Condensed Consolidating Financial Information

Certain debt obligations of the Company, which constitute debt obligations of Macy's Retail Holdings, Inc. ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent"), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, "Other Subsidiaries" includes all other direct subsidiaries of Parent, including bluemercury, Inc., FDS Bank, West 34th Street Insurance Company New York, Macy's Merchandising Corporation, Macy's Merchandising Group, Inc. and its subsidiaries Macy's Merchandising Group (Hong Kong) Limited, Macy's Merchandising Group Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, and its majority-owned subsidiary Macy's China Limited. "Subsidiary Issuer" includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in "Other Subsidiaries."

Condensed Consolidating Statements of Comprehensive Income for the 13 weeks ended April 29, 2017 and April 30, 2016, Condensed Consolidating Balance Sheets as of April 29, 2017, April 30, 2016 and January 28, 2017, and the related Condensed Consolidating Statements of Cash Flows for the 13 weeks ended April 29, 2017 and April 30, 2016 are presented on the following pages.

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended April 29, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,056		$	5,126		$	(1,844	)	$	5,338
Cost of sales	—			(1,378		)	(3,772		)	1,844			(3,306		)
Gross margin	—			678			1,354			—			2,032
Selling, general and administrative expenses	(1		)	(704		)	(1,107		)	—			(1,812		)
Operating income (loss)	(1		)	(26		)	247			—			220
Interest (expense) income, net:
External	1			(85		)	—			—			(84		)
Intercompany	—			(34		)	34			—			—
Premium on early retirement of debt	—			(3		)	—			—			(3		)
Equity in earnings (loss) of subsidiaries	71			(9		)	—			(62		)	—
Income (loss) before income taxes	71			(157		)	281			(62		)	133
Federal, state and local income tax benefit (expense)	—			30			(93		)	—			(63		)
Net income (loss)	71			(127		)	188			(62		)	70
Net loss attributable to noncontrolling interest	—			—			1			—			1
Net income (loss) attributable to Macy's, Inc. shareholders	$	71		$	(127	)	$	189		$	(62	)	$	71
Comprehensive income (loss)	$	77		$	(121	)	$	192		$	(72	)	$	76
Comprehensive loss attributable to noncontrolling interest	—			—			1			—			1
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	77		$	(121	)	$	193		$	(72	)	$	77

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended April 30, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,454		$	5,374		$	(2,057	)	$	5,771
Cost of sales	—			(1,604		)	(3,969		)	2,057			(3,516		)
Gross margin	—			850			1,405			—			2,255
Selling, general and administrative expenses	(1		)	(882		)	(1,083		)	—			(1,966		)
Settlement charges	—			(3		)	(10		)	—			(13		)
Operating income (loss)	(1		)	(35		)	312			—			276
Interest (expense) income, net:
External	1			(99		)	—			—			(98		)
Intercompany	—			(58		)	58			—			—
Equity in earnings (loss) of subsidiaries	116			10			—			(126		)	—
Income (loss) before income taxes	116			(182		)	370			(126		)	178
Federal, state and local income tax benefit (expense)	—			61			(124		)	—			(63		)
Net income (loss)	116			(121		)	246			(126		)	115
Net loss attributable to noncontrolling interest	—			—			1			—			1
Net income (loss) attributable to Macy's, Inc. shareholders	$	116		$	(121	)	$	247		$	(126	)	$	116
Comprehensive income (loss)	$	108		$	(129	)	$	241		$	(113	)	$	107
Comprehensive loss attributable to noncontrolling interest	—			—			1			—			1
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	108		$	(129	)	$	242		$	(113	)	$	108

Condensed Consolidating Balance Sheet

As of April 29, 2017

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	779	$	99	$	323		$	—		$	1,201
Receivables	—		118		227			—			345
Merchandise inventories	—		2,560		3,066			—			5,626
Prepaid expenses and other current assets	—		71		326			—			397
Total Current Assets	779		2,848		3,942			—			7,569
Property and Equipment – net	—		3,293		3,593			—			6,886
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		49		447			—			496
Other Assets	—		45		748			—			793
Deferred Income Taxes	24		—		—			(24		)	—
Intercompany Receivable	920		—		1,833			(2,753		)	—
Investment in Subsidiaries	3,003		3,535		—			(6,538		)	—
Total Assets	$	4,726	$	13,085	$	11,145		$	(9,315	)	$	19,641
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	306	$	7		$	—		$	313
Merchandise accounts payable	—		841		1,187			—			2,028
Accounts payable and accrued liabilities	22		916		1,967			—			2,905
Income taxes	317		6		32			—			355
Total Current Liabilities	339		2,069		3,193			—			5,601
Long-Term Debt	—		6,395		17			—			6,412
Intercompany Payable	18		2,801		(66		)	(2,753		)	—
Deferred Income Taxes	—		704		802			(24		)	1,482
Other Liabilities	67		498		1,281			—			1,846
Shareholders' Equity:
Macy's, Inc.	4,302		618		5,920			(6,538		)	4,302
Noncontrolling Interest	—		—		(2		)	—			(2		)
Total Shareholders' Equity	4,302		618		5,918			(6,538		)	4,300
Total Liabilities and Shareholders' Equity	$	4,726	$	13,085	$	11,145		$	(9,315	)	$	19,641

Condensed Consolidating Balance Sheet

As of April 30, 2016

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries		Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	287	$	112	$	335	$	—		$	734
Receivables	—		158		241		—			399
Merchandise inventories	—		2,707		3,031		—			5,738
Income tax receivable	66		—		—		(47		)	19
Prepaid expenses and other current assets	—		121		369		—			490
Total Current Assets	353		3,098		3,976		(47		)	7,380
Property and Equipment – net	—		3,840		3,635		—			7,475
Goodwill	—		3,315		582		—			3,897
Other Intangible Assets – net	—		50		461		—			511
Other Assets	—		154		744		—			898
Deferred Income Taxes	23		—		—		(23		)	—
Intercompany Receivable	—		—		3,433		(3,433		)	—
Investment in Subsidiaries	4,651		3,810		—		(8,461		)	—
Total Assets	$	5,027	$	14,267	$	12,831	$	(11,964	)	$	20,161
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	641	$	1	$	—		$	642
Merchandise accounts payable	—		872		1,143		—			2,015
Accounts payable and accrued liabilities	34		1,192		1,464		—			2,690
Income taxes	—		9		38		(47		)	—
Total Current Liabilities	34		2,714		2,646		(47		)	5,347
Long-Term Debt	—		6,971		19		—			6,990
Intercompany Payable	787		2,646		—		(3,433		)	—
Deferred Income Taxes	—		726		833		(23		)	1,536
Other Liabilities	58		547		1,529		—			2,134
Shareholders' Equity:
Macy's, Inc.	4,148		663		7,798		(8,461		)	4,148
Noncontrolling Interest	—		—		6		—			6
Total Shareholders' Equity	4,148		663		7,804		(8,461		)	4,154
Total Liabilities and Shareholders' Equity	$	5,027	$	14,267	$	12,831	$	(11,964	)	$	20,161

Condensed Consolidating Balance Sheet

As of January 28, 2017

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	938	$	81	$	278		$	—		$	1,297
Receivables	—		169		353			—			522
Merchandise inventories	—		2,565		2,834			—			5,399
Prepaid expenses and other current assets	—		84		324			—			408
Total Current Assets	938		2,899		3,789			—			7,626
Property and Equipment – net	—		3,397		3,620			—			7,017
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		51		447			—			498
Other Assets	—		47		766			—			813
Deferred Income Taxes	26		—		—			(26		)	—
Intercompany Receivable	375		—		2,428			(2,803		)	—
Investment in Subsidiaries	3,137		3,540		—			(6,677		)	—
Total Assets	$	4,476	$	13,249	$	11,632		$	(9,506	)	$	19,851
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	306	$	3		$	—		$	309
Merchandise accounts payable	—		590		833			—			1,423
Accounts payable and accrued liabilities	16		1,064		2,483			—			3,563
Income taxes	71		16		265			—			352
Total Current Liabilities	87		1,976		3,584			—			5,647
Long-Term Debt	—		6,544		18			—			6,562
Intercompany Payable	—		2,803		—			(2,803		)	—
Deferred Income Taxes	—		688		781			(26		)	1,443
Other Liabilities	66		500		1,311			—			1,877
Shareholders' Equity:
Macy's, Inc.	4,323		738		5,939			(6,677		)	4,323
Noncontrolling Interest	—		—		(1		)	—			(1		)
Total Shareholders' Equity	4,323		738		5,938			(6,677		)	4,322
Total Liabilities and Shareholders' Equity	$	4,476	$	13,249	$	11,632		$	(9,506	)	$	19,851

Condensed Consolidating Statement of Cash Flows

For the 13 Weeks Ended April 29, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	71		$	(127	)	$	188		$	(62	)	$	70
Equity in (earnings) loss of subsidiaries	(71		)	9			—			62			—
Dividends received from subsidiaries	211			—			—			(211		)	—
Depreciation and amortization	—			89			154			—			243
(Increase) decrease in working capital	244			130			(485		)	—			(111		)
Other, net	7			22			3			—			32
Net cash provided (used) by operating activities	462			123			(140		)	(211		)	234
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			93			(174		)	—			(81		)
Other, net	—			—			21			—			21
Net cash provided (used) by investing activities	—			93			(153		)	—			(60		)
Cash flows from financing activities:
Debt repaid, net of debt issued	—			(149		)	3			—			(146		)
Dividends paid	(155		)	—			(171		)	211			(115		)
Common stock acquired, net of issuance of common stock	2			—			(1		)	—			1
Intercompany activity, net	(476		)	(18		)	494			—			—
Other, net	8			(31		)	13			—			(10		)
Net cash provided (used) by financing activities	(621		)	(198		)	338			211			(270		)
Net increase (decrease) in cash and cash equivalents	(159		)	18			45			—			(96		)
Cash and cash equivalents at beginning of period	938			81			278			—			1,297
Cash and cash equivalents at end of period	$	779		$	99		$	323		$	—		$	1,201

Condensed Consolidating Statement of Cash Flows

For the 13 Weeks Ended April 30, 2016

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	116		$	(121	)	$	246		$	(126	)	$	115
Impairments and other charges	—			3			10			—			13
Equity in earnings of subsidiaries	(116		)	(10		)	—			126			—
Dividends received from subsidiaries	182			—			—			(182		)	—
Depreciation and amortization	—			102			158			—			260
(Increase) decrease in working capital	(34		)	55			(451		)	—			(430		)
Other, net	19			16			15			—			50
Net cash provided (used) by operating activities	167			45			(22		)	(182		)	8
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net	—			(54		)	(158		)	—			(212		)
Other, net	—			(2		)	3			—			1
Net cash used by investing activities	—			(56		)	(155		)	—			(211		)
Cash flows from financing activities:
Debt issued, net of debt repaid	—			(3		)	—			—			(3		)
Dividends paid	(112		)	—			(182		)	182			(112		)
Common stock acquired, net of issuance of common stock	(104		)	—			—			—			(104		)
Proceeds from noncontrolling interest	—			—			4			—			4
Intercompany activity, net	(415		)	52			363			—			—
Other, net	10			(17		)	50			—			43
Net cash provided (used) by financing activities	(621		)	32			235			182			(172		)
Net increase (decrease) in cash and cash equivalents	(454		)	21			58			—			(375		)
Cash and cash equivalents at beginning of period	741			91			277			—			1,109
Cash and cash equivalents at end of period	$	287		$	112		$	335		$	—		$	734