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 and 26 weeks ended August 4, 2018 and July 29, 2017, Condensed Consolidating Balance Sheets as of August 4, 2018, July 29, 2017 and February 3, 2018, and the related Condensed Consolidating Statements of Cash Flows for the 26 weeks ended August 4, 2018 and July 29, 2017 are presented on the following pages.

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended August 4, 2018

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	2,072		$	4,914		$	(1,414	)	$	5,572
Credit card revenues, net	—			3			183			—			186

Cost of sales	—			(1,271		)	(3,463		)	1,414			(3,320		)
Selling, general and administrative expenses	—			(812		)	(1,352		)	—			(2,164		)
Gains on sale of real estate	—			19			27			—			46
Impairment and other costs	—			2			(19		)	—			(17		)
Operating income	—			13			290			—			303
Benefit plan income, net	—			4			7			—			11
Settlement charges	(6		)	(16		)	(28		)	—			(50		)
Interest (expense) income, net:
External	5			(69		)	2			—			(62		)
Intercompany	—			(17		)	17			—			—
Losses on early retirement of debt	—			(5		)	—			—			(5		)
Equity in earnings of subsidiaries	167			8			—			(175		)	—
Income (loss) before income taxes	166			(82		)	288			(175		)	197
Federal, state and local income tax benefit (expense)	—			30			(63		)	—			(33		)
Net income (loss)	166			(52		)	225			(175		)	164
Net loss attributable to noncontrolling interest	—			—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	166		$	(52	)	$	227		$	(175	)	$	166
Comprehensive income (loss)	$	186		$	(35	)	$	236		$	(203	)	$	184
Comprehensive loss attributable to noncontrolling interest	—			—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	186		$	(35	)	$	238		$	(203	)	$	186

Condensed Consolidating Statement of Comprehensive Income

For the 13 Weeks Ended July 29, 2017

(millions)



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,220		$	4,789		$	(1,373	)	$	5,636
Credit card revenues, net	—		5			162			—			167

Cost of sales	—		(1,391		)	(3,385		)	1,373			(3,403		)
Selling, general and administrative expenses	—		(856		)	(1,305		)	—			(2,161		)
Gains on sale of real estate	—		26			17			—			43
Operating income	—		4			278			—			282
Benefit plan income, net	—		5			9			—			14
Settlement charges	—		(17		)	(34		)	—			(51		)
Interest (expense) income, net:
External	2		(82		)	1			—			(79		)
Intercompany	—		(34		)	34			—			—
Gains on early retirement of debt	—		2			—			—			2
Equity in earnings of subsidiaries	109		29			—			(138		)	—
Income (loss) before income taxes	111		(93		)	288			(138		)	168
Federal, state and local income tax benefit (expense)	—		56			(116		)	—			(60		)
Net income (loss)	111		(37		)	172			(138		)	108
Net loss attributable to noncontrolling interest	—		—			3			—			3
Net income (loss) attributable to Macy's, Inc. shareholders	$	111	$	(37	)	$	175		$	(138	)	$	111
Comprehensive income	$	176	$	24		$	216		$	(243	)	$	173
Comprehensive loss attributable to noncontrolling interest	—		—			3			—			3
Comprehensive income attributable to Macy's, Inc. shareholders	$	176	$	24		$	219		$	(243	)	$	176

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended August 4, 2018

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	4,081		$	10,277		$	(3,246	)	$	11,112
Credit card revenues (expense), net	—			(3		)	346			—			343

Cost of sales	—			(2,591		)	(7,356		)	3,246			(6,701		)
Selling, general and administrative expenses	—			(1,641		)	(2,606		)	—			(4,247		)
Gains on sale of real estate	—			42			28			—			70
Impairment and other costs	—			2			(38		)	—			(36		)
Operating income (loss)	—			(110		)	651			—			541
Benefit plan income, net	—			8			14			—			22
Settlement charges	(6		)	(16		)	(28		)	—			(50		)
Interest (expense) income, net:
External	9			(139		)	2			—			(128		)
Intercompany	—			(36		)	36			—			—
Losses on early retirement of debt	—			(5		)	—			—			(5		)
Equity in earnings of subsidiaries	304			109			—			(413		)	—
Income (loss) before income taxes	307			(189		)	675			(413		)	380
Federal, state and local income tax benefit (expense)	(1		)	67			(150		)	—			(84		)
Net income (loss)	306			(122		)	525			(413		)	296
Net loss attributable to noncontrolling interest	—			—			10			—			10
Net income (loss) attributable to Macy's, Inc. shareholders	$	306		$	(122	)	$	535		$	(413	)	$	306
Comprehensive income (loss)	$	333		$	(99	)	$	540		$	(451	)	$	323
Comprehensive loss attributable to noncontrolling interest	—			—			10			—			10
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	333		$	(99	)	$	550		$	(451	)	$	333

Condensed Consolidating Statement of Comprehensive Income

For the 26 Weeks Ended July 29, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—		$	4,285		$	9,919		$	(3,218	)	$	10,986
Credit card revenues (expense), net	—			(2		)	330			—			328

Cost of sales	—			(2,778		)	(7,146		)	3,218			(6,706		)
Selling, general and administrative expenses	(1		)	(1,623		)	(2,594		)	—			(4,218		)
Gains on sale of real estate	—			92			19			—			111
Operating income (loss)	(1		)	(26		)	528			—			501
Benefit plan income, net	—			10			17			—			27
Settlement charges	—			(17		)	(34		)	—			(51		)
Interest (expense) income, net:
External	3			(167		)	1			—			(163		)
Intercompany	—			(69		)	69			—			—
Losses on early retirement of debt	—			(1		)	—			—			(1		)
Equity in earnings of subsidiaries	188			31			—			(219		)	—
Income (loss) before income taxes	190			(239		)	581			(219		)	313
Federal, state and local income tax benefit (expense)	(1		)	83			(210		)	—			(128		)
Net income (loss)	189			(156		)	371			(219		)	185
Net loss attributable to noncontrolling interest	—			—			4			—			4
Net income (loss) attributable to Macy's, Inc. shareholders	$	189		$	(156	)	$	375		$	(219	)	$	189
Comprehensive income (loss)	$	260		$	(89	)	$	418		$	(333	)	$	256
Comprehensive loss attributable to noncontrolling interest	—			—			4			—			4
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	260		$	(89	)	$	422		$	(333	)	$	260

Condensed Consolidating Balance Sheet

As of August 4, 2018

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	744	$	66	$	258		$	—		$	1,068
Receivables	1		43		217			—			261
Merchandise inventories	—		2,121		2,835			—			4,956
Prepaid expenses and other current assets	—		135		445			—			580
Income taxes	46		—		—			(46		)	—
Total Current Assets	791		2,365		3,755			(46		)	6,865
Property and Equipment – net	—		3,253		3,294			—			6,547
Goodwill	—		3,326		582			—			3,908
Other Intangible Assets – net	—		41		442			—			483
Other Assets	—		89		776			—			865
Deferred Income Taxes	10		—		—			(10		)	—
Intercompany Receivable	1,347		—		1,038			(2,385		)	—
Investment in Subsidiaries	3,876		3,140		—			(7,016		)	—
Total Assets	$	6,024	$	12,214	$	9,887		$	(9,457	)	$	18,668
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	42	$	21		$	—		$	63
Merchandise accounts payable	—		788		1,007			—			1,795
Accounts payable and accrued liabilities	84		777		1,747			—			2,608
Income taxes	—		33		28			(46		)	15
Total Current Liabilities	84		1,640		2,803			(46		)	4,481
Long-Term Debt	—		5,457		16			—			5,473
Intercompany Payable	—		2,385		—			(2,385		)	—
Deferred Income Taxes	—		588		616			(10		)	1,194
Other Liabilities	24		441		1,161			—			1,626
Shareholders' Equity:
Macy's, Inc.	5,916		1,703		5,313			(7,016		)	5,916
Noncontrolling Interest	—		—		(22		)	—			(22		)
Total Shareholders' Equity	5,916		1,703		5,291			(7,016		)	5,894
Total Liabilities and Shareholders' Equity	$	6,024	$	12,214	$	9,887		$	(9,457	)	$	18,668

Condensed Consolidating Balance Sheet

As of July 29, 2017

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	421	$	78	$	284		$	—		$	783
Receivables	—		132		250			—			382
Merchandise inventories	—		2,236		2,744			—			4,980
Prepaid expenses and other current assets	—		132		439			—			571
Total Current Assets	421		2,578		3,717			—			6,716
Property and Equipment – net	—		3,388		3,434			—			6,822
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		47		446			—			493
Other Assets	1		53		756			—			810
Deferred Income Taxes	25		—		—			(25		)	—
Intercompany Receivable	1,011		—		2,256			(3,267		)	—
Investment in Subsidiaries	3,110		3,743		—			(6,853		)	—
Total Assets	$	4,568	$	13,124	$	11,191		$	(10,145	)	$	18,738
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	6	$	10		$	—		$	16
Merchandise accounts payable	—		698		971			—			1,669
Accounts payable and accrued liabilities	24		917		1,998			—			2,939
Income taxes	28		2		22			—			52
Total Current Liabilities	52		1,623		3,001			—			4,676
Long-Term Debt	—		6,284		17			—			6,301
Intercompany Payable	—		3,267		—			(3,267		)	—
Deferred Income Taxes	—		746		828			(25		)	1,549
Other Liabilities	72		425		1,276			—			1,773
Shareholders' Equity:
Macy's, Inc.	4,444		779		6,074			(6,853		)	4,444
Noncontrolling Interest	—		—		(5		)	—			(5		)
Total Shareholders' Equity	4,444		779		6,069			(6,853		)	4,439
Total Liabilities and Shareholders' Equity	$	4,568	$	13,124	$	11,191		$	(10,145	)	$	18,738

Condensed Consolidating Balance Sheet

As of February 3, 2018

(millions)



	Parent		Subsidiary Issuer		Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,109	$	58	$	288		$	—		$	1,455
Receivables	—		85		278			—			363
Merchandise inventories	—		2,344		2,834			—			5,178
Prepaid expenses and other current assets	—		165		485			—			650
Total Current Assets	1,109		2,652		3,885			—			7,646
Property and Equipment – net	—		3,349		3,323			—			6,672
Goodwill	—		3,315		582			—			3,897
Other Intangible Assets – net	—		44		444			—			488
Other Assets	1		89		790			—			880
Deferred Income Taxes	11		—		—			(11		)	—
Intercompany Receivable	884		—		2,388			(3,272		)	—
Investment in Subsidiaries	4,032		4,126		—			(8,158		)	—
Total Assets	$	6,037	$	13,575	$	11,412		$	(11,441	)	$	19,583
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt	$	—	$	6	$	16		$	—		$	22
Merchandise accounts payable	—		653		937			—			1,590
Accounts payable and accrued liabilities	159		980		2,132			—			3,271
Income taxes	113		30		153			—			296
Total Current Liabilities	272		1,669		3,238			—			5,179
Long-Term Debt	—		5,844		17			—			5,861
Intercompany Payable	—		3,272		—			(3,272		)	—
Deferred Income Taxes	—		559		600			(11		)	1,148
Other Liabilities	20		430		1,212			—			1,662
Shareholders' Equity:
Macy's, Inc.	5,745		1,801		6,357			(8,158		)	5,745
Noncontrolling Interest	—		—		(12		)	—			(12		)
Total Shareholders' Equity	5,745		1,801		6,345			(8,158		)	5,733
Total Liabilities and Shareholders' Equity	$	6,037	$	13,575	$	11,412		$	(11,441	)	$	19,583

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended August 4, 2018

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	306		$	(122	)	$	525		$	(413	)	$	296
Impairment and other costs	—			(2		)	38			—			36
Settlement charges	6			16			28			—			50
Equity in earnings of subsidiaries	(304		)	(109		)	—			413			—
Dividends received from subsidiaries	492			—			—			(492		)	—
Depreciation and amortization	—			165			305			—			470
Gains on sale of real estate	—			(42		)	(28		)	—			(70		)
Changes in assets, liabilities and other items not separately identified	(154		)	298			(381		)	(1		)	(238		)
Net cash provided by operating activities	346			204			487			(493		)	544
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net of dispositions	—			(49		)	(271		)	—			(320		)
Other, net	—			(15		)	(28		)	51			8
Net cash used by investing activities	—			(64		)	(299		)	51			(312		)
Cash flows from financing activities:
Debt repaid	—			(306		)	(1		)	(50		)	(357		)
Dividends paid	(232		)	—			(492		)	492			(232		)
Issuance of common stock, net of common stock acquired	38			—			—			—			38
Proceeds from noncontrolling interest	—			—			5			—			5
Intercompany activity, net	(441		)	162			279			—			—
Other, net	(76		)	(9		)	(5		)	—			(90		)
Net cash used by financing activities	(711		)	(153		)	(214		)	442			(636		)
Net decrease in cash, cash equivalents and restricted cash	(365		)	(13		)	(26		)	—			(404		)
Cash, cash equivalents and restricted cash at beginning of period	1,109			79			325			—			1,513
Cash, cash equivalents and restricted cash at end of period	$	744		$	66		$	299		$	—		$	1,109

Condensed Consolidating Statement of Cash Flows

For the 26 Weeks Ended July 29, 2017

(millions)



	Parent			Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Cash flows from operating activities:
Net income (loss)	$	189		$	(156	)	$	371		$	(219	)	$	185
Equity in earnings of subsidiaries	(188		)	(31		)	—			219			—
Settlement charges	—			17			34			—			51
Dividends received from subsidiaries	340			—			—			(340		)	—
Depreciation and amortization	—			178			309			—			487
Gains on sale of real estate	—			(92		)	(19		)	—			(111		)
Changes in assets, liabilities and other items not separately identified	(34		)	328			(360		)	—			(66		)
Net cash provided by operating activities	307			244			335			(340		)	546
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net of dispositions	—			85			(307		)	—			(222		)
Other, net	—			—			12			—			12
Net cash provided (used) by investing activities	—			85			(295		)	—			(210		)
Cash flows from financing activities:
Debt repaid	—			(560		)	—			—			(560		)
Dividends paid	(230		)	—			(340		)	340			(230		)
Issuance of common stock, net of common stock acquired	1			—			—			—			1
Proceeds from noncontrolling interest	—			—			6			—			6
Intercompany activity, net	(605		)	265			340			—			—
Other, net	10			(37		)	(37		)	—			(64		)
Net cash used by financing activities	(824		)	(332		)	(31		)	340			(847		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(517		)	(3		)	9			—			(511		)
Cash, cash equivalents and restricted cash at beginning of period	938			81			315			—			1,334
Cash, cash equivalents and restricted cash at end of period	$	421		$	78		$	324		$	—		$	823