Revenue

12 Months Ended

Jan. 29, 2022

Revenue From Contract With Customer [Abstract]

Revenue

2. Revenue

Net sales

Revenue is recognized when customers obtain control of goods and services promised by the Company. The amount of revenue recognized is based on the amount that reflects the consideration that is expected to be received in exchange for those respective goods and services. Macy's accounted for approximately 88%, 89%, and 88% of the Company's net sales for 2021, 2020 and 2019, respectively.  In addition, digital sales accounted for approximately 35%, 44% and 25% of net sales in 2021, 2020 and 2019, respectively. Disaggregation of the Company's net sales by family of business for 2021, 2020 and 2019 were as follows:

	2021		2020		2019
Women’s Accessories, Intimate Apparel, Shoes, Cosmetics and    Fragrances	$	10,119	$	7,206	$	9,454
Women’s Apparel		4,433		2,909		5,411
Men’s and Kids’		5,252		3,486		5,628
Home/Other (a)		4,656		3,745		4,067
Total	$	24,460	$	17,346	$	24,560

(a) Other primarily includes restaurant sales, allowance for merchandise returns adjustments, breakage income from unredeemed gift cards and certain loyalty program income.

The Company's revenue generating activities include the following:

Retail Sales

Retail sales include merchandise sales, inclusive of delivery income, licensed department income, sales of private brand goods directly to third party retailers and sales of excess inventory to third parties. Sales of merchandise are recorded at the time of shipment to the customer and are reported net of estimated merchandise returns and certain customer incentives. Commissions earned on sales generated by licensed departments are included as a component of total net sales and are recognized as revenue at the time merchandise is sold to customers. Service revenues (e.g., alteration and cosmetic services) are recorded at the time the customer receives the benefit of the service. The Company has elected to present sales taxes on a net basis and, as such, sales taxes are included in accounts payable and accrued liabilities until remitted to the taxing authorities.

Merchandise Returns

The Company estimates merchandise returns using historical data and recognizes an allowance that reduces net sales and cost of sales. The liability for merchandise returns is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $198 million as of January 29, 2022 and $159 million as of January 30, 2021. Included in prepaid expenses and other current assets is an asset totaling $120 million as of January 29, 2022 and $103 million as of January 30, 2021, for the recoverable cost of merchandise estimated to be returned by customers.

Gift Cards and Customer Loyalty Programs

The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $481 million as of January 29, 2022, and $616 million as of January 30, 2021. During 2021 and 2020, the Company recognized approximately $26 million and $30 million, respectively, in breakage income related to changes in breakage rate estimates. Changes in the liability for unredeemed gift cards and customer loyalty programs are as follows:

	2021			2020			2019
				(millions)
Balance, beginning of year	$	616		$	839		$	856
Liabilities issued but not redeemed (a)		394			262			554
Revenue recognized from beginning liability		(529	)		(485	)		(571	)
Balance, end of year	$	481		$	616		$	839

(a) Net of estimated breakage income.

Credit Card Revenues, net

In 2005, in connection with the sale of most of the Company's credit card accounts and related receivable balances to Citibank, the Company and Citibank entered into a long-term marketing and servicing alliance pursuant to the terms of a Credit Card Program Agreement ("Credit Card Program"). Subsequent to this initial arrangement and associated amendments, on December 13, 2021, the Company entered into sixth amendment to the amended and restated Credit Card Program with Citibank (the “Program Agreement”). The changes to the Credit Card Program’s financial structure are not materially different from its previous terms. As part of the Program Agreement, the Company receives payments for providing a combination of interrelated services and intellectual property to Citibank in support of the underlying Credit Card Program. Revenue based on the spending activity of the underlying accounts is recognized as the respective card purchases occur and the Company’s profit share is recognized based on the performance of the underlying portfolio. Revenue associated with the establishment of new credit accounts and assisting in the receipt of payments for existing accounts is recognized as such activities occur. Credit card revenues include finance charges, late fees and other revenue generated by the Company’s Credit Card Program, net of fraud losses and expenses associated with establishing new accounts.

The Program Agreement expires March 31, 2030, subject to an additional renewal term of three years. The Program Agreement provides for, among other things, (i) the ownership by Citibank of the accounts purchased by Citibank, (ii) the ownership by Citibank of new accounts opened by the Company’s customers, (iii) the provision of credit by Citibank to the holders of the credit cards associated with the foregoing accounts, (iv) the servicing of the foregoing accounts, and (v) the allocation between Citibank and the Company of the economic benefits and burdens associated with the foregoing and other aspects of the alliance. Pursuant to the Program Agreement, the Company continues to provide certain servicing functions related to the accounts and related receivables owned by Citibank and receives compensation from Citibank for these services. The amounts earned under the Program Agreement related to the servicing functions are deemed adequate compensation and, accordingly, no servicing asset or liability has been recorded on the Consolidated Balance Sheets.

The Company’s credit card revenues, net were $832 million, $751 million, and $771 million for 2021, 2020 and 2019, respectively. Amounts received under the Program Agreement were $950 million, $882 million, and $985 million for 2021, 2020 and 2019, respectively.