Macy's, Inc.: Macy's, Inc. Reports First Quarter 2021 Results

Press release from Macy’s, Inc.:

May 18, 2021

Performance exceeded expectations on both the top and bottom lines

Performance exceeded expectations on both the top and bottom lines

Comparable sales up 62.5% vs. 2020 on an owned basis; up 63.9% vs. 2020 on an owned plus licensed basis

Comparable sales up 62.5% vs. 2020 on an owned basis; up 63.9% vs. 2020 on an owned plus licensed basis

Diluted EPS of $0.32 and Adjusted diluted EPS of $0.39

Diluted EPS of $0.32 and Adjusted diluted EPS of $0.39

Company continues momentum as a digitally led omnichannel retailer with digital sales growth of 34% vs. 2020

Company continues momentum as a digitally led omnichannel retailer with digital sales growth of 34% vs. 2020

Raises full-year guidance, bolstered by improved macroeconomic trends and strength of Polaris strategy execution

Raises full-year guidance, bolstered by improved macroeconomic trends and strength of Polaris strategy execution

NEW YORK--(BUSINESS WIRE)-- Macy’s, Inc. (NYSE: M) today reported results for the first quarter of 2021 and raised guidance for fiscal 2021.

“In our first quarter we outperformed sales expectations across all three of our brands: Macy’s, Bloomingdale’s and Bluemercury. We built on our momentum from the fourth quarter and our sales trend continued to improve throughout the first quarter,” said Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “These results were driven by the positive effects of the government stimulus program and expanding vaccine rollout, coupled with the accelerated execution of our Polaris strategy, including investments in our digital platforms. Macy's remains a fashion and style source for customers as a digitally led omnichannel retailer.”

“As consumers seek to re-engage with each other, we are seeing promising signs that our core customers are shopping again, and we continue to attract new customers, who increasingly begin their shopping experience with us online,” continued Gennette. “Customers are shopping categories that have been strong throughout the pandemic, including home, fine jewelry and watches, fragrance and luxury items. And we’re encouraged by the improvement we’re seeing in special occasion categories as customers begin to travel and return to a pre-pandemic lifestyle. We also have emerging opportunities in new categories and brands, including toys, health & wellness, pet and home décor.”

“As we look to the rest of the year, we are hyper-focused on meeting consumers’ demand for speed, convenience and a seamless omnichannel shopping experience. We also continue to evolve our merchandising strategy, and we remain a partner of choice for top brands with more collaborative and profitable vendor relationships,” continued Gennette. “With a healthier economy and the reopening of communities as the backdrop to the execution of our Polaris strategy, we are well positioned to deliver sustainable, profitable growth in 2021 and the years beyond.”

First Quarter Highlights

In addition to prior year comparisons, Macy’s, Inc. is providing comparisons to 2019 to benchmark its performance given the impact of the pandemic last year.

• Diluted earnings per share of $0.32 and Adjusted diluted earnings per share of $0.39 both exceeded expectations for the quarter.
  • This compares to $0.44 of both diluted earnings per share and Adjusted diluted earnings per share in first quarter 2019.
  • Excluding asset sale gains, Adjusted diluted earnings per share for the quarter exceeded first quarter 2019 by $0.04.

• Comparable sales up 62.5% on an owned basis and up 63.9% on an owned plus licensed basis versus 2020.
  • Comparable sales down 10.5% on an owned basis and down 10.0% on an owned plus licensed basis versus 2019.
  • Trend improvement compared to a 17.1% owned plus licensed comparable sales decline in the fourth quarter of 2020.

• Digital sales grew 34% over first quarter 2020 and grew 32% over first quarter 2019.
  • Digital penetration was 37% of net sales, a 6-percentage point decline from first quarter 2020 when stores closed, but a 13-percentage point improvement over first quarter 2019.

• The company saw Platinum, Gold and Silver customers in its Star Rewards Loyalty program re-engage, with the average customer spend up 10% compared to first quarter 2019 and an 11-percentage point trend improvement from fourth quarter 2020.
  • The company’s Bronze segment, its youngest and most diverse loyalty tier continued to grow, adding 1.7 million members.
• The company brought 4.6 million new customers into the Macy's brand, a 23% increase compared to first quarter 2019.
  • 47% of new customers came through the digital channel in first quarter 2021.
• Gross margin for the quarter was 38.6%, up from 17.1% in first quarter 2020 and up 40 basis points from first quarter 2019.
  • Improvement due to increased merchandise margin was largely driven by inventory productivity and the execution of the Polaris strategy.
  • The first quarter 2020 included an approximately $300 million inventory write-down from markdowns on fashion merchandise due to the store closures during first quarter 2020.
  • Delivery expense declined approximately 20 basis points from the first quarter of 2020 and increased 230 basis points from first quarter 2019, partially due to the higher penetration of digital sales.
• Inventory was down 23.1% from first quarter 2019.
  • Continued strong inventory management discipline from 2020.
• Selling, general and administrative (“SG&A”) expense of $1.7 billion; increased $150 million from first quarter 2020 and declined $364 million from first quarter 2019.
  • SG&A as a percent of sales was 37.1%, down from 52.9% in first quarter of 2020 and an improvement of 130 basis points from first quarter 2019.
  • Disciplined expense management, Polaris savings and improved productivity contributed to the first quarter SG&A performance.

• Net credit card revenue of $159 million, up $28 million from first quarter 2020 and down $13 million from first quarter 2019.
  • Represented 3.4% of sales, 90 basis points lower than first quarter 2020 and 30 basis points better than first quarter 2019.
• Approximately $1.8 billion in cash as of the end of the first quarter due to strong performance and the more efficient use of capital compared to pre-pandemic.

Revised FY 2021 Guidance

As a result of Macy’s, Inc. outperformance in the first quarter of 2021 and its improved outlook, the company is raising its full year 2021 guidance.

“Our achievements in the first quarter, combined with the faster than anticipated economic recovery, give us the confidence to update our full-year 2021 guidance,” said Adrian Mitchell, chief financial officer of Macy’s, Inc. “The momentum and strength of our digital business is reshaping how we engage with customers as an omnichannel retailer. As we execute the Polaris strategy, Macy's, Inc. is well-positioned for long-term, profitable growth.”

A full overview of the company’s guidance can be found in the first quarter 2021 earnings presentation at www.macysinc.com/investors.

Conference Call and Webcasts

A webcast of Macy's, Inc.’s call with analysts and investors to report its first quarter 2021 sales and earnings will be held today (May 18, 2021) at 8:00 a.m. ET. Macy’s, Inc.’s webcast, along with the associated presentation, is accessible to the media and general public via the company's website at www.macysinc.com/investors. Analysts and investors may call in on 1-800-458-4121, passcode 2736880. A replay of the conference call and slides can be accessed on the website or by calling 1-888-203-1112 (same passcode) about two hours after the conclusion of the call. Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/pressroom.

As previously announced, Adrian Mitchell will present at Cowen’s 2nd Annual New Retail Ecosystem CEO Summit: Innovation & Digitization at 8:15 a.m. ET on May 26, 2021. Media and investors may access a live audio webcast of the presentation at www.macysinc.com. A replay of the webcast will also be available on the company’s website.

Important Information Regarding Financial Measures

Please see the final pages of this news release for important information regarding the calculation of the company’s non-GAAP financial measures.

About Macy’s, Inc.

Macy’s, Inc. (NYSE: M) is one of the nation’s premier omnichannel retailers. Headquartered in New York City, the company comprises three retail brands: Macy’s, Bloomingdale’s and Bluemercury. With a robust e-commerce business, rich mobile experience and a national stores footprint, our customers can shop the way they live — anytime and through any channel. For more information, visit macysinc.com.

Forward-Looking Statements

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 the effects of the COVID-19 pandemic on Macy's customer demand and supply chain, as well as its consolidated results of operation, financial position and cash flows, Macy’s ability to successfully implement its Polaris strategy, including the ability to realize the anticipated benefits within the expected time frame or at all, conditions to, or changes in the timing of proposed real estate and other transactions, prevailing interest rates and non-recurring charges, the effect of potential changes to trade policies, store closings, competitive pressures from specialty stores, general merchandise stores, off-price and discount stores, manufacturers’ outlets, the Internet and catalogs and general consumer spending levels, including the impact of the availability and level of consumer debt, possible systems failures and/or security breaches, the potential for the incurrence of charges in connection with the impairment of intangible assets, including goodwill, Macy’s reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional or global health pandemics, and regional political and economic conditions, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission, including under the captions “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 30, 2021. Macy’s disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Changes in Comparable Sales EBITDA and Adjusted EBITDA Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share

View source version on businesswire.com: https://www.businesswire.com/news/home/20210518005316/en/

Media - Blair Rosenberg media@macys.com

Investors - Mike McGuire investors@macys.com

Source: Macy’s, Inc.

Released May 18, 2021

This press release was produced by Macy’s, Inc.. The views expressed here are the author’s own.