(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.02. | Results of Operations and Financial Condition. | ||||||
On February 25, 2020, Macy’s, Inc. ("Macy’s") issued a press release announcing Macy’s financial condition, results of operations and cash flows as of and for the 13 and 52 weeks ended February 1, 2020. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Macy’s reports its financial results in accordance with U.S. generally accepted accounting principles (“GAAP”). The press release referred to above contains non-GAAP financial measures of changes in comparable sales on an owned plus licensed basis, changes in comparable sales on an owned plus licensed basis adjusted for the 53rd week calendar shift, earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted net income and adjusted diluted earnings per share attributable to Macy’s, Inc. shareholders. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share exclude impairment, restructuring, store closing and other costs, settlement charges and losses on the early retirement of debt. A section has been included at the end of the press release that contains important additional information regarding these non-GAAP financial measures including reconciliation to the most directly comparable GAAP financial measure. | |||||||
Item 9.01. | Financial Statements and Exhibits. | ||||||
(d) | Exhibits | ||||||
99.1 | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL Document) |
MACY'S, INC. | |
SIGNATURE | |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | |
MACY'S, INC. | |
Dated: February 25, 2020 | By: /s/ Felicia Williams |
Name: Felicia Williams | |
Title: Senior Vice President, Controller and Enterprise Risk |
• | Annual comparable sales of (0.8)% on an owned basis; (0.7)% on an owned plus licensed basis |
• | Annual Diluted EPS of $1.81 and Annual Adjusted Diluted EPS of $2.91 |
• | Strong execution of Holiday 2019 with significant trend improvement in sales from the third quarter |
• | Enters 2020 with solid plan for transition year; reiterates previously provided 2020 guidance |
Fourth Quarter | Full Year | |||||||||||
(All amounts in millions except percentages and per share figures) | 2019 | 2018 | 2019 | 2018 | ||||||||
Net sales | $ | 8,337 | $ | 8,455 | $ | 24,560 | $ | 24,971 | ||||
Comparable sales | ||||||||||||
Owned | (0.6 | )% | 0.4 | % | (0.8 | )% | 1.7 | % | ||||
Owned plus licensed | (0.5 | )% | 0.7 | % | (0.7 | )% | 2.0 | % | ||||
53rd week shifted calendar (owned plus licensed)* | 2.0 | % | 2.4 | % | ||||||||
Net income attributable to Macy’s, Inc. shareholders | $ | 340 | $ | 740 | $ | 564 | $ | 1,108 | ||||
Earnings before interest, taxes, depreciation and amortization | $ | 777 | $ | 1,287 | $ | 1,924 | $ | 2,661 | ||||
Diluted earnings per share | $ | 1.09 | $ | 2.37 | $ | 1.81 | $ | 3.56 | ||||
Adjusted Net income attributable to Macy’s, Inc. shareholders | $ | 661 | $ | 850 | $ | 906 | $ | 1,301 | ||||
Adjusted Earnings before interest, taxes, depreciation and amortization | $ | 1,160 | $ | 1,399 | $ | 2,336 | $ | 2,877 | ||||
Adjusted Diluted earnings per share | $ | 2.12 | $ | 2.73 | $ | 2.91 | $ | 4.18 |
• | Strengthen Customer Relationships: Build customer lifetime value, expand Star Rewards loyalty program with the launch of Loyalty 3.0 in early February and accelerate personalization and monetization. |
• | Curate Quality Fashion: Drive disciplined merchandise category roles, be the best destination for the best brands and balance sales and margin. |
• | Accelerate Digital Growth: Enhance the digital experience across the Macy’s website and app, grow omni-channel customer base and improve profitability. |
• | Optimize the Store Portfolio: Continue the Growth treatment for stores in the best malls, expand off-mall profitably, and test and prove a retail ecosystem model with a mix of Macy’s store formats within a geographic market. |
• | Reset Cost Base: Right-size the organization and expense base, improve working capital and balance top-line and bottom-line growth. |
Fiscal 2020 | |
Net Sales | $23.6B to $23.9B |
Comparable Sales | |
Owned | Approximately 40 basis points better than owned plus licensed |
Owned plus licensed | (2.5)% to (1.5)% |
Adjusted diluted earnings per share | $2.45 to $2.65 |
Asset sale gains | Approximately $100M |
Adjusted diluted earnings per share, excluding asset sale gains | $2.20 to $2.40 |
Annual tax rate | 23.25% |
13 Weeks Ended | 13 Weeks Ended | |||||||||||||
February 1, 2020 | February 2, 2019 | |||||||||||||
$ | % to Net sales | $ | % to Net sales | |||||||||||
Net sales | $ | 8,337 | $ | 8,455 | ||||||||||
Credit card revenues, net | 239 | 2.9 | % | 240 | 2.8 | % | ||||||||
Cost of sales | (5,266 | ) | (63.2 | %) | (5,288 | ) | (62.5 | %) | ||||||
Selling, general and administrative expenses | (2,509 | ) | (30.1 | %) | (2,538 | ) | (30.0 | %) | ||||||
Gains on sale of real estate | 95 | 1.1 | % | 278 | 3.2 | % | ||||||||
Restructuring, impairment, store closings and other costs | (337 | ) | (4.0 | %) | (97 | ) | (1.1 | %) | ||||||
Operating income | 559 | 6.7 | % | 1,050 | 12.4 | % | ||||||||
Benefit plan income, net | 8 | 8 | ||||||||||||
Settlement charges | (46 | ) | (15 | ) | ||||||||||
Interest expense, net | (42 | ) | (49 | ) | ||||||||||
Losses on early retirement of debt | (30 | ) | (28 | ) | ||||||||||
Income before income taxes | 449 | 966 | ||||||||||||
Federal, state and local income tax expense | (109 | ) | (226 | ) | ||||||||||
Net income | 340 | 740 | ||||||||||||
Net loss attributable to noncontrolling interest | — | — | ||||||||||||
Net income attributable to Macy's, Inc. shareholders | $ | 340 | $ | 740 | ||||||||||
Basic earnings per share attributable to Macy's, Inc. shareholders | $ | 1.10 | $ | 2.40 | ||||||||||
Diluted earnings per share attributable to Macy's, Inc. shareholders | $ | 1.09 | $ | 2.37 | ||||||||||
Average common shares: | ||||||||||||||
Basic | 309.9 | 308.4 | ||||||||||||
Diluted | 311.5 | 311.9 | ||||||||||||
End of period common shares outstanding | 309.0 | 307.5 | ||||||||||||
Supplemental Financial Measures: | ||||||||||||||
Gross Margin (Note 2) | $ | 3,071 | 36.8 | % | $ | 3,167 | 37.5 | % | ||||||
Depreciation and amortization expense | $ | 256 | $ | 244 |
52 Weeks Ended | 52 Weeks Ended | |||||||||||||
February 1, 2020 | February 2, 2019 | |||||||||||||
$ | % to Net sales | $ | % to Net sales | |||||||||||
Net sales | $ | 24,560 | $ | 24,971 | ||||||||||
Credit card revenues, net | 771 | 3.1 | % | 768 | 3.1 | % | ||||||||
Cost of sales | (15,171 | ) | (61.8 | %) | (15,215 | ) | (60.9 | %) | ||||||
Selling, general and administrative expenses | (8,998 | ) | (36.6 | %) | (9,039 | ) | (36.2 | %) | ||||||
Gains on sale of real estate | 162 | 0.6 | % | 389 | 1.5 | % | ||||||||
Restructuring, impairment, store closings and other costs | (354 | ) | (1.4 | %) | (136 | ) | (0.5 | %) | ||||||
Operating income | 970 | 3.9 | % | 1,738 | 7.0 | % | ||||||||
Benefit plan income, net | 31 | 39 | ||||||||||||
Settlement charges | (58 | ) | (88 | ) | ||||||||||
Interest expense, net | (185 | ) | (236 | ) | ||||||||||
Losses on early retirement of debt | (30 | ) | (33 | ) | ||||||||||
Income before income taxes | 728 | 1,420 | ||||||||||||
Federal, state and local income tax expense | (164 | ) | (322 | ) | ||||||||||
Net income | 564 | 1,098 | ||||||||||||
Net loss attributable to noncontrolling interest | — | 10 | ||||||||||||
Net income attributable to Macy's, Inc. shareholders | $ | 564 | $ | 1,108 | ||||||||||
Basic earnings per share attributable to Macy's, Inc. shareholders | $ | 1.82 | $ | 3.60 | ||||||||||
Diluted earnings per share attributable to Macy's, Inc. shareholders | $ | 1.81 | $ | 3.56 | ||||||||||
Average common shares: | ||||||||||||||
Basic | 309.7 | 307.7 | ||||||||||||
Diluted | 311.4 | 311.4 | ||||||||||||
End of period common shares outstanding | 309.0 | 307.5 | ||||||||||||
Supplemental Financial Measures: | ||||||||||||||
Gross Margin (Note 2) | $ | 9,389 | 38.2 | % | $ | 9,756 | 39.1 | % | ||||||
Depreciation and amortization expense | $ | 981 | $ | 962 |
February 1, 2020 | February 2, 2019 | |||||||
ASSETS: | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 685 | $ | 1,162 | ||||
Receivables | 409 | 400 | ||||||
Merchandise inventories | 5,188 | 5,263 | ||||||
Prepaid expenses and other current assets | 528 | 620 | ||||||
Total Current Assets | 6,810 | 7,445 | ||||||
Property and Equipment – net | 6,633 | 6,637 | ||||||
Right of Use Assets | 2,668 | — | ||||||
Goodwill | 3,908 | 3,908 | ||||||
Other Intangible Assets – net | 439 | 478 | ||||||
Other Assets | 714 | 726 | ||||||
Total Assets | $ | 21,172 | $ | 19,194 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY: | ||||||||
Current Liabilities: | ||||||||
Short-term debt | $ | 539 | $ | 43 | ||||
Merchandise accounts payable | 1,682 | 1,655 | ||||||
Accounts payable and accrued liabilities | 3,448 | 3,366 | ||||||
Income taxes | 81 | 168 | ||||||
Total Current Liabilities | 5,750 | 5,232 | ||||||
Long-Term Debt | 3,621 | 4,708 | ||||||
Long-Term Lease Liabilities | 2,918 | — | ||||||
Deferred Income Taxes | 1,169 | 1,238 | ||||||
Other Liabilities | 1,337 | 1,580 | ||||||
Shareholders' Equity: | ||||||||
Macy's, Inc. | 6,377 | 6,436 | ||||||
Noncontrolling interest | — | — | ||||||
Total Shareholders' Equity | 6,377 | 6,436 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 21,172 | $ | 19,194 |
52 Weeks Ended | 52 Weeks Ended | |||||||
February 1, 2020 | February 2, 2019 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 564 | $ | 1,098 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Restructuring, impairment, store closings and other costs | 354 | 136 | ||||||
Settlement charges | 58 | 88 | ||||||
Depreciation and amortization | 981 | 962 | ||||||
Benefit plans | 31 | 30 | ||||||
Stock-based compensation expense | 38 | 63 | ||||||
Gains on sale of real estate | (162 | ) | (389 | ) | ||||
Deferred income taxes | (6 | ) | 112 | |||||
Amortization of financing costs and premium on acquired debt | 4 | (15 | ) | |||||
Changes in assets and liabilities: | ||||||||
Increase in receivables | (9 | ) | (61 | ) | ||||
(Increase) decrease in merchandise inventories | 75 | (87 | ) | |||||
Decrease in prepaid expenses and other current assets | 89 | 21 | ||||||
Increase in merchandise accounts payable | 40 | 55 | ||||||
Increase (decrease) in accounts payable and accrued liabilities | (257 | ) | 14 | |||||
Decrease in current income taxes | (60 | ) | (136 | ) | ||||
Change in other assets and liabilities | (132 | ) | (156 | ) | ||||
Net cash provided by operating activities | 1,608 | 1,735 | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (902 | ) | (657 | ) | ||||
Capitalized software | (255 | ) | (275 | ) | ||||
Disposition of property and equipment | 185 | 474 | ||||||
Other, net | (30 | ) | 2 | |||||
Net cash used by investing activities | (1,002 | ) | (456 | ) | ||||
Cash flows from financing activities: | ||||||||
Debt issuance costs | (3 | ) | — | |||||
Debt repaid | (597 | ) | (1,149 | ) | ||||
Dividends paid | (466 | ) | (463 | ) | ||||
Increase (decrease) in outstanding checks | (62 | ) | 16 | |||||
Acquisition of treasury stock | (1 | ) | — | |||||
Issuance of common stock | 6 | 45 | ||||||
Proceeds from noncontrolling interest | — | 7 | ||||||
Net cash used by financing activities | (1,123 | ) | (1,544 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (517 | ) | (265 | ) | ||||
Cash, cash equivalents and restricted cash beginning of period | 1,248 | 1,513 | ||||||
Cash, cash equivalents and restricted cash end of period | $ | 731 | $ | 1,248 |
(1) | The results for the 13 and 52 weeks ended February 1, 2020 reflect the adoption of Accounting Standards Update 2016-02 (ASU 2016-02), Leases, on February 3, 2019, utilizing the modified retrospective approach which allowed for transition in the period of adoption. |
(2) | Gross margin is defined as net sales less cost of sales. |
(3) | Restricted cash of $46 million and $86 million have been included with cash and cash equivalents for the 52 weeks ended February 1, 2020 and February 2, 2019, respectively. Further, reclassifications were made to certain prior period amounts to conform with the classifications of such amounts in the most recent period. |
13 Weeks Ended February 1, 2020 | 52 Weeks Ended February 1, 2020 | |||||
Decrease in comparable sales on an owned basis (Note 4) | (0.6 | )% | (0.8 | )% | ||
Comparable sales growth impact of departments licensed to third parties (Note 5) | 0.1 | % | 0.1 | % | ||
Decrease in comparable sales on an owned plus licensed basis | (0.5 | )% | (0.7 | )% |
13 Weeks Ended February 2, 2019 | 52 Weeks Ended February 2, 2019 | |||||
Increase in comparable sales on an owned basis (Note 4) | 0.4 | % | 1.7 | % | ||
Comparable sales growth impact of departments licensed to third parties (Note 5) | 0.3 | % | 0.3 | % | ||
Increase in comparable sales on an owned plus licensed basis | 0.7 | % | 2.0 | % | ||
Impact of 53rd Week Shifted Calendar | 1.3 | % | 0.4 | % | ||
53rd Week Shifted Calendar comparable sales on an owned plus licensed basis (Note 6) | 2.0 | % | 2.4 | % |
(4) | Represents the period-to-period percentage change in net sales from stores in operation throughout the year presented and the immediately preceding year and all online sales, excluding commissions from departments licensed to third parties. 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. |
(5) | 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 in the calculation of comparable sales. The company licenses third parties to operate certain departments in its stores and online and receives commissions from these third parties based on a percentage of their net sales. In its financial statements prepared in conformity with GAAP, the company includes these commissions (rather than sales of the departments licensed to third parties) in its net sales. The company does not, however, include any amounts in respect of licensed department 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 are not material to its net sales for the periods presented. |
(6) | Represents comparable sales on an owned plus licensed basis that incorporates a shift of the company's fiscal 2017 calendar to align with fiscal 2018 on a like-for-like basis as a result of the 53rd week in fiscal 2017. |
• | EBITDA and adjusted EBITDA are reconciled to GAAP net income attributable to Macy’s, Inc. shareholders. |
• | Adjusted net income attributable to Macy’s, Inc. shareholders is reconciled to GAAP net income attributable to Macy’s, Inc. shareholders. |
• | Adjusted diluted earnings per share attributable to Macy’s, Inc. shareholders is reconciled to GAAP diluted earnings per share attributable to Macy’s, Inc shareholders. |
13 Weeks Ended | 13 Weeks Ended | |||||||
February 1, 2020 | February 2, 2019 | |||||||
Net income attributable to Macy's, Inc. shareholders | $ | 340 | $ | 740 | ||||
Interest expense, net | 42 | 49 | ||||||
Losses on early retirement of debt | 30 | 28 | ||||||
Federal, state and local income tax expense | 109 | 226 | ||||||
Depreciation and amortization | 256 | 244 | ||||||
EBITDA | 777 | 1,287 | ||||||
Restructuring, impairment, store closings and other costs | 337 | 97 | ||||||
Settlement charges | 46 | 15 | ||||||
Adjusted EBITDA | $ | 1,160 | $ | 1,399 |
52 Weeks Ended | 52 Weeks Ended | |||||||
February 1, 2020 | February 2, 2019 | |||||||
Net income attributable to Macy's, Inc. shareholders | $ | 564 | $ | 1,108 | ||||
Interest expense, net | 185 | 236 | ||||||
Losses on early retirement of debt | 30 | 33 | ||||||
Federal, state and local income tax expense | 164 | 322 | ||||||
Depreciation and amortization | 981 | 962 | ||||||
EBITDA | 1,924 | 2,661 | ||||||
Restructuring, impairment, store closings and other costs (Note 7) | 354 | 128 | ||||||
Settlement charges | 58 | 88 | ||||||
Adjusted EBITDA | $ | 2,336 | $ | 2,877 |
13 Weeks Ended | 13 Weeks Ended | |||||||||||||||
February 1, 2020 | February 2, 2019 | |||||||||||||||
Net Income Attributable to Macy's, Inc. Shareholders | Diluted Earnings Per Share | Net Income Attributable to Macy's, Inc. Shareholders | Diluted Earnings Per Share | |||||||||||||
As reported | $ | 340 | $ | 1.09 | $ | 740 | $ | 2.37 | ||||||||
Restructuring, impairment, store closings and other costs | 337 | 1.08 | 97 | 0.31 | ||||||||||||
Settlement charges | 46 | 0.15 | 15 | 0.05 | ||||||||||||
Losses on early retirement of debt | 30 | 0.10 | 28 | 0.09 | ||||||||||||
Income tax impact of certain items identified above | (92 | ) | (0.30 | ) | (30 | ) | (0.09 | ) | ||||||||
As adjusted | $ | 661 | $ | 2.12 | $ | 850 | $ | 2.73 |
52 Weeks Ended | 52 Weeks Ended | |||||||||||||||
February 1, 2020 | February 2, 2019 | |||||||||||||||
Net Income Attributable to Macy's, Inc. Shareholders | Diluted Earnings Per Share | Net Income Attributable to Macy's, Inc. Shareholders | Diluted Earnings Per Share | |||||||||||||
As reported | $ | 564 | $ | 1.81 | $ | 1,108 | $ | 3.56 | ||||||||
Restructuring, impairment, store closings and other costs (Note 8) | 354 | 1.13 | 128 | 0.41 | ||||||||||||
Settlement charges | 58 | 0.19 | 88 | 0.28 | ||||||||||||
Losses on early retirement of debt | 30 | 0.10 | 33 | 0.11 | ||||||||||||
Income tax impact of certain items identified above | (100 | ) | (0.32 | ) | (56 | ) | (0.18 | ) | ||||||||
As adjusted | $ | 906 | $ | 2.91 | $ | 1,301 | $ | 4.18 |
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