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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Macys Inc | NYSE:M | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.135 | -0.73% | 18.425 | 18.575 | 18.288 | 18.36 | 1,288,652 | 16:51:22 |
|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
13-3324058
|
|
||
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.01 par value per share
|
M
|
New York Stock Exchange
|
Class
|
|
Outstanding at May 30, 2020
|
Common Stock, $.01 par value per share
|
|
310,235,066 shares
|
|
|
|
|
|
||||
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
Net sales
|
$
|
3,017
|
|
|
$
|
5,504
|
|
Credit card revenues, net
|
131
|
|
|
172
|
|
||
|
|
|
|
||||
Cost of sales
|
(2,501
|
)
|
|
(3,403
|
)
|
||
Selling, general and administrative expenses
|
(1,598
|
)
|
|
(2,112
|
)
|
||
Gains on sale of real estate
|
16
|
|
|
43
|
|
||
Impairment, restructuring and other costs
|
(3,184
|
)
|
|
(1
|
)
|
||
Operating income (loss)
|
(4,119
|
)
|
|
203
|
|
||
Benefit plan income, net
|
9
|
|
|
7
|
|
||
Interest expense
|
(49
|
)
|
|
(54
|
)
|
||
Interest income
|
2
|
|
|
7
|
|
||
Income (loss) before income taxes
|
(4,157
|
)
|
|
163
|
|
||
Federal, state and local income tax benefit (expense)
|
576
|
|
|
(27
|
)
|
||
Net income (loss)
|
$
|
(3,581
|
)
|
|
$
|
136
|
|
Basic earnings (loss) per share
|
$
|
(11.53
|
)
|
|
$
|
0.44
|
|
Diluted earnings (loss) per share
|
$
|
(11.53
|
)
|
|
$
|
0.44
|
|
|
|
|
|
||||
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
Net income (loss)
|
$
|
(3,581
|
)
|
|
$
|
136
|
|
Reclassifications to net income (loss):
|
|
|
|
||||
Amortization of net actuarial loss and prior service credit on post employment and postretirement benefit plans included in net income, before tax
|
12
|
|
|
8
|
|
||
Tax effect related to items of other comprehensive income
|
(3
|
)
|
|
(2
|
)
|
||
Total other comprehensive income, net of tax effect
|
9
|
|
|
6
|
|
||
Comprehensive income (loss)
|
$
|
(3,572
|
)
|
|
$
|
142
|
|
|
|
|
|
|
|
||||||
|
May 2, 2020
|
|
February 1, 2020
|
|
May 4, 2019
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current Assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,523
|
|
|
$
|
685
|
|
|
$
|
737
|
|
Receivables
|
170
|
|
|
409
|
|
|
237
|
|
|||
Merchandise inventories
|
4,923
|
|
|
5,188
|
|
|
5,498
|
|
|||
Prepaid expenses and other current assets
|
519
|
|
|
528
|
|
|
633
|
|
|||
Total Current Assets
|
7,135
|
|
|
6,810
|
|
|
7,105
|
|
|||
Property and Equipment - net of accumulated depreciation and
amortization of $4,560, $4,392 and $4,621 |
6,425
|
|
|
6,633
|
|
|
6,499
|
|
|||
Right of Use Assets
|
2,672
|
|
|
2,668
|
|
|
2,631
|
|
|||
Goodwill
|
838
|
|
|
3,908
|
|
|
3,908
|
|
|||
Other Intangible Assets – net
|
439
|
|
|
439
|
|
|
441
|
|
|||
Other Assets
|
1,072
|
|
|
714
|
|
|
712
|
|
|||
Total Assets
|
$
|
18,581
|
|
|
$
|
21,172
|
|
|
$
|
21,296
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current Liabilities:
|
|
|
|
|
|
||||||
Short-term debt
|
$
|
739
|
|
|
$
|
539
|
|
|
$
|
41
|
|
Merchandise accounts payable
|
2,196
|
|
|
1,682
|
|
|
1,950
|
|
|||
Accounts payable and accrued liabilities
|
2,757
|
|
|
3,448
|
|
|
2,846
|
|
|||
Income taxes
|
80
|
|
|
81
|
|
|
182
|
|
|||
Total Current Liabilities
|
5,772
|
|
|
5,750
|
|
|
5,019
|
|
|||
Long-Term Debt
|
4,918
|
|
|
3,621
|
|
|
4,680
|
|
|||
Long-Term Lease Liabilities
|
2,923
|
|
|
2,918
|
|
|
2,823
|
|
|||
Deferred Income Taxes
|
944
|
|
|
1,169
|
|
|
1,193
|
|
|||
Other Liabilities
|
1,327
|
|
|
1,337
|
|
|
1,258
|
|
|||
Shareholders' Equity
|
2,697
|
|
|
6,377
|
|
|
6,323
|
|
|||
Total Liabilities and Shareholders’ Equity
|
$
|
18,581
|
|
|
$
|
21,172
|
|
|
$
|
21,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Common
Stock |
|
Additional
Paid-In Capital |
|
Accumulated
Equity |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total Shareholders' Equity
|
||||||||||||
Balance at February 1, 2020
|
$
|
3
|
|
|
$
|
621
|
|
|
$
|
7,989
|
|
|
$
|
(1,241
|
)
|
|
$
|
(995
|
)
|
|
$
|
6,377
|
|
Net loss
|
|
|
|
|
(3,581
|
)
|
|
|
|
|
|
(3,581
|
)
|
||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
9
|
|
|
9
|
|
||||||||||
Common stock dividends
($0.3775 per share)
|
|
|
|
|
(117
|
)
|
|
|
|
|
|
(117
|
)
|
||||||||||
Stock-based compensation expense
|
|
|
6
|
|
|
|
|
|
|
|
|
6
|
|
||||||||||
Stock issued under stock plans
|
|
|
(62
|
)
|
|
|
|
61
|
|
|
|
|
(1
|
)
|
|||||||||
Other
|
|
|
|
|
|
|
|
|
4
|
|
|
4
|
|
||||||||||
Balance at May 2, 2020
|
$
|
3
|
|
|
$
|
565
|
|
|
$
|
4,291
|
|
|
$
|
(1,180
|
)
|
|
$
|
(982
|
)
|
|
$
|
2,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Common
Stock |
|
Additional
Paid-In Capital |
|
Accumulated
Equity |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total Shareholders' Equity
|
||||||||||||
Balance at February 2, 2019
|
$
|
3
|
|
|
$
|
652
|
|
|
$
|
8,050
|
|
|
$
|
(1,318
|
)
|
|
$
|
(951
|
)
|
|
$
|
6,436
|
|
Cumulative-effect adjustment (a)
|
|
|
|
|
(158
|
)
|
|
|
|
|
|
(158
|
)
|
||||||||||
Net income
|
|
|
|
|
136
|
|
|
|
|
|
|
136
|
|
||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
6
|
|
|
6
|
|
||||||||||
Common stock dividends
($0.3775 per share)
|
|
|
|
|
(117
|
)
|
|
|
|
|
|
(117
|
)
|
||||||||||
Stock-based compensation expense
|
|
|
14
|
|
|
|
|
|
|
|
|
14
|
|
||||||||||
Stock issued under stock plans
|
|
|
(60
|
)
|
|
|
|
66
|
|
|
|
|
6
|
|
|||||||||
Balance at May 4, 2019
|
$
|
3
|
|
|
$
|
606
|
|
|
$
|
7,911
|
|
|
$
|
(1,252
|
)
|
|
$
|
(945
|
)
|
|
$
|
6,323
|
|
|
|
|
|
||||
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(3,581
|
)
|
|
$
|
136
|
|
Adjustments to reconcile net income (loss) to net cash used by operating activities:
|
|
|
|
||||
Impairment, restructuring and other costs
|
3,184
|
|
|
1
|
|
||
Depreciation and amortization
|
237
|
|
|
236
|
|
||
Stock-based compensation expense
|
6
|
|
|
14
|
|
||
Gains on sale of real estate
|
(16
|
)
|
|
(43
|
)
|
||
Benefit plans
|
12
|
|
|
8
|
|
||
Deferred income taxes
|
(225
|
)
|
|
7
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Decrease in receivables
|
236
|
|
|
163
|
|
||
(Increase) decrease in merchandise inventories
|
265
|
|
|
(235
|
)
|
||
(Increase) decrease in prepaid expenses and other current assets
|
12
|
|
|
(6
|
)
|
||
Increase in merchandise accounts payable
|
629
|
|
|
247
|
|
||
Decrease in accounts payable and accrued liabilities
|
(531
|
)
|
|
(516
|
)
|
||
Increase (decrease) in current income taxes
|
(353
|
)
|
|
8
|
|
||
Change in other assets and liabilities
|
(39
|
)
|
|
(58
|
)
|
||
Net cash used by operating activities
|
(164
|
)
|
|
(38
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchase of property and equipment
|
(122
|
)
|
|
(204
|
)
|
||
Capitalized software
|
(38
|
)
|
|
(60
|
)
|
||
Disposition of property and equipment
|
21
|
|
|
34
|
|
||
Other, net
|
26
|
|
|
(7
|
)
|
||
Net cash used by investing activities
|
(113
|
)
|
|
(237
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Debt issued
|
1,500
|
|
|
—
|
|
||
Debt repaid
|
(4
|
)
|
|
(3
|
)
|
||
Dividends paid
|
(117
|
)
|
|
(116
|
)
|
||
Decrease in outstanding checks
|
(231
|
)
|
|
(45
|
)
|
||
Issuance of common stock
|
—
|
|
|
6
|
|
||
Net cash provided (used) by financing activities
|
1,148
|
|
|
(158
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
871
|
|
|
(433
|
)
|
||
Cash, cash equivalents and restricted cash beginning of period
|
731
|
|
|
1,248
|
|
||
Cash, cash equivalents and restricted cash end of period
|
$
|
1,602
|
|
|
$
|
815
|
|
Supplemental cash flow information:
|
|
|
|
||||
Interest paid
|
$
|
38
|
|
|
$
|
46
|
|
Interest received
|
3
|
|
|
7
|
|
||
Income taxes paid (net of refunds received)
|
2
|
|
|
12
|
|
|
|
•
|
The Company temporarily closed all stores on March 18, 2020, which included all Macy’s, Bloomingdale’s, Bluemercury, Macy’s Backstage, Bloomingdales the Outlet and Market by Macy’s stores. The first tranche of stores began reopening on May 4, 2020 and nearly all the Company's stores have been reopened.
|
•
|
In an effort to increase liquidity, the Company fully drew on its $1,500 million credit facility, announced the suspension of quarterly cash dividends beginning in the second quarter of 2020 and took additional steps to reduce discretionary spending. The Company's Board of Directors rescinded its authorization of any unused amounts under the Company's share repurchase program. In June 2020, the Company completed financing activities of nearly $4.5 billion. See Note 7, "Financing Activities," for further discussion on these activities.
|
•
|
To improve the Company's current cash position and reduce its cash expenditures during this uncertain time, the Company's Board of Directors and Chief Executive Officer did not receive compensation from the beginning of the COVID-19 crisis through June 30, 2020. In addition, the Company deferred cash expenditures where possible and temporarily implemented a furlough for the majority of its employee population that will end at the beginning of July 2020. Certain executives not impacted by the furlough took a temporary reduction of their pay through June 30, 2020.
|
•
|
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("the CARES Act") was signed into law, providing payroll tax credits for employee retention, deferral of payroll taxes, and several income tax provisions including modifications to the net interest deduction limitation, changes to certain property depreciation and allows for carryback of certain operating losses.
|
|
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
|
(millions)
|
||||||
Impairments
|
$
|
3,150
|
|
|
$
|
—
|
|
Restructuring
|
25
|
|
|
—
|
|
||
Other
|
9
|
|
|
1
|
|
||
Total
|
$
|
3,184
|
|
|
$
|
1
|
|
•
|
$3,070 million of goodwill impairments, with $2,972 million attributable to the Macy's reporting unit and $98 million attributable to the Bluemercury reporting unit. See discussion at Note 4, "Goodwill and Indefinite Lived Intangible Assets."
|
•
|
$80 million of impairments on long-lived tangible and right of use assets to adjust the carrying value of certain store locations to their estimated fair value.
|
|
Severance and other benefits
|
|
Professional fees and other related charges
|
|
Total
|
||||||
|
(millions)
|
||||||||||
Balance at February 1, 2020
|
$
|
115
|
|
|
$
|
9
|
|
|
$
|
124
|
|
Additions charged to expense
|
25
|
|
|
7
|
|
|
32
|
|
|||
Cash payments
|
(82
|
)
|
|
(6
|
)
|
|
(88
|
)
|
|||
Balance at May 2, 2020
|
$
|
58
|
|
|
$
|
10
|
|
|
$
|
68
|
|
|
|
May 2,
2020 |
|
February 1,
2020 |
|
May 4,
2019 |
||||||
|
(millions)
|
||||||||||
Non-amortizing intangible assets
|
|
|
|
|
|
||||||
Goodwill
|
$
|
9,290
|
|
|
$
|
9,290
|
|
|
$
|
9,290
|
|
Accumulated impairment losses
|
(8,452
|
)
|
|
(5,382
|
)
|
|
(5,382
|
)
|
|||
|
838
|
|
|
3,908
|
|
|
3,908
|
|
|||
Tradenames
|
403
|
|
|
403
|
|
|
403
|
|
|||
|
$
|
1,241
|
|
|
$
|
4,311
|
|
|
$
|
4,311
|
|
|
13 Weeks Ended
|
||||||||||||||||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||||||||||||||||
|
Net
Loss |
|
|
|
Shares
|
|
Net
Income |
|
|
|
Shares
|
||||||||||
|
(millions, except per share data)
|
||||||||||||||||||||
Net income (loss)
|
$
|
(3,581
|
)
|
|
|
|
309.7
|
|
|
$
|
136
|
|
|
|
|
308.2
|
|
||||
Shares to be issued under deferred compensation and other plans
|
|
|
|
|
0.9
|
|
|
|
|
|
|
0.9
|
|
||||||||
|
$
|
(3,581
|
)
|
|
|
|
310.6
|
|
|
$
|
136
|
|
|
|
|
309.1
|
|
||||
Basic earnings (loss) per share
|
|
|
$
|
(11.53
|
)
|
|
|
|
|
|
$
|
0.44
|
|
|
|
||||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Stock options and restricted stock units
|
|
|
|
|
—
|
|
|
|
|
|
|
2.3
|
|
||||||||
|
$
|
(3,581
|
)
|
|
|
|
310.6
|
|
|
$
|
136
|
|
|
|
|
311.4
|
|
||||
Diluted earnings (loss) per share
|
|
|
$
|
(11.53
|
)
|
|
|
|
|
|
$
|
0.44
|
|
|
|
|
|
13 Weeks Ended
|
||||||
Net sales by family of business
|
May 2, 2020
|
|
May 4, 2019
|
||||
|
(millions)
|
||||||
Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances
|
$
|
1,215
|
|
|
$
|
2,152
|
|
Women's Apparel
|
579
|
|
|
1,313
|
|
||
Men's and Kids'
|
573
|
|
|
1,202
|
|
||
Home/Other (a)
|
650
|
|
|
837
|
|
||
Total
|
$
|
3,017
|
|
|
$
|
5,504
|
|
|
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
|
(millions)
|
||||||
9.5% Amortizing debentures due 2021
|
$
|
2
|
|
|
$
|
2
|
|
9.75% Amortizing debentures due 2021
|
1
|
|
|
1
|
|
||
|
$
|
3
|
|
|
$
|
3
|
|
|
|
|
|
13 Weeks Ended
|
||||||
|
May 2, 2020
|
|
May 4, 2019
|
||||
|
(millions)
|
||||||
401(k) Qualified Defined Contribution Plan
|
$
|
13
|
|
|
$
|
25
|
|
|
|
|
|
||||
Non-Qualified Defined Contribution Plan
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
||||
Pension Plan
|
|
|
|
||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
19
|
|
|
26
|
|
||
Expected return on assets
|
(45
|
)
|
|
(48
|
)
|
||
Recognition of net actuarial loss
|
10
|
|
|
7
|
|
||
Amortization of prior service credit
|
—
|
|
|
—
|
|
||
|
$
|
(15
|
)
|
|
$
|
(14
|
)
|
Supplementary Retirement Plan
|
|
|
|
||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
4
|
|
|
6
|
|
||
Recognition of net actuarial loss
|
3
|
|
|
2
|
|
||
Amortization of prior service cost
|
—
|
|
|
—
|
|
||
|
$
|
7
|
|
|
$
|
8
|
|
|
|
|
|
||||
Total Retirement Expense
|
$
|
5
|
|
|
$
|
20
|
|
|
|
|
|
||||
Postretirement Obligations
|
|
|
|
||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
1
|
|
|
1
|
|
||
Recognition of net actuarial gain
|
(1
|
)
|
|
(1
|
)
|
||
Amortization of prior service credit
|
—
|
|
|
—
|
|
||
|
$
|
—
|
|
|
$
|
—
|
|
|
|
May 2, 2020
|
|
May 4, 2019
|
||||||||||||||||||||||||||||
|
|
|
Fair Value Measurements
|
|
|
|
Fair Value Measurements
|
||||||||||||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||||||||||||
Marketable equity and debt securities
|
$
|
102
|
|
|
$
|
28
|
|
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
110
|
|
|
$
|
31
|
|
|
$
|
79
|
|
|
$
|
—
|
|
|
May 2, 2020
|
|
May 4, 2019
|
||||||||||||||||||||
|
Notional
Amount
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Notional
Amount
|
|
Carrying
Amount
|
|
Fair
Value
|
||||||||||||
|
(millions)
|
||||||||||||||||||||||
Long-term debt
|
$
|
4,903
|
|
|
$
|
4,918
|
|
|
$
|
3,698
|
|
|
$
|
4,667
|
|
|
$
|
4,680
|
|
|
$
|
4,614
|
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
867
|
|
|
$
|
2,955
|
|
|
$
|
(805
|
)
|
|
$
|
3,017
|
|
Credit card revenues (expense), net
|
—
|
|
|
(5
|
)
|
|
136
|
|
|
—
|
|
|
131
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
(796
|
)
|
|
(2,510
|
)
|
|
805
|
|
|
(2,501
|
)
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
(562
|
)
|
|
(1,036
|
)
|
|
—
|
|
|
(1,598
|
)
|
|||||
Gains on sale of real estate
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|||||
Impairment, restructuring and other costs
|
—
|
|
|
(2,722
|
)
|
|
(462
|
)
|
|
—
|
|
|
(3,184
|
)
|
|||||
Operating loss
|
—
|
|
|
(3,218
|
)
|
|
(901
|
)
|
|
—
|
|
|
(4,119
|
)
|
|||||
Benefit plan income, net
|
—
|
|
|
3
|
|
|
6
|
|
|
—
|
|
|
9
|
|
|||||
Interest (expense) income, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
External
|
1
|
|
|
(49
|
)
|
|
1
|
|
|
—
|
|
|
(47
|
)
|
|||||
Intercompany
|
—
|
|
|
(18
|
)
|
|
18
|
|
|
—
|
|
|
—
|
|
|||||
Equity in loss of subsidiaries
|
(3,582
|
)
|
|
(795
|
)
|
|
—
|
|
|
4,377
|
|
|
—
|
|
|||||
Loss before income taxes
|
(3,581
|
)
|
|
(4,077
|
)
|
|
(876
|
)
|
|
4,377
|
|
|
(4,157
|
)
|
|||||
Federal, state and local income
tax benefit |
—
|
|
|
427
|
|
|
149
|
|
|
—
|
|
|
576
|
|
|||||
Net loss
|
$
|
(3,581
|
)
|
|
$
|
(3,650
|
)
|
|
$
|
(727
|
)
|
|
$
|
4,377
|
|
|
$
|
(3,581
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive loss
|
$
|
(3,572
|
)
|
|
$
|
(3,641
|
)
|
|
$
|
(721
|
)
|
|
$
|
4,362
|
|
|
$
|
(3,572
|
)
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
Net sales
|
$
|
—
|
|
|
$
|
2,154
|
|
|
$
|
4,768
|
|
|
$
|
(1,418
|
)
|
|
$
|
5,504
|
|
Credit card revenues, net
|
—
|
|
|
(2
|
)
|
|
174
|
|
|
—
|
|
|
172
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
|
(1,341
|
)
|
|
(3,480
|
)
|
|
1,418
|
|
|
(3,403
|
)
|
|||||
Selling, general and administrative expenses
|
—
|
|
|
(803
|
)
|
|
(1,309
|
)
|
|
—
|
|
|
(2,112
|
)
|
|||||
Gains on sale of real estate
|
—
|
|
|
24
|
|
|
19
|
|
|
—
|
|
|
43
|
|
|||||
Impairment and other costs
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Operating income
|
—
|
|
|
32
|
|
|
171
|
|
|
—
|
|
|
203
|
|
|||||
Benefit plan income, net
|
—
|
|
|
3
|
|
|
4
|
|
|
—
|
|
|
7
|
|
|||||
Interest (expense) income, net:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
External
|
5
|
|
|
(53
|
)
|
|
1
|
|
|
—
|
|
|
(47
|
)
|
|||||
Intercompany
|
—
|
|
|
(19
|
)
|
|
19
|
|
|
—
|
|
|
—
|
|
|||||
Equity in earnings (loss) of subsidiaries
|
132
|
|
|
(30
|
)
|
|
—
|
|
|
(102
|
)
|
|
—
|
|
|||||
Income (loss) before income taxes
|
137
|
|
|
(67
|
)
|
|
195
|
|
|
(102
|
)
|
|
163
|
|
|||||
Federal, state and local income
tax benefit (expense) |
(1
|
)
|
|
24
|
|
|
(50
|
)
|
|
—
|
|
|
(27
|
)
|
|||||
Net income (loss)
|
$
|
136
|
|
|
$
|
(43
|
)
|
|
$
|
145
|
|
|
$
|
(102
|
)
|
|
$
|
136
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss)
|
$
|
142
|
|
|
$
|
(38
|
)
|
|
$
|
149
|
|
|
$
|
(111
|
)
|
|
$
|
142
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,160
|
|
|
$
|
25
|
|
|
$
|
338
|
|
|
$
|
—
|
|
|
$
|
1,523
|
|
Receivables
|
—
|
|
|
23
|
|
|
147
|
|
|
—
|
|
|
170
|
|
|||||
Merchandise inventories
|
—
|
|
|
2,072
|
|
|
2,851
|
|
|
—
|
|
|
4,923
|
|
|||||
Income taxes
|
—
|
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|||||
Prepaid expenses and other current assets
|
—
|
|
|
102
|
|
|
417
|
|
|
—
|
|
|
519
|
|
|||||
Total Current Assets
|
1,160
|
|
|
2,222
|
|
|
3,756
|
|
|
(3
|
)
|
|
7,135
|
|
|||||
Property and Equipment – net
|
—
|
|
|
2,978
|
|
|
3,447
|
|
|
—
|
|
|
6,425
|
|
|||||
Right of Use Assets
|
—
|
|
|
600
|
|
|
2,072
|
|
|
—
|
|
|
2,672
|
|
|||||
Goodwill
|
—
|
|
|
670
|
|
|
168
|
|
|
—
|
|
|
838
|
|
|||||
Other Intangible Assets – net
|
—
|
|
|
4
|
|
|
435
|
|
|
—
|
|
|
439
|
|
|||||
Other Assets
|
418
|
|
|
46
|
|
|
608
|
|
|
—
|
|
|
1,072
|
|
|||||
Deferred Income Taxes
|
11
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
|||||
Intercompany Receivable
|
1,598
|
|
|
—
|
|
|
677
|
|
|
(2,275
|
)
|
|
—
|
|
|||||
Investment in Subsidiaries
|
—
|
|
|
2,010
|
|
|
—
|
|
|
(2,010
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
3,187
|
|
|
$
|
8,530
|
|
|
$
|
11,163
|
|
|
$
|
(4,299
|
)
|
|
$
|
18,581
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
739
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
739
|
|
Merchandise accounts payable
|
—
|
|
|
928
|
|
|
1,268
|
|
|
—
|
|
|
2,196
|
|
|||||
Accounts payable and accrued liabilities
|
14
|
|
|
719
|
|
|
2,024
|
|
|
—
|
|
|
2,757
|
|
|||||
Income taxes
|
65
|
|
|
18
|
|
|
—
|
|
|
(3
|
)
|
|
80
|
|
|||||
Total Current Liabilities
|
79
|
|
|
2,404
|
|
|
3,292
|
|
|
(3
|
)
|
|
5,772
|
|
|||||
Long-Term Debt
|
—
|
|
|
4,918
|
|
|
—
|
|
|
—
|
|
|
4,918
|
|
|||||
Long-Term Lease Liabilities
|
—
|
|
|
548
|
|
|
2,375
|
|
|
—
|
|
|
2,923
|
|
|||||
Intercompany Payable
|
—
|
|
|
2,275
|
|
|
—
|
|
|
(2,275
|
)
|
|
—
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
377
|
|
|
578
|
|
|
(11
|
)
|
|
944
|
|
|||||
Other Liabilities
|
25
|
|
|
407
|
|
|
895
|
|
|
—
|
|
|
1,327
|
|
|||||
Accumulated Losses from Subsidiaries
|
386
|
|
|
—
|
|
|
—
|
|
|
(386
|
)
|
|
—
|
|
|||||
Shareholders' Equity (Deficit)
|
2,697
|
|
|
(2,399
|
)
|
|
4,023
|
|
|
(1,624
|
)
|
|
2,697
|
|
|||||
Total Liabilities and Shareholders' Equity
|
$
|
3,187
|
|
|
$
|
8,530
|
|
|
$
|
11,163
|
|
|
$
|
(4,299
|
)
|
|
$
|
18,581
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
293
|
|
|
$
|
151
|
|
|
$
|
293
|
|
|
$
|
—
|
|
|
$
|
737
|
|
Receivables
|
—
|
|
|
40
|
|
|
197
|
|
|
—
|
|
|
237
|
|
|||||
Merchandise inventories
|
—
|
|
|
2,369
|
|
|
3,129
|
|
|
—
|
|
|
5,498
|
|
|||||
Prepaid expenses and other current assets
|
—
|
|
|
163
|
|
|
470
|
|
|
—
|
|
|
633
|
|
|||||
Total Current Assets
|
293
|
|
|
2,723
|
|
|
4,089
|
|
|
—
|
|
|
7,105
|
|
|||||
Property and Equipment – net
|
—
|
|
|
3,202
|
|
|
3,297
|
|
|
—
|
|
|
6,499
|
|
|||||
Right of Use Assets
|
—
|
|
|
677
|
|
|
1,954
|
|
|
—
|
|
|
2,631
|
|
|||||
Goodwill
|
—
|
|
|
3,326
|
|
|
582
|
|
|
—
|
|
|
3,908
|
|
|||||
Other Intangible Assets – net
|
—
|
|
|
5
|
|
|
436
|
|
|
—
|
|
|
441
|
|
|||||
Other Assets
|
—
|
|
|
28
|
|
|
684
|
|
|
—
|
|
|
712
|
|
|||||
Deferred Income Taxes
|
6
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||||
Intercompany Receivable
|
2,436
|
|
|
—
|
|
|
886
|
|
|
(3,322
|
)
|
|
—
|
|
|||||
Investment in Subsidiaries
|
3,776
|
|
|
3,061
|
|
|
—
|
|
|
(6,837
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
6,511
|
|
|
$
|
13,022
|
|
|
$
|
11,928
|
|
|
$
|
(10,165
|
)
|
|
$
|
21,296
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
Merchandise accounts payable
|
—
|
|
|
845
|
|
|
1,105
|
|
|
—
|
|
|
1,950
|
|
|||||
Accounts payable and accrued liabilities
|
73
|
|
|
786
|
|
|
1,987
|
|
|
—
|
|
|
2,846
|
|
|||||
Income taxes
|
87
|
|
|
61
|
|
|
34
|
|
|
—
|
|
|
182
|
|
|||||
Total Current Liabilities
|
160
|
|
|
1,733
|
|
|
3,126
|
|
|
—
|
|
|
5,019
|
|
|||||
Long-Term Debt
|
—
|
|
|
4,680
|
|
|
—
|
|
|
—
|
|
|
4,680
|
|
|||||
Long-Term Lease Liabilities
|
—
|
|
|
607
|
|
|
2,216
|
|
|
—
|
|
|
2,823
|
|
|||||
Intercompany Payable
|
—
|
|
|
3,322
|
|
|
—
|
|
|
(3,322
|
)
|
|
—
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
626
|
|
|
573
|
|
|
(6
|
)
|
|
1,193
|
|
|||||
Other Liabilities
|
28
|
|
|
341
|
|
|
889
|
|
|
—
|
|
|
1,258
|
|
|||||
Shareholders' Equity
|
6,323
|
|
|
1,713
|
|
|
5,124
|
|
|
(6,837
|
)
|
|
6,323
|
|
|||||
Total Liabilities and Shareholders' Equity
|
$
|
6,511
|
|
|
$
|
13,022
|
|
|
$
|
11,928
|
|
|
$
|
(10,165
|
)
|
|
$
|
21,296
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
ASSETS:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
413
|
|
|
$
|
59
|
|
|
$
|
213
|
|
|
$
|
—
|
|
|
$
|
685
|
|
Receivables
|
—
|
|
|
83
|
|
|
326
|
|
|
—
|
|
|
409
|
|
|||||
Merchandise inventories
|
—
|
|
|
2,239
|
|
|
2,949
|
|
|
—
|
|
|
5,188
|
|
|||||
Prepaid expenses and other current assets
|
—
|
|
|
118
|
|
|
410
|
|
|
—
|
|
|
528
|
|
|||||
Total Current Assets
|
413
|
|
|
2,499
|
|
|
3,898
|
|
|
—
|
|
|
6,810
|
|
|||||
Property and Equipment – net
|
—
|
|
|
3,103
|
|
|
3,530
|
|
|
—
|
|
|
6,633
|
|
|||||
Right of Use Assets
|
—
|
|
|
611
|
|
|
2,057
|
|
|
—
|
|
|
2,668
|
|
|||||
Goodwill
|
—
|
|
|
3,326
|
|
|
582
|
|
|
—
|
|
|
3,908
|
|
|||||
Other Intangible Assets – net
|
—
|
|
|
4
|
|
|
435
|
|
|
—
|
|
|
439
|
|
|||||
Other Assets
|
—
|
|
|
37
|
|
|
677
|
|
|
—
|
|
|
714
|
|
|||||
Deferred Income Taxes
|
12
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|||||
Intercompany Receivable
|
2,675
|
|
|
—
|
|
|
1,128
|
|
|
(3,803
|
)
|
|
—
|
|
|||||
Investment in Subsidiaries
|
3,433
|
|
|
2,796
|
|
|
—
|
|
|
(6,229
|
)
|
|
—
|
|
|||||
Total Assets
|
$
|
6,533
|
|
|
$
|
12,376
|
|
|
$
|
12,307
|
|
|
$
|
(10,044
|
)
|
|
$
|
21,172
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term debt
|
$
|
—
|
|
|
$
|
539
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
539
|
|
Merchandise accounts payable
|
—
|
|
|
702
|
|
|
980
|
|
|
—
|
|
|
1,682
|
|
|||||
Accounts payable and accrued liabilities
|
126
|
|
|
909
|
|
|
2,413
|
|
|
—
|
|
|
3,448
|
|
|||||
Income taxes
|
5
|
|
|
11
|
|
|
65
|
|
|
—
|
|
|
81
|
|
|||||
Total Current Liabilities
|
131
|
|
|
2,161
|
|
|
3,458
|
|
|
—
|
|
|
5,750
|
|
|||||
Long-Term Debt
|
—
|
|
|
3,621
|
|
|
—
|
|
|
—
|
|
|
3,621
|
|
|||||
Long-Term Lease Liabilities
|
—
|
|
|
543
|
|
|
2,375
|
|
|
—
|
|
|
2,918
|
|
|||||
Intercompany Payable
|
—
|
|
|
3,803
|
|
|
—
|
|
|
(3,803
|
)
|
|
—
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
595
|
|
|
586
|
|
|
(12
|
)
|
|
1,169
|
|
|||||
Other Liabilities
|
25
|
|
|
414
|
|
|
898
|
|
|
—
|
|
|
1,337
|
|
|||||
Shareholders' Equity
|
6,377
|
|
|
1,239
|
|
|
4,990
|
|
|
(6,229
|
)
|
|
6,377
|
|
|||||
Total Liabilities and Shareholders' Equity
|
$
|
6,533
|
|
|
$
|
12,376
|
|
|
$
|
12,307
|
|
|
$
|
(10,044
|
)
|
|
$
|
21,172
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
$
|
(3,581
|
)
|
|
$
|
(3,650
|
)
|
|
$
|
(727
|
)
|
|
$
|
4,377
|
|
|
$
|
(3,581
|
)
|
Impairment, restructuring and other costs
|
—
|
|
|
2,722
|
|
|
462
|
|
|
—
|
|
|
3,184
|
|
|||||
Equity in loss of subsidiaries
|
3,582
|
|
|
795
|
|
|
—
|
|
|
(4,377
|
)
|
|
—
|
|
|||||
Dividends received from subsidiaries
|
251
|
|
|
—
|
|
|
—
|
|
|
(251
|
)
|
|
—
|
|
|||||
Depreciation and amortization
|
—
|
|
|
77
|
|
|
160
|
|
|
—
|
|
|
237
|
|
|||||
Gains on sale of real estate
|
—
|
|
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
(16
|
)
|
|||||
Changes in assets, liabilities and other items not separately identified
|
(353
|
)
|
|
151
|
|
|
214
|
|
|
—
|
|
|
12
|
|
|||||
Net cash provided (used) by operating activities
|
(101
|
)
|
|
95
|
|
|
93
|
|
|
(251
|
)
|
|
(164
|
)
|
|||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property and equipment and capitalized software, net of dispositions
|
—
|
|
|
(34
|
)
|
|
(105
|
)
|
|
—
|
|
|
(139
|
)
|
|||||
Other, net
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|||||
Net cash used by investing activities
|
—
|
|
|
(34
|
)
|
|
(79
|
)
|
|
—
|
|
|
(113
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt issued, net of debt repaid
|
—
|
|
|
1,497
|
|
|
(1
|
)
|
|
—
|
|
|
1,496
|
|
|||||
Dividends paid
|
(117
|
)
|
|
—
|
|
|
(251
|
)
|
|
251
|
|
|
(117
|
)
|
|||||
Intercompany activity, net
|
1,082
|
|
|
(1,529
|
)
|
|
447
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
(117
|
)
|
|
(68
|
)
|
|
(46
|
)
|
|
—
|
|
|
(231
|
)
|
|||||
Net cash provided (used) by financing activities
|
848
|
|
|
(100
|
)
|
|
149
|
|
|
251
|
|
|
1,148
|
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
747
|
|
|
(39
|
)
|
|
163
|
|
|
—
|
|
|
871
|
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
413
|
|
|
64
|
|
|
254
|
|
|
—
|
|
|
731
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,160
|
|
|
$
|
25
|
|
|
$
|
417
|
|
|
$
|
—
|
|
|
$
|
1,602
|
|
|
|
Parent
|
|
Subsidiary
Issuer
|
|
Other
Subsidiaries
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss)
|
$
|
136
|
|
|
$
|
(43
|
)
|
|
$
|
145
|
|
|
$
|
(102
|
)
|
|
$
|
136
|
|
Impairment and other costs
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Equity in loss (earnings) of subsidiaries
|
(132
|
)
|
|
30
|
|
|
—
|
|
|
102
|
|
|
—
|
|
|||||
Dividends received from subsidiaries
|
225
|
|
|
—
|
|
|
—
|
|
|
(225
|
)
|
|
—
|
|
|||||
Depreciation and amortization
|
—
|
|
|
85
|
|
|
151
|
|
|
—
|
|
|
236
|
|
|||||
Gains on sale of real estate
|
—
|
|
|
(24
|
)
|
|
(19
|
)
|
|
—
|
|
|
(43
|
)
|
|||||
Changes in assets, liabilities and other items not separately identified
|
78
|
|
|
(118
|
)
|
|
(328
|
)
|
|
—
|
|
|
(368
|
)
|
|||||
Net cash provided (used) by operating activities
|
307
|
|
|
(70
|
)
|
|
(50
|
)
|
|
(225
|
)
|
|
(38
|
)
|
|||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchase of property and equipment and capitalized software, net of dispositions
|
—
|
|
|
(52
|
)
|
|
(178
|
)
|
|
—
|
|
|
(230
|
)
|
|||||
Other, net
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Net cash used by investing activities
|
—
|
|
|
(52
|
)
|
|
(185
|
)
|
|
—
|
|
|
(237
|
)
|
|||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Debt repaid
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Dividends paid
|
(116
|
)
|
|
—
|
|
|
(225
|
)
|
|
225
|
|
|
(116
|
)
|
|||||
Issuance of common stock
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
Intercompany activity, net
|
(700
|
)
|
|
214
|
|
|
486
|
|
|
—
|
|
|
—
|
|
|||||
Other, net
|
(93
|
)
|
|
28
|
|
|
20
|
|
|
—
|
|
|
(45
|
)
|
|||||
Net cash provided (used) by financing activities
|
(903
|
)
|
|
239
|
|
|
281
|
|
|
225
|
|
|
(158
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(596
|
)
|
|
117
|
|
|
46
|
|
|
—
|
|
|
(433
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
889
|
|
|
64
|
|
|
295
|
|
|
—
|
|
|
1,248
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
293
|
|
|
$
|
181
|
|
|
$
|
341
|
|
|
$
|
—
|
|
|
$
|
815
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
The Company temporarily closed all stores on March 18, 2020, which included all Macy’s, Bloomingdale’s, Bluemercury, Macy’s Backstage, Bloomingdales the Outlet and Market by Macy’s stores. The first tranche of stores began reopening on May 4, 2020 and as of July 1, 2020, nearly all the Company's stores have been reopened.
|
•
|
In an effort to increase liquidity, the Company fully drew on its $1,500 million credit facility, announced the suspension of quarterly cash dividends beginning in the second quarter of 2020 and took additional steps to reduce discretionary spending. The Company's Board of Directors rescinded its authorization of any unused amounts under the Company's share repurchase program. In June 2020, the Company completed financing activities of nearly $4.5 billion. See Note 7, "Financing Activities," for further discussion on these activities.
|
•
|
To improve the Company's current cash position and reduce its cash expenditures during this uncertain time, the Company's Board of Directors and Chief Executive Officer did not receive compensation from the beginning of the COVID-19 crisis through June 30, 2020. In addition, the Company deferred cash expenditures where possible and temporarily implemented a furlough for the majority of its employee population that will end at the beginning of July 2020. Certain executives not impacted by the furlough took a temporary reduction of their pay through June 30, 2020.
|
•
|
During the 13 weeks ended May 2, 2020, the Company incurred non-cash impairment charges on long-lived tangible and right of use assets to adjust the carrying value of certain store locations to their estimated fair value. The Company also incurred a non-cash impairment charge on goodwill as a result of the sustained decline in the Company's market capitalization and decline in projected cash flows primarily as a result of the COVID-19 pandemic. See Note 3, "Impairment, Restructuring and Other Costs" and Note 4, "Goodwill and Indefinite Lived Intangible Assets", respectively, for further discussion of these charges.
|
•
|
On March 27, 2020, the CARES Act was signed into law, providing payroll tax credits for employee retention, deferral of payroll taxes, and several income tax provisions including modifications to the net interest deduction limitation, changes to certain property depreciation and allows for carryback of certain operating losses.
|
•
|
Strengthen Customer Relationships: The Company is focusing on building customer lifetime value and expanding the Macy's Star Rewards loyalty program with the launch of Loyalty 3.0 in early February 2020. Loyalty 3.0 allows every Star Rewards member to earn loyalty rewards on their purchases regardless of tender.
|
•
|
Curate Quality Fashion: The Company is repositioning its merchandise category focus to drive sales and improve gross margin.
|
•
|
Accelerate Digital Growth: The Company will continue to invest in its websites and mobile apps to deliver a superior fashion experience and accelerate growth. The Company will grow its customer franchise with a strong focus on personalization and continued innovation to deliver the best digital fashion experience to its customers.
|
•
|
Optimize the Store Portfolio: The Company completed a rigorous evaluation of the Macy’s store portfolio. This included a store-level assessment of each store’s overall value to the fleet, including predicted profitability based on consumer trends and demographics. As a result, the Company plans to close approximately 125 of its least productive stores over the next three years, including approximately 30 stores that were announced for closure in the spring of 2020.
|
•
|
Reset Cost Base: The Company is streamlining and right-sizing the organization and expense base to drive improvement in working capital and operating results. This includes reductions in corporate and support functions, campus consolidations and the consolidation of the Company's sole headquarters to New York City, New York. Additionally, the Company is further reshaping its supply chain to support omnichannel customer behavior and the Company’s new retail ecosystem.
|
|
|
First Quarter of 2020
|
|
|
First Quarter of 2019
|
|
|
||||||||||
|
|
Amount
|
|
% to Net Sales
|
|
|
Amount
|
|
% to Net Sales
|
|
|
||||||
|
|
(dollars in millions, except per share figures)
|
|||||||||||||||
Net sales
|
|
$
|
3,017
|
|
|
|
|
|
$
|
5,504
|
|
|
|
|
|
||
Credit card revenues, net
|
|
131
|
|
|
4.3
|
|
%
|
172
|
|
|
3.1
|
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
|
(2,501
|
)
|
|
(82.9
|
)
|
%
|
(3,403
|
)
|
|
(61.8
|
)
|
%
|
||||
Selling, general and administrative expenses
|
|
(1,598
|
)
|
|
(52.9
|
)
|
%
|
(2,112
|
)
|
|
(38.4
|
)
|
%
|
||||
Gains on sale of real estate
|
|
16
|
|
|
0.5
|
|
%
|
43
|
|
|
0.8
|
|
%
|
||||
Impairment, restructuring and other costs
|
|
(3,184
|
)
|
|
(105.5
|
)
|
%
|
(1
|
)
|
|
—
|
|
%
|
||||
Operating income (loss)
|
|
(4,119
|
)
|
|
(136.5
|
)
|
%
|
203
|
|
|
3.7
|
|
%
|
||||
Benefit plan income, net
|
|
9
|
|
|
|
|
|
7
|
|
|
|
|
|
||||
Interest expense, net
|
|
(47
|
)
|
|
|
|
|
(47
|
)
|
|
|
|
|
||||
Income (loss) before income taxes
|
|
(4,157
|
)
|
|
|
|
|
163
|
|
|
|
|
|
||||
Federal, state and local income tax benefit (expense)
|
|
576
|
|
|
|
|
|
(27
|
)
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
(3,581
|
)
|
|
|
|
$
|
136
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings (loss) per share
|
|
$
|
(11.53
|
)
|
|
|
|
|
$
|
0.44
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Supplemental Financial Measure
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross margin (a)
|
|
$
|
516
|
|
|
17.1
|
|
%
|
$
|
2,101
|
|
|
38.2
|
|
%
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Supplemental Non-GAAP Financial Measure
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings (loss) per share, excluding the impact of certain items
|
|
$
|
(2.03
|
)
|
|
|
|
|
$
|
0.44
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
•
|
$3,070 million of goodwill impairments, with $2,972 million attributable to the Macy's reporting unit and $98 million attributable to the Bluemercury reporting unit. See discussion at Note 4, "Goodwill and Indefinite Lived Intangible Assets."
|
•
|
$80 million of impairments on long-lived tangible and right of use assets to adjust the carrying value of certain store locations to their estimated fair value.
|
|
|
First Quarter of 2020
|
|
First Quarter of 2019
|
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Net Income (Loss)
|
|
Diluted Earnings (Loss) Per Share
|
|
Net Income
|
|
Diluted Earnings Per Share
|
||||||||
As reported
|
|
$
|
(3,581
|
)
|
|
$
|
(11.53
|
)
|
|
$
|
136
|
|
|
$
|
0.44
|
|
Impairment, restructuring and other costs
|
|
3,184
|
|
|
10.25
|
|
|
1
|
|
|
—
|
|
||||
Income tax impact of certain items noted above
|
|
(233
|
)
|
|
(0.75
|
)
|
|
—
|
|
|
—
|
|
||||
As adjusted
|
|
$
|
(630
|
)
|
|
$
|
(2.03
|
)
|
|
$
|
137
|
|
|
$
|
0.44
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Item 1.
|
Legal Proceedings.
|
Item 1A.
|
Risk Factors.
|
•
|
On March 18, 2020, the Company temporarily closed all of its stores and subsequently furloughed the majority of its workforce. As different states and localities have begun to ease the regulations imposed to slow the spread of COVID-19, the Company has, in turn, recently begun to open a portion of its stores and expects to continue to do so over the coming weeks and months. The decision to reopen a store is driven by evaluating whether such decision is safe for the Company’s customers and employees as well as an evaluation of guidance provided by the federal, state and local governments. The duration of the impact of the COVID-19 pandemic is highly uncertain. There may be further outbreaks which could require the Company to close recently reopened stores, or it may take longer than the Company expects for conditions to improve sufficiently to allow reopening of additional stores. As a result, there can be no assurance as to whether recently reopened stores can remain open, whether or when any additional stores will be reopened or whether further store closures may be required. The Company experienced, and expects to continue to experience, significant reductions and volatility in demand for its retail products as customers are not able to purchase merchandise due to illness, quarantine or government or self-imposed restrictions placed on the Company’s stores’ operations. Additionally, social distancing measures or changes in consumer spending behaviors due to COVID-19 may continue to impact traffic in stores after normal operations are resumed and such actions could result in a loss of sales and profit. In addition, the Company expects to be impacted by the deterioration in the economic conditions in North America, which could have an impact on discretionary consumer spending. Finally, a so-called second wave of the COVID-19 pandemic could further delay the reopening of any of the Company’s stores and could also lead to further store closures. While it is premature to accurately predict the ultimate impact of these developments, the Company expects its results of operations will be adversely impacted in a significant manner.
|
•
|
The Company has experienced and will continue to experience temporary or long-term disruptions in its supply chain, as the outbreak has resulted in travel disruptions and has impacted manufacturing and distribution throughout the
|
•
|
The Company has been and may continue to be required to change its plan for inventory receipts, which could place financial pressure on its brand partners. Such actions may negatively impact relationships with brand partners or adversely impact their financial performance and position. If this occurs, current brand partners’ ability to meet their obligations to the Company may be impacted or the Company may also be required to identify new brand partner relationships.
|
•
|
The Company’s liquidity has been negatively impacted by the store closures. While the Company has obtained additional financing, further actions may be required to improve the Company’s cash position, including but not limited to, monetizing Company assets, elongating employee furloughs, and foregoing capital expenditures and other discretionary expenses. Failure to obtain additional financing or enhance the Company’s liquidity could lead to default on its current financing arrangements and impact the Company’s ability to meet its obligations as they come due.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
Total
Number
of Shares
Purchased
|
|
Average
Price Paid
per Share ($)
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
|
|
Maximum Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1)($)
|
||||
|
(thousands)
|
|
|
|
(thousands)
|
|
(millions)
|
||||
February 2, 2020 – February 29, 2020
|
41
|
|
|
13.39
|
|
|
—
|
|
|
1,716
|
|
March 1, 2020 – April 4, 2020
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
April 5, 2020 – May 2, 2020
|
1
|
|
|
5.63
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
19.02
|
|
|
—
|
|
|
|
(1)
|
Commencing in January 2000, the Company's Board of Directors has from time to time approved authorizations to purchase, in the aggregate, up to $18 billion of Common Stock . As of February 2, 2020, $1,716 million of authorization remained unused. On March 26, 2020, the Company's Board of Directors rescinded its authorization of the remaining unused amount.
|
Item 5.
|
Other Information.
|
•
|
the effects of the weather, natural disasters, and health pandemics, including the COVID-19 pandemic, on the Company’s business, including the ability to open stores, customer demand and its supply chain, as well as its consolidated results of operations, financial position and cash flows;
|
•
|
the possible invalidity of the underlying beliefs and assumptions;
|
•
|
the Company’s ability to successfully implement its Polaris strategy, including the ability to realize the anticipated benefits within the expected time frame or at all;
|
•
|
the success of the Company’s operational decisions, such as product sourcing, merchandise mix and pricing, and marketing, and strategic initiatives, such as Growth stores, Backstage on-mall off-price business, and vendor direct expansion;
|
•
|
general consumer-spending levels, including the impact of changes in general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, and the costs of basic necessities and other goods;
|
•
|
competitive pressures from department stores, specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, and all other retail channels, including the Internet, catalogs and television;
|
•
|
the Company’s ability to remain competitive and relevant as consumers’ shopping behaviors migrate to other shopping channels and to maintain its brand and reputation;
|
•
|
possible systems failures and/or security breaches, including any security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach;
|
•
|
the cost of employee benefits as well as attracting and retaining quality employees;
|
•
|
transactions and strategy involving the Company's real estate portfolio;
|
•
|
the seasonal nature of the Company's business;
|
•
|
conditions to, or changes in the timing of, proposed transactions, and changes in expected synergies, cost savings and non-recurring charges;
|
•
|
the potential for the incurrence of charges in connection with the impairment of intangible assets, including goodwill;
|
•
|
possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions;
|
•
|
possible actions taken or omitted to be taken by third parties, including customers, suppliers, business partners, competitors and legislative, regulatory, judicial and other governmental authorities and officials;
|
•
|
changes in relationships with vendors and other product and service providers;
|
•
|
currency, interest and exchange rates and other capital market, economic and geo-political conditions;
|
•
|
unstable political conditions, civil unrest, terrorist activities and armed conflicts;
|
•
|
the possible inability of the Company's manufacturers or transporters to deliver products in a timely manner or meet the Company's quality standards;
|
•
|
the Company’s reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional and global health pandemics, and regional political and economic conditions; and
|
•
|
duties, taxes, other charges and quotas on imports.
|
Item 6.
|
Exhibits.
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
The following financial statements from Macy's, Inc.'s Quarterly Report on Form 10-Q for the quarter ended May 2, 2020, filed on July 2, 2020, are formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Changes in Shareholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
MACY’S, INC.
|
|
|
|
|
|
By:
|
/s/ ELISA D. GARCIA
|
|
|
Elisa D. Garcia
Executive Vice President, Chief Legal Officer and Secretary
|
|
|
|
|
By:
|
/s/ PAUL GRISCOM
|
|
|
Paul Griscom
Vice President, Financial Reporting and Interim Chief Accounting Officer
|
1 Year Macys Chart |
1 Month Macys Chart |
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