Macy's Inc · NYSE:M
Macy's — Q2 2021 Earnings Presentation
36 slides from Macy's's earnings presentation, Aug 19, 2021
Slide 1: Second Quarter 2021 Earnings
Second Quarter 2021 Earnings 52909940 Jeff Gennette, Chairman & CEO Adrian Mitchell, CFO 19 August 2021 (Revised) 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: Second Quarter and First Half Results
Second Quarter and First Half Results 2
Slide 4: Second Quarter Snapshot
Second Quarter Snapshot millions, except per share figures and percentages 2Q21 2Q20 2Q19 Net Sales $5,647 $3,559 $5,546 Comp sales - owned 61.2% (34.7%) 0.2% Comp sales - owned + licensed 62.2% (35.1%) 0.3% Credit card revenues, net $197 $168 $176 Gross margin $2,294 $841 $2,151 Gross margin rate 4
Slide 5: Spring Season Snapshot
Spring Season Snapshot millions, except per share figures and percentages 1H21 1H20 1H19 Net Sales $10,353 $6,576 $11,050 Comp sales - owned 61.8% (40.0%) 0.4% Comp sales - owned + licensed 63.0% (40.2%) 0.5% Credit card revenues, net $356 $299 $348 Gross margin $4,111 $1,357 $4,252 Gross margin rat
Slide 6: Second Quarter Highlights
Second Quarter Highlights • Diluted EPS of $1.08 and Adjusted diluted EPS of $1.29 exceeding expectations, with Adjusted diluted EPS up $1.01 to 2Q19 • Adjusted EBITDA margin of 14.8% exceeded the margin in 2Q19 by 760 basis points • Comparable sales up 5.8% on an owned basis and up 5.9% on an owned
Slide 7: Second Quarter Earnings Highlights
Second Quarter Earnings Highlights (Comparison to 2Q19 included below to more appropriately benchmark our performance) millions, except per share figures and percentages 2Q21 Notes Credit Revenue $197 • Good credit health in our customers continuing and resulting in lower bad debt levels Change to 2
Slide 8: Q2 2021 Polaris Update
Q2 2021 Polaris Update Win with Deliver Clear Excel in Digital Enhance Store Modernize Enable Fashion & Style Value Shopping Experience Supply Chain Transformation Wide assortment of Leveraging data and Upgraded search Improved trend in Continuing to update Continuing to brands and analytics tools t
Slide 9: Credit Card Revenue
Credit Card Revenue Performance Metrics 2Q21 New accounts 618K, Down 17% to 2Q19 Proprietary card penetration rate 41.4%, Down 530 bps to 2Q19 • Net credit card revenue of $197 million • Up $21 million from 2Q19 • Represented 3.5% of sales • 30 bps higher than 2Q19 • Digital new accounts up 60% vs.
Slide 10: Capital Allocation Highlights: 1H2021
Capital Allocation Highlights: 1H2021 Strengthening Balance Sheet, Optimizing Capital Allocation and Returning Capital to Shareholders • Free cash flow of $769 million • Cash flow from operating activities of $965 million, up from $350 million in 2019; variance due to EBITDA growth as well as improv
Slide 11: Prudent De-levering of the Balance Sheet
Prudent De-levering of the Balance Sheet Expect to achieve leverage ratio of no more than 2.5x by year-end 2021 ($ Millions) 1,400 3.3 3.5 1,612 1,200 2.9 3.0 2.7 1,101 COVID-19 2.5 2.5 954 Impacted 1,000 2.5 800 751 2.0 600 567 1.5 539 400 1.0 200 0.5 - - FY 2016 FY 2017 FY 2018 FY 2019 FY 2020* FY
Slide 12: Remaining Debt Maturities, Post $1.3 Billion Senior Secured Debt Paydown
Remaining Debt Maturities, Post $1.3 Billion Senior Secured Debt Paydown ($ 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 2
Slide 13: Brand and Channel Performance
Brand and Channel Performance 12
Slide 14: Digitally Led Omnichannel Model
Digitally Led Omnichannel Model Committed to delivering a dynamic, seamless integration between physical stores and digital shopping – the most effective way to meet the needs of an omnichannel customer • The Macy’s, Inc. Omnichannel ecosystem includes a strong fleet of stores in the best mall and o
Slide 15: Brand Second Quarter Highlights
Brand Second Quarter Highlights 2Q21 Comparable sales - owned + licensed Up 5.2% compared to 2Q19; 15.6pt improvement to 1Q21 Digital Penetration 31% 2Q21 Comparable sales - owned + licensed Up 11.5% compared to 2Q19; 18.6pt improvement to 1Q21 Digital Penetration 32% 2Q21 Comparable sales - owned +
Slide 16: Digital Channel: 2Q21 Highlights
Digital Channel: 2Q21 Highlights Performance Metrics 2Q21 (unless otherwise noted) Sales Up 45% to 2Q19 Penetration 32% of net sales Sales from Mobile Devices* 61% of digital demand sales Average Number of Visits* 519 million, up 22% to LLY Conversion Rate* 4.0%, up 10% to LLY Vendor Direct % of Dig
Slide 17: Macy's Merchandising Update
Macy’s Merchandising Update Met and flexed with customer demand supported by wide assortment of categories, products and brands at price points ranging from value to luxury Top Performing Categories • Continued strength in pandemic-driven products and categories • Loungewear, fragrances, fine jewelr
Slide 18: Star Rewards Loyalty Members
Star Rewards Loyalty Members Platinum Gold Silver Bronze Macy’s 2Q21 and Sales* $1.4B $707M $476M $671M 1H21 Customer Profile Active Customers 2.6M 2.9M 3.4M 3.7M Average Spend per Customer $532 $247 $141 $177 Average Visits 4.7 2.7 1.7 1.8 Average Spend per Visit $113 $92 $85 $99 Under 40** 19% 20%
Slide 19: Macy's Backstage Highlights
End of Q2 2021 End of Q1 2021 Macy’s Stores Opened in 2Q21 6 - Backstage Total Store Count 262 256 Highlights Stores within Stores 255 250 Freestanding 7 6 FY2021 Store Count Goal = 270 • Comparable sales for Backstage store-within-store locations open more than one year continue to outperform full
Slide 20: Bloomingdale's and Bluemercury Highlights
Bloomingdale’s and Bluemercury Highlights • Strong performance both in-store and online drove positive comp sales growth • Comparable sales on an owned-plus-licensed basis were up 11.5% • 18.6-point sequential trend improvement compared to 1Q21 • Improvement across all categories with strong double-
Slide 21: Expectations
Expectations 20
Slide 22: 2021 Expectations
2021 Expectations 2021 EXPECTATIONS 2021 EXPECTATIONS Revised as of 5/18/2021 $23,550 million to $23,950 million $21,725 million to $22,225 million Net sales Increase between ~ 36% and 38% compared to 2020 Increase between 25% and 28% compared to 2020 Digital Between $8,350 million and $8,450 millio
Slide 23: Back Half 2021 Expectations (Revised 8/19/21)
Back Half 2021 Expectations (Revised 8/19/21) 3Q21 EXPECTATIONS Net sales $5,040 million to $5,190 million Adjusted diluted EPS Approximately $0.17 to $0.26 • Solid back half of 2021 expected with positive comparable sales vs. 2019 and 2020 in both quarters • Expect 3Q21 and 4Q21 comparable sales, a
Slide 24: Other Expectations in 2022 and Beyond
Other Expectations in 2022 and Beyond • Increasing long-term Adjusted EBITDA margin target to remain in the low-double digits – beginning next year • Over the next couple of years, expect capital expenditures to increase to approximately $1 billion, annually • Reopening of U.S. to international tour
Slide 25: Macy's, Inc. Store Count - As of July 31, 2021
Macy’s, Inc. Store Count - As of July 31, 2021 End of 1Q21 End of 2Q21 Change in Store Locations from 1Q21 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 63 58 62 57 -1 Macy's Furniture 52 47 52
Slide 26: Appendix
Appendix 25
Slide 27: 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 28: Changes in Comparable Sales – Macy's Inc.
Changes in Comparable Sales – Macy's Inc. July 31, 2021 versus July 31, 2021 versus 13 weeks ended 13 weeks ended Macy’s, Inc. August 1, 2020 August 3, 2019 Increase in comparable sales on an owned basis (Note 1) 61.2% 5.8% Impact of growth in comparable sales of departments licensed to third partie
Slide 29: 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 August 3, 2019 Increase in comparable sales on an owned basis (Note 1) 5.5% Impact of growth in comparable sales of departments licensed to third parties (Note 2) (0.3%) Increase in com
Slide 30: EBITDA Excluding Certain Items (13 weeks)
Earnings (Loss) Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 13 weeks ended 13 weeks ended 13 weeks ended In millions July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Net income (loss) $345 $(431) $86 Net sales 5,647 3,559 5,546 Net income (
Slide 31: EBITDA Excluding Certain Items (26 weeks)
Earnings (Loss) Before Interest, Taxes, Depreciation, and Amortization Excluding Certain Items 26 weeks ended 26 weeks ended 26 weeks ended In million July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Net income (loss) $448 $(4,012) $223 Net sales 10,353 6,576 11,050 Net inco
Slide 32: Net Income (Loss), Excluding Certain Items and Asset Sale Gains
Net Income (Loss), Excluding Certain Items and Asset Sale Gains 13 weeks ended 13 weeks ended 13 weeks ended In millions July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Net income (loss) $345 $(431) $86 Non-GAAP measure: Net income (loss) $345 $(431) $86 Impairment, restruc
Slide 33: Net Income (Loss), Excluding Certain Items and Asset Sale Gains
Net Income (Loss), Excluding Certain Items and Asset Sale Gains 26 weeks ended 26 weeks ended 26 weeks ended In millions July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Net income (loss) $448 $(4,012) $223 Non-GAAP measure: Net income (loss) $448 $(4,012) $223 Impairment, r
Slide 34: Diluted EPS, Excluding Certain Items and Asset Sale Gains
Diluted Earnings (Loss) Per Share, Excluding Certain Items and Asset Sale Gains 13 weeks ended 13 weeks ended 13 weeks ended July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Diluted earnings (loss) per share $1.08 $(1.39) $0.28 Non-GAAP measure: Diluted earnings (loss) per s
Slide 35: Diluted EPS, Excluding Certain Items and Asset Sale Gains
Diluted Earnings (Loss) Per Share, Excluding Certain Items and Asset Sale Gains 26 weeks ended 26 weeks ended 26 weeks ended July 31, 2021 August 1, 2020 August 3, 2019 Most comparable GAAP measure: Diluted earnings (loss) per share $1.41 $(12.91) $0.71 Non-GAAP measure: Diluted earnings (loss) per
Slide 36: Free Cash Flow
Free Cash Flow 26 weeks ended 26 weeks ended 26 weeks ended In millions July 31, 2021 August 1, 2020 August 3, 2019 Net cash provided (used) by operating activities $965 $(7) $350 Purchase of property and equipment (142) (228) (378) Capitalized software (88) (61) (123) Disposition of property and eq