Macy’s, Inc. Reports November/December Sales and Revises 2016 Guidance

CINCINNATI–(BUSINESS WIRE)–Macy’s, Inc. (NYSE:M) today announced that its comparable sales on an
owned plus licensed basis declined by 2.1 percent in the months of
November and December 2016 combined, compared to the same period last
year. On an owned basis, comparable sales declined by 2.7 percent in the
combined November/December period.

(Editor’s Note: Macy’s, Inc. this afternoon also issued a separate
news release announcing actions to streamline its store portfolio,
intensify cost efficiency efforts and execute its real estate strategy.)

“While our sales trend is consistent with the lower end of our guidance,
we had anticipated sales would be stronger. We believe that our
performance during the holiday season reflects the broader challenges
facing much of the retail industry. We are pleased with the performance
of our digital business, with double-digit gains at both macys.com and
bloomingdales.com; however, store sales continued to be impacted by
changing customer behavior. Our apparel business, which includes
women’s, men’s and children’s, performed well, with particular strength
in active and cold-weather merchandise. Sales were also strong in fine
jewelry, as well as furniture and bedding, reflecting the success of our
initiatives in those categories. However, ongoing weakness in handbags
and watches negatively impacted our results,” said Terry J. Lundgren,
Macy’s, Inc. chairman and chief executive officer.

2016 Guidance

Macy’s, Inc. maintains its previously provided full-year sales guidance
of a 2.5 percent to 3.0 percent decrease in comparable sales on an owned
plus licensed basis, and expects to come in at the lower end of that
guidance, with comparable sales on an owned basis to be approximately 50
basis points lower.

The company now expects full-year 2016 diluted earnings per share
(excluding asset impairment, restructuring, retirement settlement and
other charges) to be in a range of $2.95 to $3.10 (compared with
previous guidance of $3.15 to $3.40).

Important Information Regarding Financial
Measures

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

Fourth Quarter Earnings Announcement

Macy’s, Inc. is scheduled to report fourth quarter sales and earnings on
February 21, 2017. Additional detail on financial performance will be
provided at that time. The company will webcast a call with financial
analysts and investors at 10 a.m. ET on February 21, 2017. Macy’s,
Inc.’s webcast is accessible to the media and general public via the
company’s website at www.macysinc.com.
Analysts and investors may call in on 888-599-8686, passcode 4375466. A
replay of the conference call can be accessed on the website or by
calling 888-203-1112 about two hours after the conclusion of the call.

About Macy’s, Inc.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one
of the nation’s premier retailers, with fiscal 2015 sales of $27.079
billion. The company operates about 880 stores in 45 states, the
District of Columbia, Guam and Puerto Rico under the names of Macy’s,
Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage 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 real estate and other transactions, prevailing interest
rates and non-recurring charges, store closings, 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.)

MACY’S, INC.

Important Information Regarding 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 additional useful information in
evaluating operating performance. Management 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. Management believes that excluding certain
items that may vary substantially in frequency and magnitude from
diluted earnings per share attributable to Macy’s, Inc. shareholders
provides useful supplemental measures that assist in evaluating the
Company’s ability to generate earnings and leverage sales and to more
readily compare these metrics between past and future periods. The
reconciliation of the forward-looking non-GAAP financial measure of
changes in comparable sales on an owned plus licensed basis to GAAP
comparable sales (i.e., on an owned basis) is in the same manner as
illustrated below, where the impact of growth in comparable sales of
departments licensed to third parties is the only reconciling item. In
addition, the Company does not provide the most directly comparable
forward-looking GAAP measure of diluted earnings per share attributable
to Macy’s, Inc. shareholders because the timing and amount of excluded
items (e.g., asset impairment charges, retirement settlement charges and
other store closing related costs) are unreasonably difficult to fully
and accurately estimate.

Non-GAAP financial measures 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 non-GAAP financial measures 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 and future 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.

Change in Comparable Sales

The following is a reconciliation of the non-GAAP financial measure of
changes in comparable sales on an owned plus licensed basis, to GAAP
comparable sales (i.e., on an owned basis), which the Company believes
to be the most directly comparable GAAP financial measure.

     
9 Weeks Ended
December 31, 2016
 
 
Decrease in comparable sales on an owned basis (Note 1) (2.7%)
 

Impact of growth in comparable sales of departments licensed to
third parties (Note 2)

 

0.6%

 

Decrease in comparable sales on an owned plus licensed basis

(2.1%)
 
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 all online
sales 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.

Contacts

Macy’s, Inc.
Media
Holly Thomas
646-429-5250
holly.thomas@macys.com
or
Investors
Matt
Stautberg
513-579-7780