Macy's Inc · NYSE:M
Macy's — Q4 2021 Earnings Presentation
43 slides from Macy's's earnings presentation, Feb 22, 2022
Slide 1: Fourth Quarter 2021 Earnings
Fourth Quarter 2021 Earnings 52909940 Jeff Gennette, Chairman & CEO Adrian Mitchell, CFO 22 February 2022 0
Slide 2: Safe Harbor Statement
Safe Harbor Statement All statements in this presentation 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
Slide 3: Fourth Quarter and Full-Year Results
Fourth Quarter and Full-Year Results 2
Slide 4: Fourth Quarter Snapshot
Fourth Quarter Snapshot millions, except per share figures and percentages 4Q21 4Q20 4Q19 Net Sales $8,665 $6,780 $8,337 Comp sales - owned 28.3% (17.0)% (0.6)% Comp sales - owned + licensed 27.8% (17.1)% (0.5)% Credit card revenues, net $264 $258 $239 Gross margin $3,159 $2,282 $3,071 Gross margin
Slide 5: Fiscal Year Snapshot
Fiscal Year Snapshot millions, except per share figures and percentages FY21 FY20 FY19 Net Sales $24,460 $17,346 $24,560 Comp sales - owned 43.0% (27.9)% (0.8%) Comp sales - owned + licensed 42.9% (27.9)% (0.7%) Credit card revenues, net $832 $751 $771 Gross margin $9,504 $5,060 $9,389 Gross margin
Slide 6: Fourth Quarter Highlights
Fourth Quarter Highlights • Adjusted diluted earnings per share of $2.45 exceeded expectations; diluted earnings per share of $2.44 • Comparable sales up 28.3% on an owned basis and up 27.8% on an owned plus licensed basis versus 4Q20 • Comparable sales up 6.6% on an owned basis and up 6.1% on an ow
Slide 7: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights (Comparison to 4Q19 included below to more appropriately benchmark our performance) millions, except per share figures and percentages 4Q21 Notes Credit Revenue $264 • Better than expected bad debt levels continued to benefit credit card revenues during the quarte
Slide 8: Macy's, Inc. is a Transformed Organization
Macy’s, Inc. is a Transformed Organization More agile, more profitable and more relevant to customers FY2019 FY2021 Scaled platform and fully integrated team, operating the nation’s #2 Digital team worked as a siloed organization website in our categories with 39% digital penetration, an increase of
Slide 9: Fiscal Year Family of Business Sales Penetration
Fiscal Year Family of Business Sales Penetration 41% 41% 38% 22% 23% 22% 22% 20% 18% 19% 17% 17% Women’s Accessories, Intimate Women’s Apparel Men’s and Kid’s Home/Other Apparel, Shoes, Cosmetics and Fragrances 2021 2020 2019 8
Slide 10: Fourth Quarter Credit Card Revenue
Fourth Quarter Credit Card Revenue Performance Metrics 4Q21 Net Credit Card Revenue $264M, $25M from 4Q19 Net Credit Card Revenue Penetration 3.0% of sales, 10bps vs 4Q19 Digital new accounts 35% vs 4Q19 New accounts 777K, 16% to 4Q19 Proprietary card penetration rate 40.5%, 590 bps to 4Q19 • Digita
Slide 11: Enhancing Shareholder Value
Enhancing Shareholder Value • Fiscal year 2021 free cash flow of $2.3 billion • Includes receipt in January of the majority of the CARES act tax refund of $582 million * • Cash flow from operating activities of $2.7 billion, driven by EBITDA growth as well as improved working capital – Working capit
Slide 12: Remaining Long-term Debt Maturities, as of January 29, 2022
Remaining Long-term Debt Maturities, as of January 29, 2022 ($ Millions) 3.24% 6.08% 13 5.28% 4.38% 183 665 81 387 385 3.88% 579 4.30% 294 5.13% 6.85% 6.38% 250 250 74 193 6.79% 133 7.88% 6.90% 7.60% 5 71 12 6 5 5 Fiscal Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Slide 13: Capital Allocation Strategy
Capital Allocation Strategy • Best-positioned for access to bank and capital market funding under all economic scenarios Capital Structure • Maintain investment grade credit metrics with well-laddered debt maturities • Target Adjusted Debt-to-Adjusted EBITDAR ratio of 2.0x or below Value-enhancing •
Slide 14: Cash Available for Enhancing Shareholder Value 2022 through 2024
Cash Available for Enhancing Shareholder Value 2022 through 2024 Between $3.2 billion and $3.6 billion of Free Cash Flow + Incremental debt capacity of up to $900 million Dividends Return on Share Invested Capital Repurchases Target 5% Drive ROIC with Authorization of increase annually value-enhanci
Slide 15: Brand and Channel Performance
Brand and Channel Performance 14
Slide 16: Digitally Led Omnichannel Model
Digitally Led Omnichannel Model Committed to delivering a dynamic integration of physical stores and digital shopping which is the most effective way to meet the needs of an omnichannel customer • The Macy’s, Inc. omnichannel ecosystem includes the a best-in-class e-commerce platform integrated with
Slide 17: Most Omnichannel Markets are Growing
Most Omnichannel Markets are Growing Increasing importance of interplay between digital and physical assets San Francisco, CA Philadelphia, PA • Omni sales growth: -11% vs 4Q19 • Omni sales growth: +6% vs 4Q19 • Stores (14 locations): -16% vs 4Q19 • Stores (13 locations): -6% vs 4Q19 • Digital sales
Slide 18: Digital Channel Performance Metrics
Digital Channel Performance Metrics Fourth Quarter 2021 Sales Up 36% to 4Q19 Penetration 39% of net sales vs. 30% in 4Q19 Sales from Mobile Devices * 63% of digital demand sales Number of Visits * 813 million, up 11% to 4Q19 Conversion Rate * 4.47%, up 9% to 4Q19 Vendor Direct % of Digital Sales * 1
Slide 19: Omnichannel Ecosystem Investment Highlights
Omnichannel Ecosystem Investment Highlights Digital • Mobile App: redesigned to make it even easier for customers to shop their personal style, price check in- store, build favorites lists, manage their star rewards, and track orders • Macy’s app downloads up 81% vs. 3Q21, largest quarterly gain in
Slide 20: Omnichannel Ecosystem Investment Highlights
Omnichannel Ecosystem Investment Highlights Store • Off-Mall Small Format: potential to expand market share is enhanced by Market by Macy’s and Bloomie’s • Opened 8 off-mall formats across Dallas, Atlanta and Washington D.C. markets in 2021 • Includes Market by Macy’s, Freestanding Backstage, Bloomi
Slide 21: Nameplate Fourth Quarter Highlights
Nameplate Fourth Quarter Highlights 4Q21 Comparable sales - owned + licensed Up 5.2% compared to 4Q19; 3.2pt decrease to 3Q21 Digital Penetration 38% 4Q21 Comparable sales - owned + licensed Up 13.0% compared to 4Q19; 1.8pt improvement to 3Q21 Digital Penetration 42% 4Q21 Comparable sales - owned +
Slide 22: Macy's Merchandising Update
Macy’s Merchandising Update Best positioned, based on the health of inventory coupled with multi-category and multi-channel capabilities, to pivot with great agility to the best customer trends Top Performing Categories • Fragrances, fine jewelry, home décor, men’s outerwear, toys, sleepwear and wat
Slide 23: Star Rewards Loyalty Members
Fourth Quarter Star Rewards Loyalty Members Platinum Gold Silver Bronze Macy’s Sales* $2.2B $959M $539M $1.2B Fourth Quarter Active Customers 3.5M 3.5M 3.7M 6.5M and Full-year 2021 Customer Average Spend per Customer $642 $275 $147 $187 Profile Average Visits 5.3 2.8 1.7 1.9 Average Spend per Visit
Slide 24: Macy's Fourth Quarter and Full-year 2021 Customer Highlights
Fourth Quarter 2021 Macy’s Fourth • Approximately 7.2 million new customers shopped the Macy's brand during the quarter, an 11% increase versus the fourth quarter of 2019 Quarter and Full- • During the fourth quarter of 2021, 58% of new customers came through the digital channel year 2021 Customer •
Slide 25: Macy's Highlights: Backstage
End of Q4 2021 FY 2021 Macy’s Stores Opened 1 48 Backstage Stores within Stores 1 46 Highlights Freestanding - 2 FY2021 Store Count Total Store Count 271 Stores within Stores 263 Freestanding 8 • Comparable sales for Backstage locations store-within-store locations open more than one year continue t
Slide 26: Bloomingdale's and Bluemercury Highlights
Bloomingdale’s and Bluemercury Highlights • 4Q21 comparable sales on an owned-plus-licensed basis up 13.0% compared to 4Q19 • Approximately 391,000 new customers shopped the Bloomingdale’s brand during the quarter, an 26% increase versus the fourth quarter of 2019 and spent 41% more • Continued to s
Slide 27: Expectations
Expectations 26
Slide 28: Tailwinds and Headwinds
Tailwinds and Headwinds Tailwinds Headwinds • Consumer demand will remain healthy • Continuing evolution of COVID-19 as the job market improves and wages continue to rise • Inflationary cost pressures both for Macy’s, Inc. and consumers • Expect demand to increase, particularly as people return to t
Slide 29: Three-year Outlook & Targets
Three-year Outlook & Targets • Targeting Adjusted EBITDA margin in the low-double digits –within the range of 11.5% and 12.0% by 2024 • Targeting a low-single digit compound annual growth rate for net sales through 2024 • Targeting digital penetration in the low- to mid-40s as a percent of net sales
Slide 30: 2022 Guidance
2022 Guidance Net sales $24,460 million to $24,700 million, flat to +1.0% growth vs. 2021 Comparable owned-plus-licensed sales three-year CAGR Approximately 1.1% to 1.4% Digital sales Approximately 37% of net sales Credit card revenues, net Approximately 2.9% of net sales Gross margin rate Between 3
Slide 31: First Quarter and Seasonal Outlook 2022
First Quarter and Seasonal Outlook 2022 First Net sales $5,270 million to $5,370 million Quarter Asset sale gains Approximately $25 million 2022 Guidance * Adjusted diluted EPS $0.77 to $0.85 • Expect quarterly net sales penetration as a percent of annual net sales to align more closely to pre-pande
Slide 32: Macy's, Inc. Store Count – As of January 29, 2022
Macy’s, Inc. Store Count – As of January 29, 2022 End of 3Q21 End of 4Q21 Change in Store Locations from 3Q21 Change in Store Locations Year to Date Boxes Store Locations Boxes Store Locations Macy's Flagships 16 11 16 11 Macy's Magnets 429 384 429 384 Macy's Core 445 395 445 395 Macy's Neighborhood
Slide 33: Appendix
Appendix 32
Slide 34: Reconciliation of GAAP to Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Financial Measures The company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non- GAAP financial measures provide users of the company's financial information with ad
Slide 35: Changes in Comparable Sales – Macy's Inc.
Changes in Comparable Sales – Macy's Inc. January 29, 2022 versus January 29, 2022 versus 13 weeks ended January 13 weeks ended Macy’s, Inc. 30, 2021 February 1, 2020 Increase in comparable sales on an owned basis (Note 1) 28.3% 6.6% Impact of growth in comparable sales of departments licensed to th
Slide 36: Changes in Comparable Sales- Macy's, Bloomingdale's and Bluemercury brands
Changes in Comparable Sales- Macy’s brand, Bloomingdale’s brand and Bluemercury brand Versus 13 Weeks Ended Macy’s February 1, 2020 Increase in comparable sales on an owned basis (Note 1) 5.9% Impact of growth in comparable sales of departments licensed to third parties (Note 2) (0.7%) Increase in c
Slide 37: EBITDA Excluding Certain Items (13 weeks)
Earnings Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 13 weeks ended, 13 weeks ended 13 weeks ended In millions January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Net income $742 $160 $340 Net sales 8,665 6,780 8,337 Net income as a per
Slide 38: EBITDA Excluding Certain Items (52 weeks)
Earnings (Loss) Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 52 weeks ended, 52 weeks ended 52 weeks ended In millions January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Net income (loss) $1,430 $(3,944) $564 Net sales $24,460 $17,346 $
Slide 39: Net Income, Excluding Certain Items
Net Income, Excluding Certain Items 13 weeks ended, 13 weeks ended 13 weeks ended In millions January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Net income $742 $160 $340 Non-GAAP measure: Net income $742 $160 $340 Impairment, restructuring and other costs 9 134 337 Set
Slide 40: Net Income (Loss), Excluding Certain Items
Net Income (Loss), Excluding Certain Items 52 weeks ended, 52 weeks ended 52 weeks ended In millions January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Net income (loss) $1,430 $(3,944) $564 Non-GAAP measure: Net income (loss) $1,430 $(3,944) $564 Impairment, restructur
Slide 41: Diluted Earnings Per Share, Excluding Certain Items
Diluted Earnings Per Share, Excluding Certain Items 13 weeks ended, 13 weeks ended 13 weeks ended January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Diluted earnings per share $2.44 $0.50 $1.09 Non-GAAP measure: Diluted earnings per share $2.44 $0.50 $1.09 Impairment, r
Slide 42: Diluted Earnings (Loss) Per Share, Excluding Certain Items
Diluted Earnings (Loss) Per Share, Excluding Certain Items 52 weeks ended, 52 weeks ended 52 weeks ended January 29, 2022 January 30, 2021 February 1, 2020 Most comparable GAAP measure: Diluted earnings (loss) per share $4.55 $(12.68) $1.81 Non-GAAP measure: Diluted earnings (loss) per share $4.55 $
Slide 43: Free Cash Flow
Free Cash Flow 52 weeks ended, January In millions 29, 2022 Net cash provided by operating activities $2,712 Purchase of property and equipment (354) Capitalized software (243) Disposition of property and equipment 164 Free Cash Flow $2,279 42