Macy’s, Inc. Reports Its Fourth Consecutive Year of Double-Digit Growth in Earnings Per Share

  Macy’s, Inc. Reports Its Fourth Consecutive Year of Double-Digit Growth in
  Earnings Per Share

    Diluted 2012 EPS is $3.24, or $3.46 as adjusted, +20% vs. prior year;
 Diluted 2013 EPS guidance of $3.90 to $3.95 points to continued double-digit
                                    growth

Business Wire

CINCINNATI -- February 26, 2013

Macy’s, Inc.’s sales and earnings grew significantly in the fourth quarter and
full year 2012, ended Feb. 2, 2013. The company exceeded the guidance it
provided coming into 2012, and today is providing new guidance for continued
growth and progress in 2013.

“2012 was another great year in our company’s evolving story of growth. The
numbers reflect our success in pursuing the right strategies, and executing
them with conviction in every part of the business with a talented team we
consider to be the best in retailing,” said Terry J. Lundgren, chairman,
president and chief executive officer of Macy’s, Inc. “We again added more
than $1 billion in top-line sales growth in 2012. Comp sales rose by 3.7
percent for the year, on top of increases of 5.3 percent in 2011 and 4.6
percent in 2010. Earnings per share grew by double-digits for the fourth
consecutive year. Operating cash flow continued to be strong, and we used
excess cash to repurchase shares and double the dividend.

“The best news of all is that we continue to see significant upside
opportunity ahead in those strategies that have worked so well since we
reorganized the company in 2009. Going into 2013, our team is moving ahead
with new plans and actions to sharpen our approach to localized merchandise
assortments and marketing, which we continue to believe is Macy’s sustainable
competitive advantage. We are accelerating progress in omnichannel strategies
at Macy’s and Bloomingdale’s to bring together our efforts in stores, online
and mobile in a manner that satisfies emerging shopping patterns and
capitalizes on the strength of our inventory regardless of where the customer
demand occurs. And we are engaging shoppers in a manner that engenders loyalty
and builds our business with each individual customer,” he said.

“Central to our continued success at both Macy’s and Bloomingdale’s is our
expertise in offering our customers fresh and exclusive fashion merchandise,
and to deliver outstanding value. You can and will see this in every family of
business, and particularly in our new strategies which will begin rolling out
in 2013 for Millennial customers, now America’s largest generation,” Lundgren
said.

Earnings were $1.83 per diluted share for the 14-week fourth quarter of 2012.
Diluted earnings per share were $2.05 in the fourth quarter of 2012, excluding
pre-tax expenses of $133 million ($85 million after tax or 21 cents per share)
associated with the early retirement of approximately $700 million of
outstanding debt, and approximately $5 million in pre-tax expenses ($3 million
after tax or 1 cent per share) related primarily to the store closings
announced on Jan. 3.

In the 13-week fourth quarter of 2011, earnings were $1.74 per diluted share.
Diluted earnings per share were $1.70 in the fourth quarter of 2011, excluding
pre-tax gains of $54 million ($34 million after tax or 8 cents per share) from
the sale of store leases related to the 2006 divestiture of Lord & Taylor, and
approximately $29 million in pre-tax expenses ($18 million after tax or 4
cents per share) related primarily to store closings.

For the 53 weeks of fiscal 2012, Macy’s, Inc. earned $3.24 per diluted share.
Earnings per diluted share were $3.46 for fiscal 2012, excluding pre-tax
expenses of $137 million ($87 million after tax or 21 cents per share)
associated with the early retirement of outstanding debt, and $5 million in
pre-tax expenses ($3 million after tax or 1 cent per share) related primarily
to store closings. The $3.46 per share compares with management’s initial
guidance provided at the beginning of the year for earnings per diluted share,
excluding such items, to be in the range of $3.25 to $3.30 per diluted share
in fiscal 2012.

For the 52 weeks of fiscal 2011, Macy’s, Inc. earned $2.92 per diluted share.
Earnings per diluted share were $2.88 for fiscal 2011, excluding pre-tax gains
of approximately $54 million ($34 million after tax or 8 cents per share) from
the sale of store leases related to the 2006 divestiture of Lord & Taylor, and
approximately $29 million in pre-tax expenses ($18 million after tax or 4
cents per share) related primarily to store closings.

Sales

Sales in the 14-week fourth quarter of 2012 totaled $9.350 billion, an
increase of 7.2 percent, compared with sales of $8.724 billion in the 13-week
fourth quarter last year. On a same-store basis – which included comparable
13-week periods this year and last – Macy’s, Inc.’s fourth quarter sales were
up 3.9 percent.

The company’s total sales for the 53 weeks of fiscal 2012 totaled $27.686
billion, up 4.9 percent from total sales of $26.405 billion in the 52 weeks of
fiscal 2011. On a same-store basis – which included comparable 52-week periods
this year and last – Macy’s, Inc.’s fiscal 2012 sales were up 3.7 percent.
This is better than initial guidance, provided at the beginning of the year,
for sales to be up by approximately 3.5 percent in 2012.

Online sales (macys.com and bloomingdales.com combined) were up 47.7 percent
in the fourth quarter and 41.0 percent for fiscal 2012 compared to the same
periods in 2011. Online sales positively affected the company’s same-store
sales by 3.3 percentage points in the fourth quarter and 2.2 percentage points
in fiscal 2012 as a whole. Online sales are included in the same-store sales
calculation for Macy's, Inc.

In fiscal 2012, the company opened a total of seven stores and closed eight
stores. Two Macy’s stores were opened in Salt Lake City, UT, and Greendale,
WI. Five Bloomingdale’s Outlet stores opened in Livermore, CA; Merrimack, NH;
Garden City, NY; and Grand Prairie and Dallas, TX. As previously announced,
Macy’s stores were closed in Pasadena, CA; Belmont, MA; Honolulu, HI; St.
Paul, MN; and Houston, TX. The company closed a Macy’s furniture clearance
center in Houston, TX, and a Macy’s men’s and home store in Santa Ana, CA, was
closed and consolidated into the main store in the same shopping center. Also
closed was a Bloomingdale’s Home Store in Las Vegas, NV.

Operating Income

Macy’s, Inc.’s operating income totaled $1.391 billion for the 14-week quarter
ended Feb. 2, 2013, compared with operating income of $1.284 billion for the
13-week fourth quarter of fiscal 2011. Macy’s, Inc.’s fourth quarter 2012
operating income included expenses of $5 million primarily associated with
store closings. Excluding these costs, operating income for the fourth quarter
of 2012 was $1.396 billion or 14.9 percent of sales. Fourth quarter 2011
operating income included gains of $54 million from the sale of store leases
and costs of $29 million associated primarily with store closings. Excluding
these gains and costs, operating income for the fourth quarter of 2011 was
$1.259 billion or 14.4 percent of sales.

For the 53 weeks of fiscal 2012, Macy’s, Inc.’s operating income totaled
$2.661 billion, compared with operating income of $2.411 billion for the 52
weeks of fiscal 2011. Macy’s, Inc.’s fiscal 2012 operating income included
expenses of $5 million primarily from asset impairment and store closing
costs. Excluding these costs, operating income for fiscal 2012 was $2.666
billion or 9.6 percent of sales. Macy’s, Inc.’s fiscal 2011 operating income
included gains of $54 million from the sale of store leases and costs of $29
million in asset impairment and other store closing costs. Excluding these
gains and costs, operating income for fiscal 2011 was $2.386 billion or 9.0
percent of sales.

Cash Flow

Net cash provided by operating activities was $2.261 billion in fiscal 2012,
compared with $2.093 billion in fiscal 2011. Net cash used by investing
activities in fiscal 2012 was $863 million, compared with $617 million in the
previous year. Thus, net cash provided before financing activities was $1.398
billion in fiscal 2011, compared with $1.476 billion in fiscal 2012.

In fiscal 2012, Macy’s, Inc. repaid $1.803 billion in debt and issued $1
billion in new debt. In fiscal 2011, the company repaid $454 million in debt
and issued $800 million in new debt.

In fiscal 2012, the company repurchased approximately 35.6 million shares of
its common stock for approximately $1.350 billion. At Feb. 2, 2013, the
company had remaining authorization to repurchase up to approximately $1.502
billion of its common stock.

Looking Ahead

The company is assuming same-store sales growth of approximately 3.5 percent
in fiscal 2013. Guidance for earnings per diluted share in fiscal 2013 is
$3.90 to $3.95. Capital expenditures for the year are expected to be
approximately $925 million.

In fiscal 2013, the company has announced plans for new Macy’s stores in
Victorville, CA, and Gurnee, IL, as well as a Macy’s Men’s Store in Las Vegas,
NV. A new Macy’s will open in Bay Shore, NY, to replace a previous location.
Bloomingdale’s will open a new store in Glendale, CA, and a new Bloomingdale’s
Outlet store in Rosemont, IL.

Investor Conferences

Macy’s, Inc. will present at the Bank of America Merrill Lynch 2013 Consumer &
Retail Conference at 8 a.m. ET on Wednesday, March 13, in New York City; the
UBS Global Consumer Conference at 8:50 a.m. ET on Thursday, March 14, in
Boston; the Telsey Advisory Group 5^th Annual Spring Consumer Conference at
8:10 a.m. ET on Tuesday, April 9, in New York City; and the Barclays Retail
and Restaurants Conference at 8 a.m. ET on Tuesday, April 30, in New York
City. Media and investors may access the live webcast of the presentations at
www.macysinc.com/ir at the appointed times. The webcasts will be available for
replay.

Macy’s, Inc. (NYSE:M), with corporate offices in Cincinnati and New York, is
one of the nation’s premier retailers, with fiscal 2012 sales of $27.7
billion. The company operates about 840 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 operates
12 Bloomingdale’s Outlet stores. 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 variability in the
costs of providing healthcare and retirement benefits to current or former
employees, 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 (Feb. 26) at 10:30 a.m. (ET).
The 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
1-888-277-7060, passcode 4317621. A replay of the conference call can be
accessed on the website 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)

(All amounts in millions except percentages and per share figures)
                                                 
                             14 Weeks Ended             13 Weeks Ended
                             February 2, 2013           January 28, 2012
                             $           % to          $           % to
                                          Net sales                  Net sales
                                                                     
Net sales                    $ 9,350                    $ 8,724
                                                                     
Cost of sales (Note           5,554     59.4   %       5,151     59.0   %
1)
                                                                     
Gross margin                   3,796      40.6   %        3,573      41.0   %
                                                                     
Selling, general and
administrative                 (2,400 )   (25.7  %)       (2,314 )   (26.6  %)
expenses
                                                                     
Impairments, store
closing costs and             (5     )   (0.0   %)      25        0.3    %
gain on sale of
leases (Note 2)
                                                                     
Operating income               1,391      14.9   %        1,284      14.7   %
                                                                     
Interest expense –             (106   )                   (108   )
net
                                                                     
Premium on early
retirement of debt            (133   )                  -      
(Note 3)
                                                                     
Income before income           1,152                      1,176
taxes
                                                                     
Federal, state and
local income tax              (422   )                  (431   )
expense (Note 4)
                                                                     
Net income                   $ 730                     $ 745    
                                                                     
Basic earnings per           $ 1.86                    $ 1.77   
share
                                                                     
Diluted earnings per         $ 1.83                    $ 1.74   
share
                                                                     
Average common
shares:
Basic                          392.3                      420.0
Diluted                        399.4                      427.3
                                                                     
End of period common           387.7                      414.2
shares outstanding
                                                                     
Depreciation and             $ 267                      $ 267
amortization expense
                                                                     



MACY’S, INC.

Consolidated Statements of Income (Unaudited)

Notes:

        Merchandise inventories are valued at the lower of cost or market
        using the last-in, first-out (LIFO) retail inventory method.
(1)   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 14 weeks ended February 2, 2013 or the 13 weeks ended January 28,
        2012.

        For the 14 weeks ended February 2, 2013, includes $4 million of asset
        impairment charges primarily related to the store closings announced
        in January 2013 and $1 million of other costs and expenses primarily
        related to the announced store closings. For the 13 weeks ended
        January 28, 2012, included a gain of $54 million from the sale of
(2)     store leases related to the 2006 divestiture of Lord & Taylor,
        partially offset by $22 million of asset impairment charges and $7
        million of other costs and expenses primarily related to the store
        closings announced in January 2012. For the 14 weeks ended February 2,
        2013, these costs amounted to $.01 per diluted share and for the 13
        weeks ended January 28, 2012, the net after tax gain amounted to $.04
        per diluted share.

        For the 14 weeks ended February 2, 2013, includes approximately $133
(3)     million on a pre-tax basis, or $85 million after tax or $.21 per
        diluted share, of expenses associated with the early retirement of
        approximately $700 million of outstanding debt.

        Federal, state and local income taxes differ from the federal income
(4)     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)

(All amounts in millions except percentages and per share figures)
                                                 
                             53 Weeks Ended             52 Weeks Ended
                             February 2, 2013           January 28, 2012
                             $           % to          $           % to
                                          Net sales                  Net sales
                                                                     
Net sales                    $ 27,686                   $ 26,405
                                                                     
Cost of sales (Note           16,538    59.7   %       15,738    59.6   %
1)
                                                                     
Gross margin                   11,148     40.3   %        10,667     40.4   %
                                                                     
Selling, general and
administrative                 (8,482 )   (30.7  %)       (8,281 )   (31.4  %)
expenses
                                                                     
Impairments, store
closing costs and             (5     )   (0.0   %)      25        0.1    %
gain on sale of
leases (Note 2)
                                                                     
Operating income               2,661      9.6    %        2,411      9.1    %
                                                                     
Interest expense –             (422   )                   (443   )
net
                                                                     
Premium on early
retirement of debt            (137   )                  -      
(Note 3)
                                                                     
Income before income           2,102                      1,968
taxes
                                                                     
Federal, state and
local income tax              (767   )                  (712   )
expense (Note 4)
                                                                     
Net income                   $ 1,335                   $ 1,256  
                                                                     
Basic earnings per           $ 3.29                    $ 2.96   
share
                                                                     
Diluted earnings per         $ 3.24                    $ 2.92   
share
                                                                     
Average common
shares:
Basic                          405.5                      424.5
Diluted                        412.2                      430.4
                                                                     
End of period common           387.7                      414.2
shares outstanding
                                                                     
Depreciation and             $ 1,049                    $ 1,085
amortization expense
                                                                     



MACY’S, INC.

Consolidated Statements of Income (Unaudited)

Notes:

        Merchandise inventories are valued at the lower of cost or market
        using the last-in, first-out (LIFO) retail inventory method.
(1)   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 53 weeks ended February 2, 2013 or the 52 weeks ended
        January 28, 2012.

        For the 53 weeks ended February 2, 2013, includes $4 million of
        asset impairment charges primarily related to the store closings
        announced in January 2013 and $1 million of other costs and expenses
        primarily related to the announced store closings. For the 52 weeks
        ended January 28, 2012, included a gain of $54 million from the sale
(2)     of store leases related to the 2006 divestiture of Lord & Taylor,    .
        partially offset by $22 million of asset impairment charges and $7
        million of other costs and expenses primarily related to the store
        closings announced in January 2012. For the 53 weeks ended February
        2, 2013, these costs amounted to $.01 per diluted share and for the
        52 weeks ended January 28, 2012, the net after tax gain amounted to
        $.04 per diluted share

        For the 53 weeks ended February 2, 2013, includes approximately $137
(3)     million on a pre-tax basis, or $87 million after tax or $.21 per
        diluted share, of expenses associated with the early retirement of
        approximately $873 million of outstanding debt.

        Federal, state and local income taxes differ from the federal income
(4)     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)
                                                            
                                                   February 2,     January 28,
                                                   2013            2012
ASSETS:
Current Assets:
Cash and cash equivalents                          $   1,836       $   2,827
Receivables                                            371             368
Merchandise inventories                                5,308           5,117
Prepaid expenses and other current assets             361            465
Total Current Assets                                   7,876           8,777
                                                                   
Property and Equipment – net                           8,196           8,420
Goodwill                                               3,743           3,743
Other Intangible Assets – net                          561             598
Other Assets                                          615            557
                                                                   
Total Assets                                       $   20,991      $   22,095
                                                                   
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt                                    $   124         $   1,103
Merchandise accounts payable                           1,579           1,593
Accounts payable and accrued liabilities               2,610           2,788
Income taxes                                           355             371
Deferred income taxes                                 407            408
Total Current Liabilities                              5,075           6,263
                                                                   
Long-Term Debt                                         6,806           6,655
Deferred Income Taxes                                  1,238           1,141
Other Liabilities                                      1,821           2,103
Shareholders’ Equity                                  6,051          5,933
                                                                   
Total Liabilities and Shareholders’ Equity         $   20,991      $   22,095
                                                                   



MACY’S, INC.

Consolidated Statements of Cash Flows (Unaudited)

(millions)
                                                       
                                         53 Weeks Ended       52 Weeks Ended
                                         February 2, 2013     January 28, 2012
Cash flows from operating
activities:
Net income                               $   1,335            $    1,256
Adjustments to reconcile net
income to net cash provided by
operating activities:
Impairments, store closing costs             5                     (25     )
and gain on sale of leases
Depreciation and amortization                1,049                 1,085
Stock-based compensation expense             61                    70
Amortization of financing costs              (16      )            (15     )
and premium on acquired debt
Changes in assets and
liabilities:
(Increase) decrease in                       7                     (37     )
receivables
Increase in merchandise                      (191     )            (359    )
inventories
(Increase) decrease in prepaid
expenses and other current                   75                    (99     )
assets
Decrease in other assets not                 23                    8
separately identified
Increase in merchandise accounts             23                    143
payable
Increase (decrease) in accounts
payable and accrued liabilities              (33      )            109
not separately identified
Increase (decrease) in current               (16      )            188
income taxes
Increase in deferred income                  14                    153
taxes
Decrease in other liabilities               (75      )           (384    )
not separately identified
Net cash provided by operating              2,261               2,093   
activities
                                                              
Cash flows from investing
activities:
Purchase of property and                     (698     )            (555    )
equipment
Capitalized software                         (244     )            (209    )
Disposition of property and                  66                    114
equipment
Proceeds from insurance claims               -                     6
Other, net                                  13                  27      
Net cash used by investing                  (863     )           (617    )
activities
                                                              
Cash flows from financing
activities:
Debt issued                                  1,000                 800
Financing costs                              (11      )            (20     )
Debt repaid                                  (1,803   )            (454    )
Dividends paid                               (324     )            (148    )
Increase (decrease) in                       (88      )            49
outstanding checks
Acquisition of treasury stock                (1,397   )            (502    )
Issuance of common stock                    234                 162     
Net cash used by financing                  (2,389   )           (113    )
activities
                                                              
Net increase (decrease) in cash              (991     )            1,363
and cash equivalents
Cash and cash equivalents at                2,827               1,464   
beginning of period
                                                              
Cash and cash equivalents at end         $   1,836           $    2,827   
of period
                                                              

Contact:

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