Exhibit 99.1
macy's inc.
Contacts:
Media
- Jim Sluzewski
513/579-7764
Investor
– Matt Stautberg
513/579-7780
FOR IMMEDIATE RELEASE
MACY'S, INC. REPORTS SECOND QUARTER EARNINGS, ADJUSTS
2015 GUIDANCE AND OUTLINES NEW SALES GROWTH INITIATIVES
CINCINNATI, Ohio, August 12, 2015 – Macy's, Inc. today
reported sales and earnings for its second quarter of 2015, ended Aug. 1, 2015,
and adjusted guidance for 2015. In addition, the company provided updates on
key initiatives to grow profitable sales on a short-term and long-term basis.
(Editor's Note: Macy's, Inc. this morning also issued
separate news releases announcing a joint venture in China and a real estate
agreement in Brooklyn.)
The company's
earnings were 64 cents per diluted share for the second quarter of 2015. This
compares with earnings of 80 cents per diluted share in the second quarter of
2014. Macy's, Inc.'s diluted earnings per share in the first half of 2015 were
$1.19, compared with earnings per diluted share of $1.40 in the same period
last year. (Additional information on second quarter results is included
below.)
“We are
disappointed in our second quarter results, which were impacted by a variety of
factors, both internal to the company and in the macroeconomic environment. We
expect an improvement in trend beginning in the second half of 2015 based on a
range of promising new strategic initiatives, including those initially
announced in January, which we believe will transform our company in the years
ahead,” said Terry J. Lundgren, Macy's chairman and chief executive officer.
“In the second quarter, we removed a major Friends &
Family promotional event from Macy's calendar. In addition, as a result of the previous
port slowdown, planned markdowns in many departments were delayed into the
second quarter to clear merchandise that arrived late. Moreover, throughout the
first half of the year, overall consumer demand has been restrained in many of the
categories of merchandise we sell, and the strong U.S. dollar has led to
significantly lower international tourist spending,” Lundgren said.
“Our work to enhance the performance of our business through organic
growth and new businesses is multi-dimensional and rooted in the
extraordinarily talented management team at Macy's, Inc. We remain committed to
enhancing value for our shareholders as we strengthen our position as a
world-class omnichannel retailer with a capability to serve consumers in new
ways,” he added.
Sales Growth Initiatives
The
company continues to aggressively position itself for sales growth in the short
and long term. Examples include:
•
Accelerating progress in the
company's fast-growing online business through integrated omnichannel buying and planning of merchandise, as well as
more strategic placement of inventories in stores and online fulfillment
centers. Expanded markets for Same Day Delivery, as previously announced, and nationwide
Buy Online Pick Up In Store provide Macy's and Bloomingdale's customers more
options than ever.
• Piloting the first six
Macy's Backstage off-price stores in metro New York City, as previously
announced, beginning in September. All are expected to be in full operation for
the holiday season. Additional Backstage store locations are expected to be rolled
out beginning in 2016, based on learnings and customer response to the pilots.
• Beginning e-commerce
selling in China in late fall 2015 through a joint venture with Fung Retailing
Limited (for details, see a separate news release issued today).
• Opening another 10 Bluemercury free-standing
specialty beauty and spa locations before the end of 2015, bringing its store
count to 76. In addition, Bluemercury is using Macy's, Inc.'s omnichannel and
digital expertise to improve its e-commerce offering and drive online sales, and
four Bluemercury stores within Macy's locations will be opened this fall.
Real Estate
Following a competitive bidding process conducted over the past year,
the company today announced an agreement to sell property in downtown Brooklyn
to Tishman Speyer (see separate news release) to take advantage of the inherent
real estate value in this prime location while making the Macy's store more
productive and easier for customers to navigate. This transaction will enable Macy's
to re-create its Fulton Street store while further enlivening one of New York
City’s most dynamic neighborhoods.
Macy's, Inc.
continually evaluates the highest and best use of its properties and its
overall real estate portfolio. In light of current market conditions, the
company has retained specialized real estate advisors, in addition to financial,
legal and tax advisors, to intensely study its real estate portfolio to
determine where opportunities exist that would further enhance the value of the
company. Macy's is actively working with its advisors and will communicate the
results of its analysis and review as soon as complete.
Sales
Sales in the second quarter of 2015 totaled $6.104 billion, a decrease
of 2.6 percent, compared with sales of $6.267 billion in the same period last
year. Comparable sales on an owned plus licensed basis were down by 1.5 percent
in the second quarter. On an owned basis, second quarter comparable sales
declined by 2.1 percent.
For the year to date, Macy's, Inc. sales totaled $12.336 billion, down 1.7
percent from total sales of $12.546 billion in the first half of 2014.
Comparable sales on an owned plus licensed basis were down by 0.8 percent
year-to-date in 2015. On an owned basis, year-to-date comparable sales declined
by 1.4 percent.
In the second quarter, the company closed Macy's stores in Pittsburgh,
PA, and West Orange, NJ, and opened three new Bluemercury locations. In the
fall season, scheduled store openings include a Macy's in Ponce, PR, a full-line
Bloomingdale's in Honolulu, six Macy's Backstage, one Bloomingdale's Outlet,
and 10 additional Bluemercury freestanding specialty stores. A Macy's store in
Los Angeles, CA, is scheduled to close in the fourth quarter of 2015 in
preparation for a new store to be built in the same mall.
Operating Income
Macy's, Inc.'s operating income totaled $436 million or 7.1
percent of sales for the quarter ended Aug. 1, 2015, compared with operating
income of $571 million or 9.1 percent of sales for the same period last year.
For the first half of 2015, Macy's, Inc.'s operating income
totaled $845 million or 6.8 percent of sales, compared with operating income of
$1.014 billion or 8.1 percent of sales for the same period last year.
Cash Flow
Net cash provided by operating activities was $398 million
in the first half of 2015, compared with $736 million in the first six months
of last year. Net cash used by investing activities in the first half of 2015
was
$615
million, compared with $378 million a year ago. Net cash used by financing
activities in the first six months of 2015 was $1.186 billion, compared with $1.001
billion in the first half of 2014.
The company repurchased approximately 8.0 million shares of its common
stock for a total of approximately $552 million in the second quarter of 2015. In
the fiscal year to date, the company repurchased approximately 13.9 million
shares of its common stock for approximately $937 million. At Aug. 1, 2015, the
company had remaining authorization to repurchase up to approximately $1.6
billion of its common stock.
Looking Ahead
Primarily based on weaker-than-expected sales performance
in the first half, the company is reducing its full-year 2015 guidance for
comparable sales on an owned plus licensed basis to be approximately flat,
compared with previous guidance for growth of approximately 2 percent.
Comparable sales on an owned basis will be approximately 50 basis points lower
than on an owned plus licensed basis. The company expects total sales to be down by approximately 1
percent in 2015, compared to previous guidance for total sales growth of
approximately 1 percent.
The company is maintaining its guidance for 2015 earnings
per diluted share to be in the range of $4.70 to $4.80 as a result of the
expected $250 million gain on the sale of real estate in downtown Brooklyn,
which was not factored into previous calculations.
Important Information Regarding Financial Measures
Please see the final pages of this news release for
important information regarding the calculation of the company's comparable
sales and non-GAAP financial measures.
Macy's, Inc.,
with corporate offices in Cincinnati and New York, is one of the nation’s
premier retailers, with fiscal 2014 sales of $28.105 billion. The company
operates about 885 stores in 45 states, the District of Columbia, Guam and
Puerto Rico under the names of Macy's, Bloomingdale's, Bloomingdale's Outlet
and Bluemercury, as well as the macys.com, bloomingdales.com and
bluemercury.com websites. Bloomingdale's in Dubai is operated by Al Tayer Group
LLC under a license agreement.
All statements in this press
release that are not statements of historical fact are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are based upon the current beliefs and expectations of
Macy's management and are subject to significant risks and uncertainties.
Actual results could differ materially from those expressed in or implied by
the forward-looking statements contained in this release because of a variety
of factors, including conditions to, or changes in the timing of, proposed
transactions, prevailing interest rates and non-recurring charges, competitive
pressures from specialty stores, general merchandise stores, off-price and
discount stores, manufacturers' outlets, the Internet, mail-order catalogs and
television shopping and general consumer spending levels, including the impact
of the availability and level of consumer debt, the effect of weather and other
factors identified in documents filed by the company with the Securities and
Exchange Commission.
# # #
(NOTE: Additional
information on Macy's, Inc., including past news releases, is available at www.macysinc.com/pressroom. A webcast of Macy's, Inc.'s call with
analysts and investors will be held today (Aug. 12) at 9 a.m. (ET). (Note this is a new time for Macy's quarterly earnings
conference calls, as was previously announced.) Macy's, Inc.’s webcast is
accessible to the media and general public via the company's Web site at
www.macysinc.com. Analysts and investors may call in on 1-800-334-8065, passcode 8552521. A replay of the conference call can be accessed on the Web
site or by calling 1-888-203-1112 (same passcode) about two hours after the
conclusion of the call.
Macy's, Inc. is scheduled to present at the Goldman Sachs Global Retailing Conference at 8:05 a.m. ET on Wednesday, Sept. 9, in New York City. Media and investors
may access a live audio webcast of the presentation at www.macysinc.com/ir beginning at 8:05 a.m. on Sept. 9. A replay of the webcast will be available on the
company’s website.)
MACY'S, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
(All amounts in millions except percentages and per
share figures)
|
|
13 Weeks Ended
|
13 Weeks
Ended
|
|
|
August 1,
2015
|
August 2,
2014
|
|
|
$
|
% to
Net sales
|
$
|
% to
Net sales
|
|
|
|
|
|
|
|
Net sales...................................................................
|
$ 6,104
|
|
$ 6,267
|
|
|
|
|
|
|
|
|
Cost of sales (Note 2)..................................................
|
3,610
|
59.1%
|
3,672
|
58.6%
|
|
|
|
|
|
|
|
Gross margin.............................................................
|
2,494
|
40.9%
|
2,595
|
41.4%
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses................
|
(2,058)
|
(33.8%)
|
(2,024)
|
(32.3%)
|
|
|
|
|
|
|
|
Operating income......................................................
|
436
|
7.1%
|
571
|
9.1%
|
|
|
|
|
|
|
|
Interest expense – net...............................................
|
(93)
|
|
(100)
|
|
|
|
|
|
|
|
|
Income before income taxes......................................
|
343
|
|
471
|
|
|
|
|
|
|
|
|
Federal, state and local income
tax expense (Note 3)...
|
(126)
|
|
(179)
|
|
|
|
|
|
|
|
|
Net income...............................................................
|
$ 217
|
|
$ 292
|
|
|
|
|
|
|
|
|
Basic earnings per share............................................
|
$ .65
|
|
$ .81
|
|
|
|
|
|
|
|
|
Diluted earnings per share..........................................
|
$ .64
|
|
$ .80
|
|
|
|
|
|
|
|
|
Average
common shares:
|
|
|
|
|
|
Basic..................................................................
|
335.7
|
|
359.2
|
|
|
Diluted................................................................
|
341.0
|
|
365.4
|
|
|
|
|
|
|
|
|
End of period common shares
outstanding..................
|
331.0
|
|
353.5
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense.......................
|
$ 261
|
|
$ 254
|
|
MACY'S, INC.
Consolidated Statements of Income (Unaudited)
Notes:
(1) Because of the seasonal nature of
the retail business, the results of operations for the 13 weeks ended August 1,
2015 and August 2, 2014 (which do not include the Christmas season) are not
necessarily indicative of such results for the fiscal year.
(2) Merchandise inventories are valued
at the lower of cost or market using the last-in, first-out (LIFO) retail
inventory method. Application of the LIFO retail inventory method did not result
in the recognition of any LIFO charges or credits affecting cost of sales for
the 13 weeks ended August 1, 2015 or August 2, 2014.
(3) Federal, state and local income
taxes differ from the federal income tax statutory rate of 35% principally
because of the effect of state and local taxes, including the settlement of
various tax issues and tax examinations.
MACY'S, INC.
Consolidated Statements of Income (Unaudited) (Note 1)
(All amounts in millions except percentages and per
share figures)
|
|
26 Weeks Ended
|
26 Weeks
Ended
|
|
|
August 1,
2015
|
August 2,
2014
|
|
|
$
|
% to
Net sales
|
$
|
% to
Net sales
|
|
|
|
|
|
|
|
Net sales...................................................................
|
$ 12,336
|
|
$ 12,546
|
|
|
|
|
|
|
|
|
Cost of sales (Note 2).................................................
|
7,410
|
60.1%
|
7,508
|
59.8%
|
|
|
|
|
|
|
|
Gross margin.............................................................
|
4,926
|
39.9%
|
5,038
|
40.2%
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses................
|
(4,081)
|
(33.1%)
|
(4,024)
|
(32.1%)
|
|
|
|
|
|
|
|
Operating income......................................................
|
845
|
6.8%
|
1,014
|
8.1%
|
|
|
|
|
|
|
|
Interest expense – net...............................................
|
(188)
|
|
(200)
|
|
|
|
|
|
|
|
|
Income before income taxes.......................................
|
657
|
|
814
|
|
|
|
|
|
|
|
|
Federal, state and local income
tax expense (Note 3)...
|
(247)
|
|
(298)
|
|
|
|
|
|
|
|
|
Net income...............................................................
|
$ 410
|
|
$ 516
|
|
|
|
|
|
|
|
|
Basic earnings per share...........................................
|
$ 1.21
|
|
$ 1.42
|
|
|
|
|
|
|
|
|
Diluted earnings per share.........................................
|
$ 1.19
|
|
$ 1.40
|
|
|
|
|
|
|
|
|
Average
common shares:
|
|
|
|
|
|
Basic.................................................................
|
338.2
|
|
362.5
|
|
|
Diluted..............................................................
|
343.7
|
|
369.0
|
|
|
|
|
|
|
|
|
End of period common shares
outstanding..................
|
331.0
|
|
353.5
|
|
|
|
|
|
|
|
|
Depreciation and
amortization expense.......................
|
$ 520
|
|
$ 507
|
|
MACY'S, INC.
Consolidated Statements of Income (Unaudited)
Notes:
(1) Because of the seasonal nature of
the retail business, the results of operations for the 26 weeks ended August 1,
2015 and August 2, 2014 (which do not include the Christmas season) are not
necessarily indicative of such results for the fiscal year.
(2) Merchandise inventories are valued
at the lower of cost or market using the last-in, first-out (LIFO) retail
inventory method. Application of the LIFO retail inventory method did not result
in the recognition of any LIFO charges or credits affecting cost of sales for
the 26 weeks ended August 1, 2015 or August 2, 2014.
(3) Federal, state and local income
taxes differ from the federal income tax statutory rate of 35% principally
because of the effect of state and local taxes, including the settlement of
various tax issues and tax examinations.
MACY'S, INC.
Consolidated Balance Sheets (Unaudited)
(millions)
|
|
August 1,
|
January 31,
|
August 2,
|
|
|
2015
|
2015
|
2014
|
|
ASSETS:
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash
and cash equivalents..................................
|
$ 843
|
$ 2,246
|
$ 1,630
|
|
Receivables.......................................................
|
334
|
424
|
352
|
|
Merchandise
inventories.....................................
|
5,622
|
5,516
|
5,416
|
|
Prepaid
expenses and other current assets...........
|
437
|
493
|
399
|
|
Total
Current Assets.......................................
|
7,236
|
8,679
|
7,797
|
|
|
|
|
|
|
Property
and Equipment – net...............................
|
7,704
|
7,800
|
7,771
|
|
Goodwill..............................................................
|
3,897
|
3,743
|
3,743
|
|
Other
Intangible Assets – net...............................
|
523
|
496
|
512
|
|
Other
Assets.......................................................
|
756
|
743
|
783
|
|
|
|
|
|
|
Total
Assets..................................................
|
$20,116
|
$21,461
|
$20,606
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY:
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Short-term
debt................................................
|
$ 83
|
$ 76
|
$ 483
|
|
Merchandise
accounts payable..........................
|
2,067
|
1,693
|
1,990
|
|
Accounts
payable and accrued liabilities.............
|
2,278
|
3,109
|
2,150
|
|
Income taxes....................................................
|
64
|
296
|
120
|
|
Deferred
income taxes......................................
|
367
|
362
|
393
|
|
Total
Current Liabilities..................................
|
4,859
|
5,536
|
5,136
|
|
|
|
|
|
|
Long-Term
Debt.................................................
|
7,181
|
7,265
|
6,729
|
|
Deferred
Income Taxes.......................................
|
1,082
|
1,081
|
1,287
|
|
Other
Liabilities...................................................
|
2,150
|
2,201
|
1,647
|
|
Shareholders'
Equity.............................................
|
4,844
|
5,378
|
5,807
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity..........
|
$20,116
|
$21,461
|
$20,606
|
Note:
Certain reclassifications were made to prior year's amounts to conform with the
classifications of such amounts in the most recent years.
MACY'S, INC.
Consolidated Statements of Cash Flows (Unaudited)
(millions)
|
|
26 Weeks Ended
August 1, 2015
|
26 Weeks Ended
August 2, 2014
|
|
Cash flows from operating
activities:
|
|
|
|
Net income....................................................................
|
$ 410
|
$ 516
|
|
Adjustments to reconcile
net income to net cash
provided by operating activities:
|
|
|
|
Depreciation
and amortization...................................
|
520
|
507
|
|
Stock-based
compensation expense..........................
|
47
|
38
|
|
Amortization
of financing costs and premium on
acquired
debt........................................................
|
(2)
|
(3)
|
|
Changes in assets
and liabilities:
|
|
|
|
Decrease
in receivables.......................................
|
92
|
86
|
|
(Increase)
decrease in merchandise inventories......
|
(77)
|
141
|
|
Increase in prepaid expenses and other
current assets.
|
(29)
|
(14)
|
|
Increase in other assets not
separately identified.....
|
-
|
(31)
|
|
Increase
in merchandise accounts payable.............
|
340
|
276
|
|
Decrease in
accounts payable, accrued liabilities
and other
items not separately identified...........
|
(625)
|
(531)
|
|
Decrease
in current income taxes.........................
|
(232)
|
(242)
|
|
Increase
(decrease) in deferred income taxes........
|
(20)
|
2
|
|
Decrease in
other liabilities not separately identified
|
(26)
|
(9)
|
|
Net
cash provided by operating activities.............
|
398
|
736
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Purchase of property and
equipment...............................
|
(367)
|
(335)
|
|
Capitalized software......................................................
|
(144)
|
(116)
|
|
Acquisition of
Bluemercury, Inc., net of cash acquired.....
|
(212)
|
-
|
|
Disposition of property
and equipment.............................
|
4
|
24
|
|
Other, net.....................................................................
|
104
|
49
|
|
Net
cash used by investing activities...................
|
(615)
|
(378)
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Debt issued...................................................................
|
-
|
500
|
|
Financing costs..............................................................
|
-
|
(4)
|
|
Debt repaid...................................................................
|
(72)
|
(459)
|
|
Dividends paid...............................................................
|
(227)
|
(204)
|
|
Decrease in outstanding
checks......................................
|
(136)
|
(61)
|
|
Acquisition of treasury
stock...........................................
|
(909)
|
(922)
|
|
Issuance of common stock..............................................
|
158
|
149
|
|
Net
cash used by financing activities....................
|
(1,186)
|
(1,001)
|
|
|
|
|
|
Net decrease in cash and
cash equivalents..........................
|
(1,403)
|
(643)
|
|
Cash and cash equivalents
at beginning of period................
|
2,246
|
2,273
|
|
|
|
|
|
Cash and cash equivalents
at end of period..........................
|
$ 843
|
$ 1,630
|
Note:
Certain reclassifications were made to prior year’s amounts to conform with the
classifications of such amounts in the most recent years.
MACY'S, INC.
Important Information Regarding Non-GAAP Financial
Measures
(All amounts in millions except percentages)
The Company reports its financial results
in accordance with generally accepted accounting principles (GAAP). However,
management believes that certain non-GAAP financial measures provide users of
the Company's financial information with additional useful information in
evaluating operating performance. See the table below for supplemental
financial data and a corresponding reconciliation to the most directly
comparable GAAP financial measures. This non-GAAP financial measure should be
viewed as supplementing, and not as an alternative or substitute for, the
Company's financial results prepared in accordance with GAAP. Certain of the
items that may be excluded or included in this non-GAAP financial measure may
be significant items that could impact the Company's financial position,
results of operations and cash flows and should therefore be considered in
assessing the Company's actual financial condition and performance. Additionally,
the amounts received by the Company on account of sales of departments licensed
to third parties are limited to commissions received on such sales. The methods
used by the Company to calculate its non-GAAP financial measures may differ
significantly from methods used by other companies to compute similar measures.
As a result, any non-GAAP financial measures presented herein may not be
comparable to similar measures provided by other companies.
Macy's, Inc. believes that providing
changes in comparable sales on an owned plus licensed basis, which includes the
impact of growth in comparable sales of departments licensed to third parties
supplementally to its results of operations calculated in accordance with GAAP
assists in evaluating the Company's ability to generate sales growth, whether
through owned businesses or departments licensed to third parties, on a
comparable basis, and in evaluating the impact of changes in the manner in
which certain departments are operated.
|
|
13 Weeks
Ended
August 1,
2015
|
26 Weeks
Ended
August 1,
2015
|
|
|
|
|
|
Decrease in comparable sales
on an owned basis (Note 1)........
|
(2.1)%
|
(1.4)%
|
|
|
|
|
|
Impact of growth in comparable
sales of departments
licensed
to third parties (Note 2)........................................
|
0.6 %
|
0.6 %
|
|
|
|
|
|
Decrease in comparable sales
on an owned plus licensed basis..
|
(1.5)%
|
(0.8)%
|
Notes:
(1) Represents the period-to-period
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.
(2) 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
via the Internet 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 Company believes that the amounts of commissions earned on
sales of departments licensed to third parties are not material to its results
of operations for the periods presented.