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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended July 30, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from          to

 

Commission file number: 1-13536

 

 

Macy's, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

13-3324058

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

151 West 34th Street, New York, New York 10001

(Address of Principal Executive Offices, including Zip Code)

(212) 494-1621

(Registrant's telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $.01 par value per share

 

M

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

  

Accelerated Filer

 

 

 

 

 

Non-Accelerated Filer

 

  

Smaller Reporting Company

 

 

 

 

 

 

 

 

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.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at July 30, 2022

Common Stock, $.01 par value per share

 

270,991,176 shares

 

 

 


 

 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MACY’S, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

(millions, except per share figures)

 

 

 

13 Weeks Ended

 

 

26 Weeks Ended

 

 

 

July 30, 2022

 

 

July 31, 2021

 

 

July 30, 2022

 

 

July 31, 2021

 

Net sales

 

$

5,600

 

 

$

5,647

 

 

$

10,948

 

 

$

10,353

 

Credit card revenues, net

 

 

204

 

 

 

197

 

 

 

395

 

 

 

356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

(3,422

)

 

 

(3,353

)

 

 

(6,652

)

 

 

(6,242

)

Selling, general and administrative expenses

 

 

(1,981

)

 

 

(1,898

)

 

 

(3,861

)

 

 

(3,646

)

Gains on sale of real estate

 

 

 

 

 

6

 

 

 

42

 

 

 

12

 

Impairment, restructuring and other costs

 

 

(2

)

 

 

(2

)

 

 

(10

)

 

 

(21

)

Operating income

 

 

399

 

 

 

597

 

 

 

862

 

 

 

812

 

Benefit plan income, net

 

 

7

 

 

 

17

 

 

 

14

 

 

 

32

 

Settlement charges

 

 

 

 

 

(81

)

 

 

 

 

 

(81

)

Interest expense

 

 

(43

)

 

 

(80

)

 

 

(91

)

 

 

(159

)

Losses on early retirement of debt

 

 

 

 

 

(3

)

 

 

(31

)

 

 

(14

)

Interest income

 

 

1

 

 

 

 

 

 

2

 

 

 

 

Income before income taxes

 

 

364

 

 

 

450

 

 

 

756

 

 

 

590

 

Federal, state and local income tax expense

 

 

(89

)

 

 

(105

)

 

 

(195

)

 

 

(142

)

Net income

 

$

275

 

 

$

345

 

 

$

561

 

 

$

448

 

Basic earnings per share

 

$

1.01

 

 

$

1.11

 

 

$

2.02

 

 

$

1.44

 

Diluted earnings per share

 

$

0.99

 

 

$

1.08

 

 

$

1.97

 

 

$

1.41

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

2


 

MACY’S, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

(millions)

 

 

 

13 Weeks Ended

 

 

26 Weeks Ended

 

 

 

July 30, 2022

 

 

July 31, 2021

 

 

July 30, 2022

 

 

July 31, 2021

 

Net income

 

$

275

 

 

$

345

 

 

$

561

 

 

$

448

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial gain on post employment and postretirement

   benefit plans, before tax

 

 

 

 

 

63

 

 

 

 

 

 

63

 

Reclassifications to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net actuarial loss and prior service credit on

   post employment and postretirement benefit plans included in

   net income, before tax

 

 

5

 

 

 

9

 

 

 

10

 

 

 

19

 

Settlement charges, before tax

 

 

 

 

 

81

 

 

 

 

 

 

81

 

Tax effect related to items of other comprehensive income

 

 

(1

)

 

 

(38

)

 

 

(3

)

 

 

(40

)

Total other comprehensive income, net of tax effect

 

 

4

 

 

 

115

 

 

 

7

 

 

 

123

 

Comprehensive income

 

$

279

 

 

$

460

 

 

$

568

 

 

$

571

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

3


 

MACY’S, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(millions)

 

 

 

July 30, 2022

 

 

January 29, 2022

 

 

July 31, 2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

300

 

 

$

1,712

 

 

$

2,137

 

Receivables

 

 

219

 

 

 

297

 

 

 

221

 

Merchandise inventories

 

 

4,610

 

 

 

4,383

 

 

 

4,298

 

Prepaid expenses and other current assets

 

 

387

 

 

 

366

 

 

 

955

 

Total Current Assets

 

 

5,516

 

 

 

6,758

 

 

 

7,611

 

Property and Equipment - net of accumulated depreciation and

   amortization of $4,820, $4,548 and $4,689

 

 

5,656

 

 

 

5,665

 

 

 

5,713

 

Right of Use Assets

 

 

2,715

 

 

 

2,808

 

 

 

2,819

 

Goodwill

 

 

828

 

 

 

828

 

 

 

828

 

Other Intangible Assets – net

 

 

433

 

 

 

435

 

 

 

436

 

Other Assets

 

 

1,194

 

 

 

1,096

 

 

 

1,010

 

Total Assets

 

$

16,342

 

 

$

17,590

 

 

$

18,417

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Short-term debt

 

$

 

 

$

 

 

$

1,546

 

Merchandise accounts payable

 

 

2,290

 

 

 

2,222

 

 

 

2,476

 

Accounts payable and accrued liabilities

 

 

2,395

 

 

 

3,086

 

 

 

2,660

 

Income taxes

 

 

23

 

 

 

108

 

 

 

18

 

Total Current Liabilities

 

 

4,708

 

 

 

5,416

 

 

 

6,700

 

Long-Term Debt

 

 

2,995

 

 

 

3,295

 

 

 

3,295

 

Long-Term Lease Liabilities

 

 

3,008

 

 

 

3,098

 

 

 

3,096

 

Deferred Income Taxes

 

 

948

 

 

 

983

 

 

 

913

 

Other Liabilities

 

 

1,152

 

 

 

1,177

 

 

 

1,267

 

Shareholders' Equity

 

 

3,531

 

 

 

3,621

 

 

 

3,146

 

Total Liabilities and Shareholders’ Equity

 

$

16,342

 

 

$

17,590

 

 

$

18,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

4


 

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

 

(millions)

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Equity

 

 

Treasury

Stock

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

Shareholders'

Equity

 

Balance at January 29, 2022

$

3

 

 

$

517

 

 

$

5,268

 

 

$

(1,545

)

 

$

(622

)

 

$

3,621

 

Net income

 

 

 

 

 

 

 

 

 

286

 

 

 

 

 

 

 

 

 

 

 

286

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Common stock dividends

   ($0.1575 per share)

 

 

 

 

 

 

 

 

 

(45

)

 

 

 

 

 

 

 

 

 

 

(45

)

Stock repurchases

 

 

 

 

 

 

 

 

 

 

 

 

 

(600

)

 

 

 

 

 

 

(600

)

Stock-based compensation expense

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Stock issued under stock plans

 

 

 

 

 

(54

)

 

 

 

 

 

 

53

 

 

 

 

 

 

 

(1

)

Balance at April 30, 2022

 

3

 

 

 

476

 

 

 

5,509

 

 

 

(2,092

)

 

 

(618

)

 

 

3,278

 

Net income

 

 

 

 

 

 

 

 

 

275

 

 

 

 

 

 

 

 

 

 

 

275

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Common stock dividends

   ($0.1575 per share)

 

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

 

 

 

 

 

(42

)

Stock-based compensation expense

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

 

Stock issued under stock plans

 

 

 

 

 

(43

)

 

 

 

 

 

 

43

 

 

 

 

 

 

 

 

Balance at July 30, 2022

$

3

 

 

$

450

 

 

$

5,742

 

 

$

(2,049

)

 

$

(615

)

 

$

3,531

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

5


 

 

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (Continued)

(Unaudited)

 

(millions)

 

 

Common

Stock

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Equity

 

 

Treasury

Stock

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

Shareholders'

Equity

 

Balance at January 30, 2021

$

3

 

 

$

571

 

 

$

3,928

 

 

$

(1,161

)

 

$

(788

)

 

$

2,553

 

Net income

 

 

 

 

 

 

 

 

 

103

 

 

 

 

 

 

 

 

 

 

 

103

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

8

 

Stock-based compensation expense

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

Stock issued under stock plans

 

 

 

 

 

(24

)

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

Balance at May 1, 2021

 

3

 

 

 

558

 

 

 

4,031

 

 

 

(1,137

)

 

 

(780

)

 

 

2,675

 

Net income

 

 

 

 

 

 

 

 

 

345

 

 

 

 

 

 

 

 

 

 

 

345

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

115

 

Stock-based compensation expense

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

 

Stock issued under stock plans

 

 

 

 

 

(71

)

 

 

 

 

 

 

71

 

 

 

 

 

 

 

 

Balance at July 31, 2021

$

3

 

 

$

498

 

 

$

4,376

 

 

$

(1,066

)

 

$

(665

)

 

$

3,146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

6


 

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

(millions)

 

 

 

26 Weeks Ended

 

 

 

July 30, 2022

 

 

July 31, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

561

 

 

$

448

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Impairment, restructuring and other costs

 

 

10

 

 

 

21

 

Settlement charges

 

 

 

 

 

81

 

Depreciation and amortization

 

 

413

 

 

 

444

 

Stock-based compensation expense

 

 

30

 

 

 

22

 

Gains on sale of real estate

 

 

(42

)

 

 

(12

)

Benefit plans

 

 

10

 

 

 

19

 

Amortization of financing costs and premium on acquired debt

 

 

5

 

 

 

14

 

Deferred income taxes

 

 

(38

)

 

 

(36

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Decrease in receivables

 

 

78

 

 

 

55

 

Increase in merchandise inventories

 

 

(227

)

 

 

(525

)

Increase in prepaid expenses and other current assets

 

 

(28

)

 

 

(41

)

Increase in merchandise accounts payable

 

 

100

 

 

 

647

 

Decrease in accounts payable and accrued liabilities

 

 

(455

)

 

 

(78

)

Increase (decrease) in current income taxes

 

 

(72

)

 

 

12

 

Change in other assets and liabilities

 

 

(42

)

 

 

(106

)

Net cash provided by operating activities

 

 

303

 

 

 

965

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(378

)

 

 

(142

)

Capitalized software

 

 

(204

)

 

 

(88

)

Disposition of property and equipment

 

 

73

 

 

 

34

 

Other, net

 

 

(6

)

 

 

52

 

Net cash used by investing activities

 

 

(515

)

 

 

(144

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Debt issued

 

 

850

 

 

 

500

 

Debt issuance costs

 

 

(21

)

 

 

(9

)

Debt repaid

 

 

(1,140

)

 

 

(518

)

Debt repurchase premium and expenses

 

 

(29

)

 

 

(15

)

Dividends paid

 

 

(87

)

 

 

 

Decrease in outstanding checks

 

 

(172

)

 

 

(318

)

Acquisition of treasury stock

 

 

(601

)

 

 

 

Net cash used by financing activities

 

 

(1,200

)

 

 

(360

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(1,412

)

 

 

461

 

Cash, cash equivalents and restricted cash beginning of period

 

 

1,715

 

 

 

1,754

 

Cash, cash equivalents and restricted cash end of period

 

$

303

 

 

$

2,215

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$

108

 

 

$

152

 

Interest received

 

 

1

 

 

 

 

Income taxes paid, net of refunds received

 

 

305

 

 

 

166

 

 

Note: Restricted cash of $3 million and $78 million have been included with cash and cash equivalents for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

 

The accompanying notes are an integral part of these Consolidated Financial Statements.

 

7


MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

1.

Organization and Summary of Significant Accounting Policies

Nature of Operations

Macy's, Inc., together with its subsidiaries (the "Company"), is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and kids'), cosmetics, home furnishings and other consumer goods. The Company has stores in 43 states, the District of Columbia, Puerto Rico and Guam. As of July 30, 2022, the Company's operations and operating segments were conducted through Macy's, Market by Macy’s, Macy’s Backstage, Bloomingdale's, Bloomingdale's The Outlet, Bloomie’s, and bluemercury.  

Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.

A description of the Company's significant accounting policies is included in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (the "2021 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the 2021 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from reported amounts.

The Consolidated Financial Statements for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly, in all material respects, the consolidated financial position and results of operations of the Company.

Seasonality

Because of the seasonal nature of the retail business, the results of operations for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021 (which do not include the Christmas season) are not necessarily indicative of such results for the full fiscal year.

 

Reclassifications

Certain reclassifications were made to prior years' amounts to conform with the classifications of such amounts in the most recent years.

Comprehensive Income

Total comprehensive income represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net income.  For the Company, the only other components of total comprehensive income for the 13 and 26 weeks ended July 30, 2022 and July 31, 2021 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of income (loss) before income taxes in the Consolidated Statements of Income. Amortization reclassifications out of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income) and are included in benefit plan income, net on the Consolidated Statements of Income.  See Note 5, "Retirement Plans," for further information.

 

8

 


MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

 

2.

Earnings Per Share

The following tables set forth the computation of basic and diluted earnings per share:

 

 

 

13 Weeks Ended

 

 

 

July 30, 2022

 

 

July 31, 2021

 

 

 

Net Income

 

 

 

 

 

 

Shares

 

 

Net Income