Macy’s, Inc. Reports Third Quarter Earnings of 36 Cents Per Diluted Share

  Macy’s, Inc. Reports Third Quarter Earnings of 36 Cents Per Diluted Share

                Company increases full-year earnings guidance

Business Wire

CINCINNATI -- November 07, 2012

Macy’s, Inc. (NYSE: M) today reported strong third quarter earnings that
underscore the company’s continued progress in implementing key business
strategies to drive growth. Earnings were 36 cents per diluted share for the
third quarter of 2012, ended Oct. 27, 2012. This compares with earnings of 32
cents per diluted share in last year’s third quarter.

“We were pleased to deliver sales and earnings growth for the 11^th
consecutive quarter,” said Terry J. Lundgren, chairman, president and chief
executive officer of Macy’s, Inc. “Our success in the third quarter reflected
a combination of factors, as has been the case over the past several years. We
continue to implement our My Macy’s localization, omnichannel integration and
enhanced customer engagement strategies with increasing precision, passion and
success. This has helped us to deepen our relationship with customers and
capture market share.

“We have confidence in our ability to continue to grow sales and earnings in
the fourth quarter, even taking into account a recovery from Hurricane Sandy
that will cause stress to consumers and our employees in the Northeast and
Mid-Atlantic regions. Throughout the holiday season, we will be offering our
customers new and fresh merchandise assortments, great value and an engaging
shopping environment at both Macy’s and Bloomingdale’s – in store, online and
via mobile devices. We are providing more reasons than ever for customers to
shop us first and buy from Macy’s and Bloomingdale’s, especially for memorable
gifts for family and friends,” Lundgren said.

For the first three quarters of 2012, Macy’s, Inc.’s diluted earnings per
share were $1.45, compared with earnings of $1.18 per diluted share in the
first three quarters of 2011.

Sales

Sales in the third quarter totaled $6.075 billion, up 3.8 percent from total
sales of $5.853 billion in the third quarter of 2011. On a same-store basis,
Macy’s, Inc.’s third quarter sales were up 3.7 percent.

For the year to date, Macy’s, Inc. sales totaled $18.336 billion, up 3.7
percent from total sales of $17.681 billion in the first 39 weeks of 2011. On
a same-store basis, Macy’s, Inc.’s year-to-date sales were up 3.7 percent.

Online sales (macys.com and bloomingdales.com combined) were up 40.4 percent
in the third quarter and 36.8 percent year to date, compared with the same
periods in 2011. Online sales positively affected the company’s same-store
sales by 2.2 percentage points in the third quarter and 1.8 percentage points
in the year to date. Online sales are included in the same-store sales
calculation for Macy's, Inc.

In the third quarter, the company opened new Bloomingdale’s Outlet stores, as
previously announced, in Westbury, NY, and Grand Prairie, TX. A third new
Bloomingdale’s Outlet store in Livermore, CA, is opening in the second week of
the fourth quarter. A Macy’s men’s and furniture store in Santa Ana, CA, was
closed in the third quarter, with its business consolidated into a full-line
Macy’s store in the same shopping center.

Macy’s, Inc. announced today that it will discontinue reporting monthly sales,
beginning in fiscal 2013, consistent with the practice of most other
retailers. Sales will continue to be reported quarterly, along with earnings
and cash flow.

Operating Income

Macy’s, Inc.’s operating income totaled $325 million or 5.4 percent of sales
for the quarter ended Oct. 27, 2012, compared with operating income of $291
million or 5.0 percent of sales for the same period last year. For the first
three quarters of 2012, Macy’s, Inc.’s operating income totaled $1.270 billion
or 6.9 percent of sales, compared with operating income of $1.127 billion or
6.4 percent of sales for the same period last year.

Cash Flow

Net cash provided by operating activities was $889 million in the first three
quarters of 2012, compared with $627 million in the first three quarters of
2011. Net cash used by investing activities in the first three quarters of
2012 was $615 million, compared with $472 million a year ago. Net cash used by
financing activities in the first three quarters of 2012 was $1.837 billion,
compared with net cash used by financing activities in the first three
quarters of 2011 of $522 million.

The company repurchased approximately 10.3 million shares of its common stock
for a total of approximately $403 million in the third quarter of 2012. In the
fiscal year to date, the company repurchased approximately 26.3 million shares
of its common stock for approximately $991 million. At Oct. 27, 2012, the
company had remaining authorization to repurchase up to approximately $361
million of its common stock. The company previously stated that it plans to
repurchase at least $1 billion in shares in fiscal 2012 under its repurchase
program.

Looking Ahead

Macy’s, Inc. is increasing its full-year 2012 earnings guidance to $3.35 to
$3.40 per diluted share, including fourth quarter earnings guidance of $1.94
to $1.99 per diluted share. Previous 2012 full-year guidance (provided on Aug.
8) was for earnings of $3.30 to $3.35 per share, and compares to initial
guidance of $3.25 to $3.30 per diluted share provided at the beginning of the
year. The guidance does not give effect to expenses associated with the debt
tender offer announced on Oct. 29, the amount of which will depend upon the
amount and series of notes purchased and presently cannot be determined.

As reported in the October sales news release issued on Nov. 1, the company
has raised its guidance for same-store sales growth in the second half of 2012
to approximately 4 percent (from previous guidance of up approximately 3.7
percent). This calculates to guidance for same-store sales in the fourth
quarter to grow by approximately 4.2 percent, and for full-year 2012 sales to
grow by 3.9 percent. This compares with guidance provided at the beginning of
the year for 2012 same-store sales to be up by approximately 3.5 percent.

Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the
nation’s premier retailers, with fiscal 2011 sales of $26.4 billion. The
company operates about 840 department stores in 45 states, the District of
Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s,
as well as the macys.com and bloomingdales.com websites. The company also
operates 12 Bloomingdale’s Outlet stores.

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 transactions, prevailing interest rates and
non-recurring charges, 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.  A webcast of Macy's, Inc.’s call
with analysts and investors will be held today (Nov. 7) at 10:30 a.m. (ET).
Macy’s, Inc.’s webcast is accessible to the media and general public via the
company's Web site at www.macysinc.com. Analysts and investors may call in on
1-888-724-9511, passcode 5303489. A replay of the conference call can be
accessed on the Web site or by calling 1-888-203-1112 (same passcode) about
two hours after the conclusion of the call.)

                                                     
MACY’S, INC.

Consolidated Statements of Income (Unaudited) (Note 1)

(All amounts in millions except percentages and per share figures)
                                                        
                               13 Weeks Ended           13 Weeks Ended
                               October 27, 2012         October 29, 2011
                               $           % to        $           % to
                                            Net sales                Net sales
                                                                     
Net sales                      $ 6,075                  $ 5,853
                                                                     
Cost of sales (Note 2)          3,672     60.4   %     3,544     60.6   %
                                                                     
Gross margin                     2,403      39.6   %      2,309      39.4   %
                                                                     
Selling, general and            (2,078 )   (34.2  %)    (2,018 )   (34.4  %)
administrative expenses
                                                                     
Operating income                 325        5.4    %      291        5.0    %
                                                                     
Interest expense – net          (103   )                (108   )
                                                                     
Income before income taxes       222                      183
                                                                     
Federal, state and local        (77    )                (44    )
income tax expense (Note 3)
                                                                     
Net income                     $ 145                   $ 139    
                                                                     
Basic earnings per share       $ .36                   $ .33    
                                                                     
Diluted earnings per share     $ .36                   $ .32    
                                                                     
Average common shares:
Basic                            401.3                    425.3
Diluted                          407.9                    431.8
                                                                     
End of period common shares      395.5                    420.6
outstanding
                                                                     
Depreciation and               $ 269                    $ 282
amortization expense
                                                                     

                                 MACY’S, INC.

                Consolidated Statements of Income (Unaudited)

Notes:

(1) Because of the seasonal nature of the retail business, the results of
operations for the 13 weeks ended October 27, 2012 and October 29, 2011 (which
do not include the Christmas season) are not necessarily indicative of such
results for the fiscal year.

(2) Merchandise inventories are valued at the lower of cost or market using
the last-in, first-out (LIFO) retail inventory method. Application of the LIFO
retail inventory method did not result in the recognition of any LIFO charges
or credits affecting cost of sales for the 13 weeks ended October 27, 2012 or
October 29, 2011.

(3) Federal, state and local income taxes differ from the federal income tax
statutory rate of 35%, principally because of the effect of state and local
taxes, including the settlement of various tax issues and tax examinations.


MACY’S, INC.

Consolidated Statements of Income (Unaudited) (Note 1)

(All amounts in millions except percentages and per share figures)

                              39 Weeks Ended          39 Weeks Ended
                               October 27, 2012         October 29, 2011
                               $           % to        $           % to
                                            Net sales                Net sales
                                                                     
Net sales                      $ 18,336                 $ 17,681
                                                                     
Cost of sales (Note 2)          10,984    59.9   %     10,587    59.9   %
                                                                     
Gross margin                     7,352      40.1   %      7,094      40.1   %
                                                                     
Selling, general and            (6,082 )   (33.2  %)    (5,967 )   (33.7  %)
administrative expenses
                                                                     
Operating income                 1,270      6.9    %      1,127      6.4    %
                                                                     
Interest expense – net          (320   )                (335   )
                                                                     
Income before income taxes       950                      792
                                                                     
Federal, state and local        (345   )                (281   )
income tax expense (Note 3)
                                                                     
Net income                     $ 605                   $ 511    
                                                                     
Basic earnings per share       $ 1.48                  $ 1.20   
                                                                     
Diluted earnings per share     $ 1.45                  $ 1.18   
                                                                     
Average common shares:
Basic                            409.9                    426.0
Diluted                          416.5                    432.2
                                                                     
End of period common shares      395.5                    420.6
outstanding
                                                                     
Depreciation and               $ 782                    $ 818
amortization expense
                                                                     

                                 MACY’S, INC.

                Consolidated Statements of Income (Unaudited)

Notes:

(1) Because of the seasonal nature of the retail business, the results of
operations for the 39 weeks ended October 27, 2012 and October 29, 2011 (which
do not include the Christmas season) are not necessarily indicative of such
results for the fiscal year.

(2) Merchandise inventories are valued at the lower of cost or market using
the last-in, first-out (LIFO) retail inventory method. Application of the LIFO
retail inventory method did not result in the recognition of any LIFO charges
or credits affecting cost of sales for the 39 weeks ended October 27, 2012 or
October 29, 2011.

(3) Federal, state and local income taxes differ from the federal income tax
statutory rate of 35%, principally because of the effect of state and local
taxes, including the settlement of various tax issues and tax examinations.


MACY’S, INC.

Consolidated Balance Sheets (Unaudited)

(millions)
                                                               
                                       October 27,   January 28,   October 29,
                                       2012          2012          2011
ASSETS:
Current Assets:
Cash and cash equivalents              $   1,264     $   2,827     $   1,097
Receivables                                281           368           288
Merchandise inventories                    7,208         5,117         7,158
Prepaid expenses and other current        410          465          408
assets
Total Current Assets                       9,163         8,777         8,951
                                                                   
Property and Equipment – net               8,212         8,420         8,423
Goodwill                                   3,743         3,743         3,743
Other Intangible Assets – net              570           598           608
Other Assets                              582          557          538
                                                                   
Total Assets                           $   22,270    $   22,095    $   22,263
                                                                   
LIABILITIES AND SHAREHOLDERS’
EQUITY:
Current Liabilities:
Short-term debt                        $   421       $   1,103     $   805
Merchandise accounts payable               3,627         1,593         3,576
Accounts payable and accrued               2,419         2,788         2,375
liabilities
Income taxes                               89            371           66
Deferred income taxes                     426          408          388
Total Current Liabilities                  6,982         6,263         7,210
                                                                   
Long-Term Debt                             6,519         6,655         6,151
Deferred Income Taxes                      1,182         1,141         1,402
Other Liabilities                          2,024         2,103         1,648
Shareholders’ Equity                      5,563        5,933        5,852
                                                                   
Total Liabilities and Shareholders’    $   22,270    $   22,095    $   22,263
Equity
                                                                       

Note: Certain reclassifications were made to prior year’s amounts to conform
with the classifications of such amounts in the most recent years.


MACY’S, INC.

Consolidated Statements of Cash Flows (Unaudited)

(millions)

                                          39 Weeks Ended    39 Weeks Ended
                                           October 27, 2012   October 29, 2011
Cash flows from operating activities:
Net income                                 $   605            $   511
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization                  782                818
Stock-based compensation expense               47                 54
Amortization of financing costs and            (10      )         (12      )
premium on acquired debt
Changes in assets and liabilities:
Decrease in receivables                        91                 28
Increase in merchandise inventories            (2,091   )         (2,400   )
(Increase) decrease in prepaid expenses        58                 (32      )
and other current assets
Decrease in other assets not separately        23                 40
identified
Increase in merchandise accounts payable       1,941              2,023
Decrease in accounts payable and accrued       (323     )         (220     )
liabilities not separately identified
Decrease in current income taxes               (282     )         (117     )
Increase in deferred income taxes              14                 162
Increase (decrease) in other liabilities      34               (228     )
not separately identified
Net cash provided by operating                889              627      
activities
                                                              
Cash flows from investing activities:
Purchase of property and equipment             (464     )         (359     )
Capitalized software                           (169     )         (141     )
Disposition of property and equipment          36                 22
Proceeds from insurance claims                 -                  6
Other, net                                    (18      )        -        
Net cash used by investing activities         (615     )        (472     )
                                                              
Cash flows from financing activities:
Debt repaid                                    (803     )         (451     )
Financing costs                                -                  (8       )
Dividends paid                                 (246     )         (106     )
Increase in outstanding checks                 38                 140
Acquisition of treasury stock                  (1,018   )         (210     )
Issuance of common stock                      192              113      
Net cash used by financing activities         (1,837   )        (522     )
                                                              
Net decrease in cash and cash                  (1,563   )         (367     )
equivalents
Cash and cash equivalents at beginning        2,827            1,464    
of period
                                                              
Cash and cash equivalents at end of        $   1,264         $   1,097    
period

Contact:

Macy’s, Inc.
Media
Jim Sluzewski, 513-579-7764
or
Investor
Matt Stautberg, 513-579-7780