in net interest expense in 2024 compared to 2023 was primarily driven by an increase in interest income on investments.

### MACY'S, INC.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Effective tax rate | 27.4% | 26.5% |
| Federal income statutory rate | 21% | 21% |

Income tax expense increased $32 million in 2024 compared to 2023 due to higher income before income taxes. Additionally, the effective tax rates in 2024 and 2023 were 27.4% and 26.5%, respectively, and reflect a different effective tax rate as compared to the Company’s Federal income tax statutory rate of 21% primarily due to the impact of state and local taxes and the vesting and cancellation of certain stock-based compensation awards.

### Liquidity and Capital Resources

The Company's principal sources of liquidity are cash from operations, cash on hand and the ABL Credit Facility (as defined below). Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, lease obligations, merchandise purchase obligations, retirement plan benefits, and self-insurance reserves. The Company believes that, assuming no change in its current business plan, its available cash, together with expected future cash generated from operations, the amount available under the ABL Credit Facility, and credit available in the market, will be sufficient to satisfy its anticipated needs for working capital, capital expenditures, and cash dividends for at least the next twelve months and the foreseeable future thereafter.

Merchandise purchase obligations represent future merchandise payables for inventory purchased from various suppliers through contractual arrangements and are expected to be funded through cash from operations.

#### Capital Allocation

The Company's capital allocation goals include maintaining a healthy balance sheet and investment-grade credit metrics, followed by investing in growth initiatives and returning capital to shareholders through predictable dividends and share repurchases with excess cash.

The Company ended the second quarter of 2024 with a cash and cash equivalents balance of $646 million, an increase of $208 million from $438 million at the end of the second quarter of 2023. The Company is party to an ABL Credit Facility with certain financial institutions providing for a $3,000 million asset-based credit facility.

|  | 2024 | 2023 |
| --- | ---: | ---: |
| Net cash provided by operating activities | $137 | $271 |
| Net cash used by investing activities | (373) | (531) |
| Net cash used by financing activities | (152) | (164) |

#### Operating Activities

The decrease in net cash provided by operating activities was primarily driven by a lower cash inflow from the change in merchandise inventory in the first half of 2024 compared to the first half of 2023 mainly due to sales results and the Company's decision to invest into areas of strength for the second half of 2024.

#### Investing Activities

The Company's capital expenditures were $432 million in the first half of 2024 compared to $564 million in the first half of 2023. Capital expenditures in the current year are primarily focused on digital and technology investments as well as omni-channel capabilities.

#### Financing Activities

#### Dividends

The Company paid dividends totaling $96 million and $90 million in the first half of 2024 and 2023, respectively.

On August 23, 2024, the Company announced that its Board of Directors declared a regular quarterly dividend of 17.37 cents per share on its common stock, which will be paid on October 1, 2024, to Macy's shareholders of record at the close of business on September 13, 2024. Subsequent dividends will be subject to approval of the Board of Directors, which will depend on market and other conditions.

#### Stock Repurchases

On February 22, 2022, the Board of Directors authorized a new $2,000 million share repurchase program, which does not have an expiration date. During the first quarter of 2023, the Company repurchased approximately 1.4 million shares of its common stock at an average cost of $17.57 per share on the open market under its share repurchase program. The Company did not repurchase any shares of its common stock during the first half of 2024. As of August 3, 2024, $1,375 million remained available under the authorization. Repurchases may be made from time to time in the open market or through privately negotiated transactions in accordance with applicable securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, on terms determined by the Company. During the first half of 2023, the Company also withheld approximately $12 million of shares for tax purposes associated with the issuance of certain stock awards.

#### Debt Transactions

As of August 3, 2024 and July 29, 2023, the Company had $144 million and $138 million of standby letters of credit outstanding under its ABL Credit Facility, respectively, which reduced the available borrowing capacity to $2,856 million and $2,862 million, respectively. The Company had no outstanding borrowings under the ABL Credit Facility as of both August 3, 2024 and July 29, 2023.

#### Contractual Obligations

As of August 3, 2024, other than the financing transactions discussed in Note 4 to the accompanying Consolidated Financial Statements, there were no material changes to the Company's contractual obligations and commitments outside the ordinary course of business since February 3, 2024, as reported in the Company's 2023 Form 10-K.

### Guarantor Summarized Financial Information

The Company had $3,007 million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the "Unsecured Notes") outstanding as of both August 3, 2024 and February 3, 2024 with maturities ranging from 2025 to 2043. The Unsecured Notes constitute debt obligations of Macy's Retail Holdings, LLC ("MRH" or "Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent" and together with the "Subsidiary Issuer," the "Obligor Group"), and are fully and unconditionally guaranteed on a senior unsecured basis by Parent. The Unsecured Notes rank equally in right of payment with all of the Company's existing and future senior unsecured obligations, senior to any of the Company's future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the Company's subsidiaries that do not guarantee the Unsecured Notes. Holders of the Company's secured indebtedness, including any borrowings under the ABL Credit Facility, will have a priority claim on the assets that secure such secured indebtedness; therefore, the Unsecured Notes and the related guarantees are effectively subordinated to all of the Subsidiary Issuer's and Parent and their subsidiaries’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.

The following tables include combined financial information of the Obligor Group. Investments in subsidiaries of $9,616 million and $9,423 million as of August 3, 2024 and February 3, 2024, respectively, have been excluded from the Summarized Balance Sheets. Equity in earnings of non-Guarantor subsidiaries of $439 million and $794 million for the 13 and 26 weeks ended August 3, 2024, respectively, have been excluded from the Summarized Statement of Operations. The combined financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions within the Obligor Group eliminated.

### Summarized Balance Sheets

*(in millions)*

*ASSETS*

|  | August 3, 2024 | February 3, 2024 |
| --- | ---: | ---: |
| Current Assets | $955 | $1,028 |
| Noncurrent Assets | 6,127 | 6,145 |
| **LIABILITIES** |  |  |
| Current Liabilities | $2,190 | $1,800 |
| Noncurrent Liabilities (a) | 10,199 | 10,654 |

(a) Includes net amounts due to non-Guarantor subsidiaries of $3,992 million and $6,784 million as of August 3, 2024 and February 3, 2024, respectively.

### Summarized Statement of Operations

*(in millions)*

|  | 13 Weeks Ended August 3, 2024 | 26 Weeks Ended August 3, 2024 |
| --- | ---: | ---: |
| Net sales | $221 | $415 |
| Consignment commission income (a) | 794 | 1,550 |
| Other revenue | 35 | 70 |
| Cost of sales | (101) | (198) |
| Operating loss | (328) | (655) |
| Loss before income taxes (b) | (234) | (526) |
| Net loss | (135) | (333) |

(a) Income pertains to transactions with ABL Borrower, a non-Guarantor subsidiary.

(b) Includes $154 million and $249 million of dividend income from non-Guarantor subsidiaries for the 13 and 26 weeks ended August 3, 2024, respectively.

#### 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 basis and an owned-plus-licensed-plus-marketplace basis, which includes the impact of growth in comparable sales of departments licensed to third parties and marketplace sales, as applicable, assists in evaluating the Company's ability to generate sales growth, whether through owned businesses, departments licensed to third parties or marketplace sales, on a comparable basis, and in evaluating the impact of changes in the manner in which certain departments are operated. Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure which the Company believes provides meaningful information about its operational efficiency by excluding the impact of changes in tax law and structure, debt levels and capital investment. In addition, management believes that excluding certain items that are not associated with the Company's core operations and that may vary substantially in frequency and magnitude from period-to-period from net income (loss), diluted earnings (loss) per share and EBITDA provide useful supplemental measures that assist in evaluating the Company's ability to generate earnings and leverage sales, respectively, and to more readily compare these metrics between past and future periods. Management also believes that EBITDA and Adjusted EBITDA are frequently used by investors and securities analysts in their evaluations of companies, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. The Company uses certain non-GAAP financial measures as performance measures for components of executive compensation.

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.

#### Changes in Comparable Sales

The following is a tabular reconciliation of the non-GAAP financial measure of changes in comparable sales on an owned-plus-licensed-plus-marketplace basis, to GAAP comparable sales (i.e., on an owned basis), which the Company believes to be the most directly comparable GAAP financial measure.

|  | 13 Weeks Ended August 3, 2024 vs. 13 Weeks Ended July 29, 2023 Macy's, Inc. | Macy's |
| --- | ---: | ---: |
| Decrease in comparable sales on an owned basis (Note 1) | (4.0%) | (4.5%) |
| Impact of departments licensed to third parties and marketplace sales (Note 2) | 0.7% | 0.9% |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (3.3%) | (3.6%) |

|  | 13 Weeks Ended August 3, 2024 vs. 13 Weeks Ended July 29, 2023 Macy's, Inc. go-forward business | Macy's go-forward business | Bloomingdale's (a) | Bluemercury |
| --- | ---: | ---: | ---: | ---: |
| Increase (decrease) in comparable sales on an owned basis (Note 1) | (3.8)% | (4.3)% | (1.1%) | 2.0% |
| Impact of departments licensed to third parties and marketplace sales (Note 2) | 0.8% | 1.0% | (0.3%) | —% |
| Increase (decrease) in comparable sales on an owned-plus-licensed-plus-marketplace basis | (3.0%) | (3.3%) | (1.4%) | 2.0% |

(a) Bloomingdale's excludes one non-go-forward location.

|  | 13 Weeks Ended August 3, 2024 vs. 13 Weeks Ended July 29, 2023 Macy's First 50 locations | Macy's Non-First 50 go-forward locations | Macy's go-forward locations | Macy's non-go-forward locations |
| --- | ---: | ---: | ---: | ---: |
| Increase (decrease) in comparable sales on an owned basis (Note 1) | 0.8% | (3.8%) | (2.4%) | (6.5%) |
| Impact of departments licensed to third parties (Note 2) | 0.2% | 0.1% | 0.1% | —% |
| Increase (decrease) in comparable sales on an owned-plus-licensed basis | 1.0% | (3.7%) | (2.3%) | (6.5%) |

|  | 26 Weeks Ended August 3, 2024 vs. 26 Weeks Ended July 29, 2023 Macy's, Inc. |
| --- | ---: |
| Decrease in comparable sales on an owned basis (Note 1) | (2.6%) |
| Impact of departments licensed to third parties and marketplace sales (Note 2) | 0.8% |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (1.8%) |

26

### MACY'S, INC.

|  | 13 Weeks Ended July 29, 2023 vs. 13 Weeks Ended July 30, 2022 Macy's, Inc. | 26 Weeks Ended July 29, 2023 vs. 26 Weeks Ended July 30, 2022 |
| --- | ---: | ---: |
| Decrease in comparable sales on an owned basis (Note 1) | (8.2%) | (8.1%) |
| Impact of departments licensed to third parties and marketplace sales (Note 2) | 0.9% | 0.9% |
| Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis | (7.3%) | (7.2%) |

Notes:

(1) Represents the period-to-period percentage change in net sales from stores in operation for one full fiscal year for the 13 and 26 weeks ended August 3, 2024 and July 29, 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 their stores and online, including Macy’s and Bloomingdale’s digital Marketplace, 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.

#### EBITDA and Adjusted EBITDA

The following is a tabular reconciliation of the non-GAAP financial measure EBITDA and Adjusted EBITDA to GAAP net income (loss), which the Company believes to be the most directly comparable GAAP measure.

|  | 13 Weeks Ended August 3, 2024 (millions) | 13 Weeks Ended July 29, 2023 | 26 Weeks Ended August 3, 2024 | 26 Weeks Ended July 29, 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $150 | $(22) | $212 | $133 |
| Interest expense - net | 31 | 36 | 62 | 73 |
| Federal, state and local income tax expense (benefit) | 45 | (8) | 80 | 48 |
| Depreciation and amortization | 213 | 215 | 429 | 433 |
| EBITDA | $439 | $221 | $783 | $687 |
| Impairment, restructuring and other costs (benefits) | (1) | 4 | 19 | 6 |
| Settlement charges | — | 122 | — | 122 |
| Adjusted EBITDA | $438 | $347 | $802 | $815 |

27

#### Adjusted Net Income and Adjusted Diluted Earnings Per Share

The following is a tabular reconciliation of the non-GAAP financial measures adjusted net income to GAAP net income (loss) and adjusted diluted earnings per share to GAAP diluted earnings (loss) per share, which the Company believes to be the most directly comparable GAAP measures.

*(millions, except per share figures)*

|  | 13 Weeks Ended August 3, 2024 Net Income Diluted Earnings Per Share | 13 Weeks Ended July 29, 2023 Net Income (Loss) Diluted Earnings (Loss) Per Share |
| --- | ---: | ---: |
| As reported | $150 $0.53 | $(22) $(0.08) |
| Impairment, restructuring and other costs (benefits) | (1) — | 4 0.01 |
| Settlement charges | — — | 122 0.44 |
| Income tax impact of certain items noted above | — — | (33) (0.11) |
| As adjusted to exclude certain items above | $149 $0.53 | $71 $0.26 |
|  | **26 Weeks Ended August 3, 2024** | **26 Weeks Ended July 29, 2023** |
|  | **Net Income** **Diluted Earnings Per Share** | **Net Income** **Diluted Earnings Per Share** |
|  | **(millions, except per share figures)** |  |
| As reported | $212 $0.75 | $133 $0.48 |
| Impairment, restructuring and other costs | 19 0.07 | 6 0.01 |
| Settlement charges | — — | 122 0.44 |
| Income tax impact of certain items noted above | (5) (0.02) | (33) (0.11) |
| As adjusted to exclude certain items above | $226 $0.80 | $228 $0.82 |

### Critical Accounting Estimates

Commencing in fiscal 2024, the Company no longer considers merchandise inventories be a critical accounting estimate due to the change in inventory valuation method from LIFO RIM to LIFO cost. Certain operational management judgments and estimates, such as the amount and timing of permanent markdowns to clear unproductive or slow-moving inventory, do not impact inventory valuation under LIFO cost to the same extent as they previously did under LIFO RIM.

## Market risk

As filed, 321 characters.

There have been no material changes to the Company's market risk as described in the Company's 2023 10-K. For a discussion of the Company's exposure to market risk, refer to the Company's market risk disclosures set forth in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" of the 2023 10-K.

## Controls and procedures

As filed, 1,675 characters.

The Company's Chief Executive Officer and Chief Financial Officer have carried out, as of August 3, 2024, with the participation of the Company's management, an evaluation of the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of August 3, 2024, the Company's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports the Company files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (the "SEC") rules and forms, and that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

From time to time adoption of new accounting pronouncements, major organizational restructuring and realignment occurs for which the Company reviews its internal control over financial reporting. As a result of this review, there were no changes in the Company's internal control over financial reporting that occurred during the Company's most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

## Risk factors

As filed, 132 characters.

There have been no material changes to the Risk Factors described in Part I, Item 1A."Risk Factors" in the Company's 2023 Form 10-K.

Filed Sep 4, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-039219. Last ingested by Listed: Nov 2, 2026, 17:32 ET. No prices; not investment advice.