(Address of Principal Executive Offices, including Zip Code)

(212) ~~494-1602~~494-1621

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý☒ No ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐

~~Large accelerated filer~~ ý Non-Accelerated Filer	~~Accelerated filer~~ o ☐	~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company)~~ Smaller Reporting Company	~~Smaller reporting~~ ~~company~~ o ☐

Emerging ~~growth company~~ oGrowth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No ý

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at May 29, 2021

~~Class~~		~~Outstanding at November 25, 2017~~
Common Stock, ~~$0.01~~$.01 par value per share		~~304,566,377~~ 311,868,429 shares

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MACY’S, INC.

CONSOLIDATED STATEMENTS OF ~~INCOME~~

OPERATIONS

(Unaudited)

(millions, except per share figures)

	13 Weeks Ended
	May 1, 2021			May 2, 2020
Net sales	$	4,706		$	3,017
Credit card revenues, net		159			131

Cost of sales		(2,889	)		(2,501	)
Selling, general and administrative expenses		(1,748	)		(1,598	)
Gains on sale of real estate		6			16
Impairment, restructuring and other costs		(19	)		(3,184	)
Operating income (loss)		215			(4,119	)
Benefit plan income, net		15			9
Interest expense		(79	)		(49	)
Losses on early retirement of debt		(11	)		0
Interest income		0			2
Income (loss) before income taxes		140			(4,157	)
Federal, state and local income tax benefit (expense)		(37	)		576
Net income (loss)	$	103		$	(3,581	)
Basic earnings (loss) per share	$	0.33		$	(11.53	)
Diluted earnings (loss) per share	$	0.32		$	(11.53	)

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
Net sales $ 5,281
$ 5,626
$ 16,171
$ 17,263
Cost of sales (3,175 ) (3,386 ) (9,794 ) (10,370 )
Gross margin 2,106
2,240
6,377
6,893
Selling, general and administrative expenses (1,995 ) (2,112 ) (5,853 ) (6,139 )
Gains on sale of real estate 65
41
176
76
Impairments, restructuring and other costs (33 ) —
(33 ) (249 )
Settlement charges (22 ) (62 ) (73 ) (81 )
Operating income 121
107
594
500
Interest expense (76 ) (82 ) (244 ) (279 )
Net premiums on early retirement of debt —
—
(1 ) —
Interest income 2
1
7
3
Income before income taxes 47
26
356
224
Federal, state and local income tax expense (13 ) (11 ) (140 ) (85 )
Net income 34
15
216
139
Net loss attributable to noncontrolling interest 2
2
6
5
Net income attributable to Macy's, Inc. shareholders $ 36
$ 17
$ 222
$ 144
Basic earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
$ .73
$ .46
Diluted earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
$ .73
$ .46

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(millions)

	13 Weeks Ended
	May 1, 2021			May 2, 2020
Net income (loss)	$	103		$	(3,581	)
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		10			12
Tax effect related to items of other comprehensive income		(2	)		(3	)
Total other comprehensive income, net of tax effect		8			9
Comprehensive income (loss)	$	111		$	(3,572	)

~~(Unaudited)~~

~~(millions)~~

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
Net income $ 34
$ 15
$ 216
$ 139
Other comprehensive income (loss):
Actuarial gain (loss) on post employment and postretirement benefit plans, before tax 10
3
57
(74 )
Settlement charges included in net income, before tax 22
62
73
81
Amortization of net actuarial loss on post employment and postretirement benefit plans included in net income, before tax 8
9
26
26
Tax effect related to items of other comprehensive income (loss) (15 ) (29 ) (60 ) (13 )
Total other comprehensive income, net of tax effect 25
45
96
20
Comprehensive income 59
60
312
159
Comprehensive loss attributable to noncontrolling interest 2
2
6
5
Comprehensive income attributable to
Macy's, Inc. shareholders $ 61
$ 62
$ 318
$ 164

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(millions)

	May 1, 2021		January 30, 2021		May 2, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	1,798	$	1,679	$	1,523
Receivables		205		276		170
Merchandise inventories		4,230		3,774		4,923
Prepaid expenses and other current assets		1,007		455		519
Total Current Assets		7,240		6,184		7,135
Property and Equipment - net of accumulated depreciation and amortization of $4,550, $4,400 and $4,560		5,798		5,940		6,425
Right of Use Assets		2,853		2,878		2,672
Goodwill		828		828		838
Other Intangible Assets – net		436		437		439
Other Assets		927		1,439		1,072
Total Assets	$	18,082	$	17,706	$	18,581
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	294	$	452	$	739
Merchandise accounts payable		2,545		1,978		2,196
Accounts payable and accrued liabilities		2,616		2,927		2,757
Income taxes		63		0		80
Total Current Liabilities		5,518		5,357		5,772
Long-Term Debt		4,558		4,407		4,918
Long-Term Lease Liabilities		3,166		3,185		2,923
Deferred Income Taxes		868		908		944
Other Liabilities		1,297		1,296		1,327
Shareholders' Equity		2,675		2,553		2,697
Total Liabilities and Shareholders’ Equity	$	18,082	$	17,706	$	18,581

~~(Unaudited)~~

~~(millions)~~

October 28, 2017 January 28, 2017 October 29, 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 534
$ 1,297
$ 457
Receivables 219
522
262
Merchandise inventories 7,065
5,399
7,587
Income tax receivable —
—
60
Prepaid expenses and other current assets 432
408
454
Total Current Assets 8,250
7,626
8,820
Property and Equipment - net of accumulated depreciation and
amortization of $5,330, $4,856 and $5,625 6,742
7,017
7,149
Goodwill 3,897
3,897
3,897
Other Intangible Assets – net 491
498
499
Other Assets 835
813
909
Total Assets $ 20,215
$ 19,851
$ 21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt $ 22
$ 309
$ 938
Merchandise accounts payable 3,173
1,423
3,375
Accounts payable and accrued liabilities 3,162
3,563
2,930
Income taxes 34
352
—
Total Current Liabilities 6,391
5,647
7,243
Long-Term Debt 6,297
6,562
6,563
Deferred Income Taxes 1,553
1,443
1,548
Other Liabilities 1,750
1,877
2,129
Shareholders' Equity:
Macy's, Inc. 4,231
4,323
3,789
Noncontrolling interest (7 ) (1 ) 2
Total Shareholders’ Equity 4,224
4,322
3,791
Total Liabilities and Shareholders’ Equity $ 20,215
$ 19,851
$ 21,274

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(millions)

	Common Stock		Additional Paid-In Capital			Accumulated Equity		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance at January 30, 2021	$	3	$	571		$	3,928	$	(1,161	)	$	(788	)	$	2,553
Net income							103								103
Other comprehensive income												8			8
Stock-based compensation expense				11											11
Stock issued under stock plans				(24	)				24						0
Balance at May 1, 2021	$	3	$	558		$	4,031	$	(1,137	)	$	(780	)	$	2,675

~~(Unaudited)~~

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (Continued)

(Unaudited)

(millions)

~~(millions)~~

	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

39 Weeks Ended
October 28, 2017 October 29, 2016
Cash flows from operating activities:
Net income $ 216
$ 139
Adjustments to reconcile net income to net cash provided by operating activities:
Impairments, restructuring and other costs 33
249
Settlement charges 73
81
Depreciation and amortization 741
787
Stock-based compensation expense 46
56
Gains on sale of real estate (176 ) (76 )
Amortization of financing costs and premium on acquired debt (10 ) (14 )
Changes in assets and liabilities:
Decrease in receivables 274
237
Increase in merchandise inventories (1,665 ) (2,081 )
Increase in prepaid expenses and other current assets (20 ) (37 )
Increase in merchandise accounts payable 1,630
1,665
Decrease in accounts payable, accrued liabilities
and other items not separately identified (375 ) (380 )
Decrease in current income taxes (318 ) (287 )
Increase in deferred income taxes 49
45
Change in other assets and liabilities not separately identified (109 ) (76 )
Net cash provided by operating activities 389
308
Cash flows from investing activities:
Purchase of property and equipment (359 ) (451 )
Capitalized software (191 ) (230 )
Disposition of property and equipment 212
138
Other, net (8 ) 52
Net cash used by investing activities (346 ) (491 )
Cash flows from financing activities:
Debt issued —
51
Financing costs (1 ) (3 )
Debt repaid (554 ) (174 )
Dividends paid (346 ) (344 )
Increase in outstanding checks 80
193
Acquisition of treasury stock (1 ) (230 )
Issuance of common stock 3
31
Proceeds from noncontrolling interest 13
7
Net cash used by financing activities (806 ) (469 )
Net decrease in cash and cash equivalents (763 ) (652 )
Cash and cash equivalents beginning of period 1,297
1,109
Cash and cash equivalents end of period $ 534
$ 457
Supplemental cash flow information:
Interest paid $ 251
$ 279
Interest received 7
3
Income taxes paid (net of refunds received) 412
308

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(millions)

	13 Weeks Ended
	May 1, 2021			May 2, 2020
Cash flows from operating activities:
Net income (loss)	$	103		$	(3,581	)
Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities:
Impairment, restructuring and other costs		19			3,184
Depreciation and amortization		224			237
Stock-based compensation expense		11			6
Gains on sale of real estate		(6	)		(16	)
Benefit plans		10			12
Amortization of financing costs and premium on acquired debt		8			0
Deferred income taxes		(43	)		(225	)
Changes in assets and liabilities:
Decrease in receivables		71			236
(Increase) decrease in merchandise inventories		(457	)		265
(Increase) decrease in prepaid expenses and other current assets		(56	)		12
Increase in merchandise accounts payable		674			629
Decrease in accounts payable and accrued liabilities		(114	)		(531	)
(Increase) decrease in current income taxes		75			(353	)
Change in other assets, liabilities, and other items not separately identified		(25	)		(39	)
Net cash provided (used) by operating activities		494			(164	)
Cash flows from investing activities:
Purchase of property and equipment		(61	)		(122	)
Capitalized software		(38	)		(38	)
Disposition of property and equipment		8			21
Other, net		17			26
Net cash used by investing activities		(74	)		(113	)
Cash flows from financing activities:
Debt issued		500			1,500
Debt issuance costs		(9	)		0
Debt repurchase premium and expenses		(12	)		0
Debt repaid		(503	)		(4	)
Dividends paid		0			(117	)
Decrease in outstanding checks		(276	)		(231	)
Net cash provided (used) by financing activities		(300	)		1,148
Net increase in cash, cash equivalents and restricted cash		120			871
Cash, cash equivalents and restricted cash beginning of period		1,754			731
Cash, cash equivalents and restricted cash end of period	$	1,874		$	1,602
Supplemental cash flow information:
Interest paid	$	52		$	38
Interest received		0			3
Income taxes paid (net of refunds received)		5			2

Note: Restricted cash of $76 million and $79 million have been included with cash and cash equivalents for the 13 weeks ended May 1, 2021 and May 2, 2020, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Organization and Summary of Significant Accounting Policies

~~1. Summary of Significant Accounting Policies~~

Nature of Operations

Macy's, Inc. ~~and~~, together with its subsidiaries (the "Company"), is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and ~~children's)~~kids'), cosmetics, home furnishings and other consumer goods. The Company has stores in 43 states, the District of Columbia, Puerto Rico and Guam. As of May 1, 2021, the Company's operations ~~are~~were conducted through ~~approximately~~ ~~860~~Macy's, ~~Macy's~~Market by Macy’s, Macy’s Backstage, Bloomingdale's, Bloomingdale's The Outlet, and ~~bluemercury stores in~~ 45 ~~states, the District of Columbia, Guam and Puerto Rico, as well as macys.com, bloomingdales.com and bluemercury.com. In addition,~~ bluemercury.

Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.

A description of the Company's significant accounting policies is included in the Company's Annual Report on Form 10-K for the fiscal year ended January ~~28, 2017~~30, 2021 (the ~~"2016~~"2020 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the ~~2016~~2020 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States ~~generally accepted accounting principles~~of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties, including the ultimate financial impact of the COVID-19 pandemic, which may result in actual amounts differing from reported amounts.

The Consolidated Financial Statements for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~May 1, 2021 and ~~October 29, 2016~~,May 2, 2020, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly, in all material respects, the consolidated financial position and results of operations of the Company.

Seasonality

Because of the seasonal nature of the retail business, the results of operations for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~May 1, 2021 and ~~October 29, 2016~~May 2, 2020 (which do not include the Christmas season) are not necessarily indicative of such results for the full fiscal year.

~~Reclassifications~~

~~Certain reclassifications were made to prior years’ amounts to conform to the classifications of such amounts in the most recent years.~~

Comprehensive Income

(Loss)

Total comprehensive income (loss) represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net ~~income.~~income (loss). For the Company, the only other components of total comprehensive income (loss) for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~May 1, 2021 and ~~October 29, 2016~~May 2, 2020 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of ~~operating expenses~~income (loss) before income taxes in the Consolidated Statements of ~~Income.~~Operations. Amortization reclassifications out of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income) and are included in ~~selling, general and administrative expenses~~benefit plan income, net on the Consolidated Statements of ~~Income.~~Operations. See Note 4,6, "Benefit Plans," for further information.

~~Newly Adopted Accounting Pronouncements~~

COVID-19 Pandemic

As the COVID-19 pandemic continues into fiscal 2021, the Company remains focused on prudent cash management, maintaining strong liquidity, and executing its strategic initiatives. In addition, the Company continues to prioritize health and safety measures in its stores and facilities to protect the well-being of its customers and colleagues. Although the Company has experienced recovery in operating results during the first quarter of 2021 as compared to fiscal 2020, certain stores continued to operate under local governmental orders or restrictions. The ~~Company adopted Accounting Standards Update ("ASU") No. 2016-09,~~ ~~Improvements~~full impact of COVID-19 will continue to ~~Employee Share-Based Payment Accounting, effective January 29, 2017. This standard was issued to simplify several aspects~~depend on future developments, including the continued spread and duration of the ~~accounting for share-based payment awards,~~pandemic, variant strains of COVID-19, the availability and distribution of effective medical treatments or vaccines as well as any related federal, state or local governmental orders or restrictions. In addition, numerous uncertainties continue to surround the pandemic and its ultimate impact on the Company, including the ~~income tax consequences, financial statement classification~~timing and ~~forfeiture considerations~~extent of ~~such awards. Upon adoption,~~any recovery in consumer traffic and spending, and potential delays, interruptions and disruptions in the ~~Company began to recognize, on a prospective basis,~~Company’s supply chain, all ~~excess tax benefits~~of which are highly uncertain and tax deficiencies as income tax benefit or expense, respectively, in its Consolidated Statements of Income. For awards that were exercised, vested or expired during the 39 weeks ended October 28, 2017, approximately $12 million of additional income tax expense associated with net tax deficiencies was recognized. Additionally, these net tax deficiencies have been classified as an operating activity

cannot be predicted.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

As further disclosed in the Company’s 2020 Form 10-K, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law, which permitted, among other benefits, the carryback of certain net operating losses. Based on the Company’s 2020 fiscal results, a $520 million income tax receivable has been recognized as of May 1, 2021, associated with this net operating loss carryback benefit. This income tax receivable is estimated to be received in the first quarter of 2022 and is included within prepaid expenses and other current assets on the Company’s Consolidated Balance Sheet.

2.	Impairment, Restructuring and Other Costs

~~(Unaudited)~~

	13 Weeks Ended
	May 1, 2021			May 2, 2020
	(millions)
Impairments	$	18		$	3,150
Restructuring		(1	)		25
Other		2			9
Total	$	19		$	3,184

During the 13 weeks ended May 1, 2021, the Company incurred non-cash impairment charges totaling $18 million primarily related to capitalized software assets.

During the 13 weeks ended May 2, 2020, primarily as a result of the COVID-19 pandemic, the Company incurred non-cash impairment charges totaling $3,150 million consisting of:

•

$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.

•

$80 million of impairments primarily related to long-lived tangible and right of use assets to adjust the carrying value of certain store locations to their estimated fair value.

~~along with~~

A summary of the restructuring and other ~~income tax~~ cash ~~flows~~activity for the 13 weeks ended May 1, 2021 and May 2, 2020 related to the Polaris strategy, which was announced in ~~the Consolidated Statements of Cash Flows. The Company has elected to adopt such presentation on a prospective basis.~~February 2020 and included within accounts payable and accrued liabilities, is as follows:

	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

	Severance and other benefits			Professional fees and other related charges			Total
	(millions)
Balance at January 30, 2021	$	14		$	2		$	16
Additions charged to expense		5			0			5
Cash payments		(16	)		(2	)		(18	)
Balance at May 1, 2021	$	3		$	0		$	3

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3.	Earnings (Loss) Per Share

~~2. Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

The following tables set forth the computation of basic and diluted earnings (loss) per ~~share attributable to Macy's, Inc. shareholders:~~share:

	13 Weeks Ended
	May 1, 2021						May 2, 2020
	Net Income				Shares		Net Loss						Shares
	(millions, except per share data)
Net income (loss)	$	103				310.7	$	(3,581	)					309.7
Shares to be issued under deferred compensation and other plans						0.9								0.9
	$	103				311.6	$	(3,581	)					310.6
Basic earnings (loss) per share			$	0.33						$	(11.53	)
Effect of dilutive securities:
Stock options and restricted stock units						7.0								0
	$	103				318.6	$	(3,581	)					310.6
Diluted earnings (loss) per share			$	0.32						$	(11.53	)

13 Weeks Ended
October 28, 2017 October 29, 2016
Net
Income Shares Net
Income Shares
(millions, except per share data)
Net income attributable to Macy's, Inc. shareholders and
average number of shares outstanding $ 36
304.6
$ 17
307.5
Shares to be issued under deferred
compensation and other plans 0.9
0.9
$ 36
305.5
$ 17
308.4
Basic earnings per share attributable to
Macy's, Inc. shareholders $ .12
$ .05

Effect of dilutive securities:
Stock options, restricted stock and restricted stock units 1.0
2.2
$ 36
306.5
$ 17
310.6
Diluted earnings per share attributable to
Macy's, Inc. shareholders $ .12
$ .05

39 Weeks Ended
October 28, 2017 October 29, 2016
Net
Income Shares Net
Income Shares
(millions, except per share data)
Net income attributable to Macy's, Inc. shareholders and
average number of shares outstanding $ 222
304.5
$ 144
308.6
Shares to be issued under deferred
compensation and other plans 0.8
0.9
$ 222
305.3
$ 144
309.5
Basic earnings per share attributable to
Macy's, Inc. shareholders $ .73
$ .46

Effect of dilutive securities:
Stock options, restricted stock and restricted stock units 1.3
2.3
$ 222
306.6
$ 144
311.8
Diluted earnings per share attributable to
Macy's, Inc. shareholders $ .73
$ .46

~~For the 13 and 39 weeks ended October 28, 2017, in~~

In addition to the stock options and restricted stock units reflected in the foregoing tables, stock options to purchase ~~18.9~~14.7 million shares of common stock and restricted stock units relating to ~~1.2~~11.7 million shares of common stock were outstanding at ~~October 28, 2017~~,May 1, 2021, but were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

For the 13 ~~and 39~~ weeks ended ~~October 29, 2016, in addition to~~May 2, 2020, as a result of the ~~stock~~net loss for the quarter, all options and restricted stock units ~~reflected~~have been excluded from the calculation of diluted earnings per share and, therefore, there was no difference in the ~~foregoing tables, stock~~weighted average number of common shares for basic and diluted loss per share as the effect of all potentially dilutive shares outstanding was anti-dilutive. Stock options to purchase ~~15.7~~17.3 million shares of common stock and restricted stock units relating to ~~0.7~~3.4 million shares of common stock ~~were~~ outstanding at ~~October 29, 2016, but~~May 2, 2020 were ~~not included in~~excluded from the computation of diluted earnings per share.

Revenue

Net sales

Revenue is recognized when customers obtain control of goods and services promised by the Company. The amount of revenue recognized is based on the amount that reflects the consideration that is expected to be received in exchange for those respective goods and services. The Company's revenue generating activities include the following:

Retail Sales

Retail sales include merchandise sales, inclusive of delivery income, licensed department income, sales of private brand goods directly to third party retailers and sales of excess inventory to third parties. Sales of merchandise are recorded at the time of shipment to the customer and are reported net of estimated merchandise returns and certain customer incentives. Commissions earned on sales generated by licensed departments are included as a component of total net sales and are recognized as revenue at the time merchandise is sold to customers. Service revenues (e.g., alteration and cosmetic services) are recorded at the time the customer receives the benefit of the service. The Company has elected to present sales taxes on a net basis and, as such, sales taxes are included in accounts payable and accrued liabilities until remitted to the taxing authorities.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Macy’s accounted for 87% of the Company’s net sales for each of the 13 weeks ended May 1, 2021 and May 2, 2020. In addition, digital sales accounted for approximately 37% and 43% of the Company’s net sales for the 13 weeks ended May 1, 2021 and May 2, 2020, respectively.

Disaggregation of the Company's net sales by family of business for the 13 weeks ended May 1, 2021 and May 2, 2020 were as follows:

	13 Weeks Ended
Net sales by family of business	May 1, 2021		May 2, 2020
	(millions)
Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances	$	2,023	$	1,215
Women's Apparel		913		579
Men's and Kids'		932		573
Home/Other (a)		838		650
Total	$	4,706	$	3,017

(a)	Other primarily includes restaurant sales, allowance for merchandise returns adjustments and breakage income from unredeemed gift cards.

Merchandise Returns

The Company estimates merchandise returns using historical data and recognizes an allowance that reduces net sales and cost of sales. The liability for merchandise returns is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $225 million, $159 million and $184 million as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively. Included in prepaid expenses and other current assets is an asset totaling $136 million, $103 million and $130 million as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively, for the recoverable cost of merchandise estimated to be returned by customers.

Gift Cards and Customer Loyalty Programs

The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold or issued, no revenue is recognized; rather, the Company records an accrued liability to customers. The liability is relieved and revenue is recognized equal to the amount redeemed at the time gift cards are redeemed for merchandise. The Company records revenue from unredeemed gift cards (breakage) in net sales on a pro-rata basis over the time period gift cards are actually redeemed. At least three years of historical data, updated annually, is used to determine actual redemption patterns.

The Company maintains customer loyalty programs in which customers earn points based on their purchases. Under the Macy’s Star Rewards loyalty program, points are earned based on customers’ spending on Macy’s private label and co-branded credit cards as well as non-proprietary cards. The Company’s Bloomingdale’s Loyallist and bluemercury BlueRewards programs provide tender neutral points-based programs to their customers. The Company recognizes the estimated net amount of the rewards that will be earned and redeemed as a reduction to net sales at the time of the initial transaction and as tender when the points are subsequently redeemed by a customer.

The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $580 million, $616 million and $732 million as of May 1, 2021, January 30, 2021 and May 2, 2020, respectively.

Credit Card Revenues, net

In 2005, the Company entered into an arrangement with Citibank, N.A. ("Citibank") to sell the Company's private label and co-branded credit cards ("Credit Card Program"). Subsequent to this initial arrangement and associated amendments, in 2014, the Company entered into an amended and restated Credit Card Program Agreement (the "Program Agreement") with Citibank. As part of the Program Agreement, the Company receives payments for providing a combination of interrelated services and intellectual property to Citibank in support of the underlying Credit Card Program. Revenue based on the spending activity of the underlying accounts is recognized as the respective card purchases occur and the Company’s profit share ~~because their inclusion would have been antidilutive~~is recognized based on the performance of the underlying portfolio. Revenue associated with the establishment of new credit accounts and assisting in the receipt of payments for

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

existing accounts is recognized as such activities occur. Credit card revenues include finance charges, late fees and other revenue generated by the Company’s Credit Card Program, net of fraud losses and expenses associated with establishing new accounts.

Under the terms of the Program Agreement, if sales decrease by more than 34% over a twelve-month period as compared to the Benchmark Year, defined as the twelve-month period from July 2006 to June 2007 in the Program Agreement, Citibank has the ability to provide written notice to terminate the agreement prior to the end of its current term. Based on the results for the Company’s February 2021 fiscal period, sales for the twelve-month period ended February 27, 2021 decreased by more than 34% as compared to the Benchmark Year. On June 4, 2021, the Company received a written notice of termination of the Program Agreement from Citibank. The Company plans to continue negotiations with Citibank as well as evaluate a potential transfer of its Credit Card Program to another financial service entity. Upon receipt of the written notice of termination, the Company has six months to exercise, or ~~they were~~not exercise, an option to purchase the assets of the Program Agreement, or nominate a third party to purchase such assets, and a subsequent six month period to complete such transfer, subject to ~~performance conditions that had not been met.~~potential extensions as more fully described in the Program Agreement. The Company and Citibank are required to continue to meet their respective obligations and provide support pursuant to the terms of the Program Agreement through this period.

5.	Financing Activities

~~3. Financing Activities~~

The following table shows the detail of debt repayments:

	13 Weeks Ended
	May 1, 2021		May 2, 2020
	(millions)
9.5% Amortizing debentures due 2021	$	2	$	2
9.75% Amortizing debentures due 2021		1		1
3.875% Senior notes due 2022		156		0
2.875% Senior notes due 2023		136		0
4.375% Senior notes due 2023		49		0
3.625% Senior notes due 2024		150		0
6.65% Senior debentures due 2024		5		0
7.6% Senior debentures due 2025		4		0
	$	503	$	3

39 Weeks Ended
October 28, 2017 October 29, 2016
(millions)
7.45% Senior debentures due 2017 $ 300
$ —
7.875% Senior debentures due 2036 —
108
6.375% Senior notes due 2037 135
—
7.45% Senior debentures due 2016 —
59
6.9% Senior debentures due 2032 72
—
6.7% Senior debentures due 2034 28
—
6.65% Senior debentures due 2024 4
—
6.9% Senior debentures due 2029 3
—
6.7% Senior debentures due 2028 3
—
7.0% Senior debentures due 2028 2
—
9.5% amortizing debentures due 2021 4
4
9.75% amortizing debentures due 2021 2
2
Capital leases and other obligations 1
1
$ 554
$ 174

~~During~~

On March 17, 2021, Macy’s Retail Holdings, LLC (“MRH”), a direct, wholly owned subsidiary of Macy’s, Inc., completed an offering of $500 million in aggregate principal amount of 5.875% senior notes due 2029 (the “2029 Notes”) in a private offering (the “Notes Offering”). The 2029 Notes mature on April 1, 2029. The 2029 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on a senior unsecured basis by Macy’s, Inc. MRH used the ~~39 weeks ended October 28, 2017,~~net proceeds from the Notes Offering, together with cash on hand, to fund the tender offer discussed below.

On March 17, 2021, the Company ~~repaid, at maturity, $300~~completed a tender offer in which $500 million ~~of 7.45% senior debentures due July 2017.~~

~~During the 39 weeks ended October 28, 2017, the Company repurchased $247 million face value~~ of senior notes and ~~debentures. The debt repurchases~~debentures were ~~made in the open market~~tendered for aearly settlement and purchased by MRH. The total cash cost for the tender offer was $17 million with the remainder funded through the net proceeds from the private offering discussed above. The Company recognized $11 million of ~~$257 million, including expenses~~loss related to the ~~transactions. Such repurchases resulted in the recognition of expense of $1 million during the 39 weeks ended October 28, 2017 presented as net premiums on~~ early retirement of debt on the Consolidated Statements of ~~Income.~~

On November 27, 2017, the Company commenced a cash tender offer ("tender offer") to purchase up to $400 million in aggregate principal amount of certain senior unsecured notes and debentures, with stated interest rates ranging from 6.375% to 10.25% and maturities ranging from fiscal years 2021 to 2037. The tender offer expires on December 22, 2017, with an early tender date on December 8, 2017. The Company expects to record the redemption premium and other costs related to these repurchases as net premiums on early retirement of debt on the Consolidated Statements of IncomeOperation during the ~~fourth~~first quarter of ~~2017.~~2021.

6.	Benefit Plans

~~4. Benefit Plans~~

The Company has defined contribution plans which cover substantially all ~~employees~~colleagues who work 1,000 hours or more in a year. In addition, the Company has a funded defined benefit plan ("Pension Plan") and an unfunded defined benefit supplementary retirement plan ("SERP"), which provides benefits, for certain ~~employees,~~colleagues, in excess of qualified plan limitations. Effective January 1, 2012, the Pension Plan was closed to new participants, with limited exceptions, and effective January 2, 2012, the SERP was closed to new participants.

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible ~~employees~~colleagues no longer earn future pension service credits after December 31, 2013, with limited exceptions. All retirement benefits attributable to service in subsequent periods are provided through defined contribution plans.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In addition, certain retired ~~employees~~colleagues currently are provided with specified health care and life insurance benefits ("Postretirement Obligations"). Eligibility requirements for such benefits vary, but generally state that benefits are available to eligible ~~employees~~colleagues who were hired prior to a certain date and retire after a certain age with specified years of service. Certain ~~employees~~colleagues are subject to having such benefits modified or terminated.

The defined contribution plan expense and actuarially determined components of the net periodic benefit cost (income) associated with the defined benefit plans are as follows:

	13 Weeks Ended
	May 1, 2021			May 2, 2020
	(millions)
401(k) Qualified Defined Contribution Plan	$	22		$	13
Pension Plan
Service cost	$	0		$	1
Interest cost		12			19
Expected return on assets		(40	)		(45	)
Recognition of net actuarial loss		8			10
	$	(20	)	$	(15	)
Supplementary Retirement Plan
Interest cost		3			4
Recognition of net actuarial loss		3			3
	$	6		$	7

Total Retirement Expense	$	8		$	5

Postretirement Obligations
Interest cost		0			1
Recognition of net actuarial gain		(1	)		(1	)
	$	(1	)	$	0

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
(millions) (millions)
401(k) Qualified Defined Contribution Plan $ 20
$ 22
$ 65
$ 71

Non-Qualified Defined Contribution Plan $ —
$ —
$ —
$ 1

Pension Plan
Service cost $ 1
$ 1
$ 4
$ 3
Interest cost 25
27
79
83
Expected return on assets (55 ) (56 ) (168 ) (170 )
Recognition of net actuarial loss 8
7
24
22
Amortization of prior service credit —
—
—
—
$ (21 ) $ (21 ) $ (61 ) $ (62 )
Supplementary Retirement Plan
Service cost $ —
$ —
$ —
$ —
Interest cost 5
5
16
17
Recognition of net actuarial loss 2
3
6
7
Amortization of prior service cost —
—
—
—
$ 7
$ 8
$ 22
$ 24

Total Retirement Expense $ 6
$ 9
$ 26
$ 34

Postretirement Obligations
Service cost $ —
$ —
$ —
$ —
Interest cost 1
1
4
4
Recognition of net actuarial gain (2 ) (1 ) (4 ) (3 )
Amortization of prior service cost —
—
—
—
$ (1 ) $ —
$ —
$ 1

During the 13 and 39 weeks ended October 28, 2017, the Company incurred $22 million and $73 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. During the 13 and 39 weeks ended October 29, 2016, the Company also incurred $62 million and $81 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses associated with the Company's defined benefit plans and are a result of an increase in lump sum distributions associated with a voluntary separation program, organizational restructuring, and store closings, in addition to periodic distribution activity.

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Fair Value Measurements

~~5. Fair Value Measurements~~

The following table shows the Company's financial assets that are required to be measured at fair value on a recurring basis, by level within the hierarchy as defined by applicable accounting standards:

Level 1: Quoted prices in active markets for identical assets

Level 2: Significant observable inputs for the assets

Level 3: Significant unobservable inputs for the assets

	May 1, 2021								May 2, 2020
			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	$	82	$	38	$	44	$	0	$	102	$	28	$	74	$	0

October 28, 2017 October 29, 2016
Fair Value Measurements Fair Value Measurements
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
(millions)
Marketable equity and debt securities $ 100
$ 23
$ 77
$ —
$ 127
$ 19
$ 108
$ —

Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, certain short-term investments and other assets, short-term debt, merchandise accounts payable, accounts payable and accrued liabilities and long-term debt. With the exception of long-term debt, the carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. The fair values of long-term debt, excluding capitalized leases, are generally estimated based on quoted market prices for identical or similar instruments, and are classified as Level 2 measurements within the hierarchy as defined by applicable accounting standards.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The following table shows the estimated fair value of the Company's long-term debt:

	May 1, 2021						May 2, 2020
	Notional Amount		Carrying Amount		Fair Value		Notional Amount		Carrying Amount		Fair Value
	(millions)
Long-term debt	$	4,610	$	4,558	$	4,643	$	4,903	$	4,918	$	3,698

October 28, 2017 October 29, 2016

Notional
Amount

Carrying
Amount

Fair
Value

Notional
Amount

Carrying
Amount

Fair
Value
(millions)
Long-term debt $ 6,206
$ 6,297
$ 5,908
$ 6,459
$ 6,536
$ 6,749

~~6. Condensed Consolidating Financial Information~~

Certain debt obligations of the Company, which constitute debt obligations of Macy's Retail Holdings, Inc. ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent"), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, "Other Subsidiaries" includes all other direct subsidiaries of Parent, including Bluemercury, Inc., FDS Bank, West 34th Street Insurance Company New York, Macy's Merchandising Corporation, Macy's Merchandising Group, Inc. and its subsidiaries Macy's Merchandising Group (Hong Kong) Limited, Macy's Merchandising Group Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, and its majority-owned subsidiary Macy's China Limited. "Subsidiary Issuer" includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in "Other Subsidiaries."

Condensed Consolidating Statements of Comprehensive Income for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016, Condensed Consolidating Balance Sheets as of October 28, 2017, October 29, 2016 and January 28, 2017, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 28, 2017 and October 29, 2016 are presented on the following pages.

MACY'S, INC.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 13 Weeks Ended October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 2,077
$ 5,861
$ (2,657 ) $ 5,281
Cost of sales —
(1,391 ) (4,441 ) 2,657
(3,175 )
Gross margin —
686
1,420
—
2,106
Selling, general and administrative expenses —
(813 ) (1,182 ) —
(1,995 )
Gains on sale of real estate —
24
41
—
65
Restructuring and other costs —
(1 ) (32 ) —
(33 )
Settlement charges —
(8 ) (14 ) —
(22 )
Operating income (loss) —
(112 ) 233
—
121
Interest (expense) income, net:
External 1
(76 ) 1
—
(74 )
Intercompany —
(34 ) 34
—
—
Equity in earnings (loss) of subsidiaries 35
(61 ) —
26
—
Income (loss) before income taxes 36
(283 ) 268
26
47
Federal, state and local income
tax benefit (expense) —
59
(72 ) —
(13 )
Net income (loss) 36
(224 ) 196
26
34
Net loss attributable to noncontrolling interest —
—
2
—
2
Net income (loss) attributable to
Macy's, Inc. shareholders $ 36
$ (224 ) $ 198
$ 26
$ 36
Comprehensive income (loss) $ 61
$ (201 ) $ 212
$ (13 ) $ 59
Comprehensive loss attributable to
noncontrolling interest —
—
2
—
2
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 61
$ (201 ) $ 214
$ (13 ) $ 61

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 13 Weeks EndedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 2,376
$ 6,183
$ (2,933 ) $ 5,626
Cost of sales —
(1,577 ) (4,742 ) 2,933
(3,386 )
Gross margin —
799
1,441
—
2,240
Selling, general and administrative expenses (1 ) (950 ) (1,161 ) —
(2,112 )
Gains on sale of real estate —
41
—
—
41
Settlement charges —
(24 ) (38 ) —
(62 )
Operating income (loss) (1 ) (134 ) 242
—
107
Interest (expense) income, net:
External 1
(82 ) —
—
(81 )
Intercompany —
(51 ) 51
—
—
Equity in earnings (loss) of subsidiaries 17
(101 ) —
84
—
Income (loss) before income taxes 17
(368 ) 293
84
26
Federal, state and local income
tax benefit (expense) —
68
(79 ) —
(11 )
Net income (loss) 17
(300 ) 214
84
15
Net loss attributable to noncontrolling interest —
—
2
—
2
Net income (loss) attributable to
Macy's, Inc. shareholders $ 17
$ (300 ) $ 216
$ 84
$ 17
Comprehensive income (loss) $ 62
$ (255 ) $ 241
$ 12
$ 60
Comprehensive loss attributable to
noncontrolling interest —
—
2
—
2
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 62
$ (255 ) $ 243
$ 12
$ 62

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 39 weeks ended October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 6,319
$ 15,727
$ (5,875 ) $ 16,171
Cost of sales —
(4,126 ) (11,543 ) 5,875
(9,794 )
Gross margin —
2,193
4,184
—
6,377
Selling, general and administrative expenses (1 ) (2,430 ) (3,422 ) —
(5,853 )
Gains on sale of real estate —
116
60
—
176
Restructuring and other costs —
(1 ) (32 ) —
(33 )
Settlement charges —
(24 ) (49 ) —
(73 )
Operating income (loss) (1 ) (146 ) 741
—
594
Interest (expense) income, net:
External 4
(243 ) 2
—
(237 )
Intercompany —
(102 ) 102
—
—
Net premiums on early retirement of debt —
(1 ) —
—
(1 )
Equity in earnings (loss) of subsidiaries 220
(30 ) —
(190 ) —
Income (loss) before income taxes 223
(522 ) 845
(190 ) 356
Federal, state and local income
tax benefit (expense) (1 ) 142
(281 ) —
(140 )
Net income (loss) 222
(380 ) 564
(190 ) 216
Net loss attributable to noncontrolling interest —
—
6
—
6
Net income (loss) attributable to
Macy's, Inc. shareholders $ 222
$ (380 ) $ 570
$ (190 ) $ 222
Comprehensive income (loss) $ 318
$ (290 ) $ 627
$ (343 ) $ 312
Comprehensive loss attributable to
noncontrolling interest —
—
6
—
6
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 318
$ (290 ) $ 633
$ (343 ) $ 318

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 39 weeks endedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 7,324
$ 16,546
$ (6,607 ) $ 17,263
Cost of sales —
(4,704 ) (12,273 ) 6,607
(10,370 )
Gross margin —
2,620
4,273
—
6,893
Selling, general and administrative expenses (2 ) (2,803 ) (3,334 ) —
(6,139 )
Gains on sale of real estate —
71
5
—
76
Impairments and other costs —
(184 ) (65 ) —
(249 )
Settlement charges —
(29 ) (52 ) —
(81 )
Operating income (loss) (2 ) (325 ) 827
—
500
Interest (expense) income, net:
External 2
(278 ) —
—
(276 )
Intercompany —
(166 ) 166
—
—
Equity in earnings (loss) of subsidiaries 144
(69 ) —
(75 ) —
Income (loss) before income taxes 144
(838 ) 993
(75 ) 224
Federal, state and local income
tax benefit (expense) —
243
(328 ) —
(85 )
Net income (loss) 144
(595 ) 665
(75 ) 139
Net loss attributable to noncontrolling interest —
—
5
—
5
Net income (loss) attributable to
Macy's, Inc. shareholders $ 144
$ (595 ) $ 670
$ (75 ) $ 144
Comprehensive income (loss) $ 164
$ (575 ) $ 677
$ (107 ) $ 159
Comprehensive loss attributable to
noncontrolling interest —
—
5
—
5
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 164
$ (575 ) $ 682
$ (107 ) $ 164

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 116
$ 89
$ 329
$ —
$ 534
Receivables —
67
152
—
219
Merchandise inventories —
3,218
3,847
—
7,065
Income tax receivable —
2
—
(2 ) —
Prepaid expenses and other current assets —
86
346
—
432
Total Current Assets 116
3,462
4,674
(2 ) 8,250
Property and Equipment – net —
3,184
3,558
—
6,742
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
46
445
—
491
Other Assets 1
62
772
—
835
Deferred Income Taxes 26
—
—
(26 ) —
Intercompany Receivable 1,436
—
1,971
(3,407 ) —
Investment in Subsidiaries 2,882
3,644
—
(6,526 ) —
Total Assets $ 4,461
$ 13,713
$ 12,002
$ (9,961 ) $ 20,215
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 6
$ 16
$ —
$ 22
Merchandise accounts payable —
1,339
1,834
—
3,173
Accounts payable and accrued liabilities 139
975
2,048
—
3,162
Income taxes 20
—
16
(2 ) 34
Total Current Liabilities 159
2,320
3,914
(2 ) 6,391
Long-Term Debt —
6,280
17
—
6,297
Intercompany Payable —
3,407
—
(3,407 ) —
Deferred Income Taxes —
707
872
(26 ) 1,553
Other Liabilities 71
476
1,203
—
1,750
Shareholders' Equity:
Macy's, Inc. 4,231
523
6,003
(6,526 ) 4,231
Noncontrolling Interest —
—
(7 ) —
(7 )
Total Shareholders' Equity 4,231
523
5,996
(6,526 ) 4,224
Total Liabilities and Shareholders' Equity $ 4,461
$ 13,713
$ 12,002
$ (9,961 ) $ 20,215

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of October 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 60
$ 99
$ 298
$ —
$ 457
Receivables —
74
188
—
262
Merchandise inventories —
3,621
3,966
—
7,587
Income tax receivable 99
—
—
(39 ) 60
Prepaid expenses and other current assets —
89
365
—
454
Total Current Assets 159
3,883
4,817
(39 ) 8,820
Property and Equipment – net —
3,534
3,615
—
7,149
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
47
452
—
499
Other Assets 1
153
755
—
909
Deferred Income Taxes 24
—
—
(24 ) —
Intercompany Receivable 878
—
1,876
(2,754 ) —
Investment in Subsidiaries 2,954
3,173
—
(6,127 ) —
Total Assets $ 4,016
$ 14,105
$ 12,097
$ (8,944 ) $ 21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 935
$ 3
$ —
$ 938
Merchandise accounts payable —
1,481
1,894
—
3,375
Accounts payable and accrued liabilities 164
910
1,856
—
2,930
Income taxes —
3
36
(39 ) —
Total Current Liabilities 164
3,329
3,789
(39 ) 7,243
Long-Term Debt —
6,545
18
—
6,563
Intercompany Payable —
2,754
—
(2,754 ) —
Deferred Income Taxes —
694
878
(24 ) 1,548
Other Liabilities 63
565
1,501
—
2,129
Shareholders' Equity:
Macy's, Inc. 3,789
218
5,909
(6,127 ) 3,789
Noncontrolling Interest —
—
2
—
2
Total Shareholders' Equity 3,789
218
5,911
(6,127 ) 3,791
Total Liabilities and Shareholders' Equity $ 4,016
$ 14,105
$ 12,097
$ (8,944 ) $ 21,274

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of January 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 938
$ 81
$ 278
$ —
$ 1,297
Receivables —
169
353
—
522
Merchandise inventories —
2,565
2,834
—
5,399
Prepaid expenses and other current assets —
84
324
—
408
Total Current Assets 938
2,899
3,789
—
7,626
Property and Equipment – net —
3,397
3,620
—
7,017
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
51
447
—
498
Other Assets —
47
766
—
813
Deferred Income Taxes 26
—
—
(26 ) —
Intercompany Receivable 375
—
2,428
(2,803 ) —
Investment in Subsidiaries 3,137
3,540
—
(6,677 ) —
Total Assets $ 4,476
$ 13,249
$ 11,632
$ (9,506 ) $ 19,851
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 306
$ 3
$ —
$ 309
Merchandise accounts payable —
590
833
—
1,423
Accounts payable and accrued liabilities 16
1,064
2,483
—
3,563
Income taxes 71
16
265
—
352
Total Current Liabilities 87
1,976
3,584
—
5,647
Long-Term Debt —
6,544
18
—
6,562
Intercompany Payable —
2,803
—
(2,803 ) —
Deferred Income Taxes —
688
781
(26 ) 1,443
Other Liabilities 66
500
1,311
—
1,877
Shareholders' Equity:
Macy's, Inc. 4,323
738
5,939
(6,677 ) 4,323
Noncontrolling Interest —
—
(1 ) —
(1 )
Total Shareholders' Equity 4,323
738
5,938
(6,677 ) 4,322
Total Liabilities and Shareholders' Equity $ 4,476
$ 13,249
$ 11,632
$ (9,506 ) $ 19,851

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Cash Flows~~

~~For the~~ ~~39 Weeks EndedOctober 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Cash flows from operating activities:
Net income (loss) $ 222
$ (380 ) $ 564
$ (190 ) $ 216
Restructuring and other costs —
1
32
—
33
Settlement charges —
24
49
—
73
Equity in loss (earnings) of subsidiaries (220 ) 30
—
190
—
Dividends received from subsidiaries 571
—
—
(571 ) —
Depreciation and amortization —
265
476
—
741
(Increase) decrease in working capital (52 ) 35
(633 ) —
(650 )
Other, net 8
2
(34 ) —
(24 )
Net cash provided (used) by operating activities 529
(23 ) 454
(571 ) 389
Cash flows from investing activities:
Disposition (purchase) of property and equipment and capitalized software, net —
30
(368 ) —
(338 )
Other, net —
2
(10 ) —
(8 )
Net cash provided (used) by investing activities —
32
(378 ) —
(346 )
Cash flows from financing activities:
Debt repaid —
(553 ) (1 ) —
(554 )
Dividends paid (346 ) —
(571 ) 571
(346 )
Issuance of common stock, net of common stock acquired 2
—
—
—
2
Proceeds from noncontrolling interest —
—
13
—
13
Intercompany activity, net (1,016 ) 584
432
—
—
Other, net 9
(32 ) 102
—
79
Net cash used by financing activities (1,351 ) (1 ) (25 ) 571
(806 )
Net increase (decrease) in cash and
cash equivalents (822 ) 8
51
—
(763 )
Cash and cash equivalents at beginning of period 938
81
278
—
1,297
Cash and cash equivalents at end of period $ 116
$ 89
$ 329
$ —
$ 534

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Cash Flows~~

~~For the~~ ~~39 Weeks EndedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Cash flows from operating activities:
Net income (loss) $ 144
$ (595 ) $ 665
$ (75 ) $ 139
Impairments and other costs —
184
65
—
249
Settlement charges —
29
52
—
81
Equity in loss (earnings) of subsidiaries (144 ) 69
—
75
—
Dividends received from subsidiaries 535
575
—
(1,110 ) —
Depreciation and amortization —
298
489
—
787
Increase in working capital (59 ) (572 ) (328 ) —
(959 )
Other, net 19
(36 ) 28
—
11
Net cash provided (used) by operating activities 495
(48 ) 971
(1,110 ) 308
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net —
(23 ) (520 ) —
(543 )
Other, net —
47
5
—
52
Net cash provided (used) by investing activities —
24
(515 ) —
(491 )
Cash flows from financing activities:
Debt repaid, net of debt issued —
(122 ) (1 ) —
(123 )
Dividends paid (344 ) —
(1,110 ) 1,110
(344 )
Common stock acquired, net of
issuance of common stock (199 ) —
—
—
(199 )
Proceeds from noncontrolling interest —
—
7
—
7
Intercompany activity, net (642 ) 158
484
—
—
Other, net 9
(4 ) 185
—
190
Net cash provided (used) by
financing activities (1,176 ) 32
(435 ) 1,110
(469 )
Net increase (decrease) in cash and
cash equivalents (681 ) 8
21
—
(652 )
Cash and cash equivalents at beginning of period 741
91
277
—
1,109
Cash and cash equivalents at end of period $ 60
$ 99
$ 298
$ —
$ 457

~~MACY'S, INC.~~


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following discussion, all references to "~~third~~"first quarter of ~~2017~~"2021" and "~~third~~"first quarter of ~~2016~~"2020" are to the Company's 13-week fiscal periods ended ~~October 28, 2017~~May 1, 2021 and ~~October 29, 2016, respectively, and all references to "2017" and "2016" are to the Company's 39-week fiscal periods ended October 28, 2017 and October 29, 2016,~~May 2, 2020, respectively.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes included ~~elsewhere~~elsewhere in this report, as well as the financial and other information included in the ~~2016~~2020 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report (particularly in "Risk Factors" and in "Forward-Looking Statements") and in the ~~2016~~2020 10-K (particularly in "Risk Factors" and in "Forward-Looking Statements"). This discussion includes ~~non-GAAP~~Non-GAAP financial measures. For information about these measures, see the disclosure under the caption "Important Information Regarding Non-GAAP Financial Measures".

COVID-19 Update

As the COVID-19 pandemic continues into fiscal 2021, the Company remains focused on ~~pages 29~~prudent cash management, maintaining strong liquidity, and executing its strategic initiatives. In addition, the Company continues to ~~31.~~

~~Overview~~

prioritize health and safety measures in its stores and facilities to protect the well-being of its customers and colleagues. The Company ~~is an omnichannel retail organization operating stores, websites~~continuously monitors the ongoing impacts of COVID-19, including the evolving federal, state and ~~mobile applications under three brands (Macy's, Bloomingdale's~~local ordinances and ~~bluemercury) that sell a wide range~~health guidelines related to the mitigation of ~~merchandise, including apparel and accessories (men's, women's and children's), cosmetics, home furnishings and other consumer goods. The Company operates approximately~~ ~~860~~ ~~stores in 45 states,~~transmission risk associated with the District of Columbia, Guam and Puerto Rico. As of October 28, 2017, the Company's operations were conducted through Macy's, Bloomingdale's, Bloomingdale's The Outlet, Macy's Backstage, bluemercury and Macy's China Limited. In addition, Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.

The Company has begun the implementation of its North Star strategy to transform its omnichannel business and focus on key growth areas, embrace customer centricity, and optimize value in its real estate portfolio. Inspired by the North Star, there are five points to this strategy.


1.	~~FromFamiliar to Favorite~~ includes everything the Company does to further its brand awareness and identity to its core customers. Actions include understanding and anticipating customers’ needs, strengthening the Company's fashion authority and executing initiatives around its loyalty and pricing strategies.

~~It Must Be Macy’s~~ encompasses delivering the products and experiences customers love and are exclusive to the Company. This includes styles and home fashion for every day and special occasions, from the Company's leading private brands, as well as exclusive national brands or assortments. It celebrates the Company's iconic events and includes strategies to appeal to more value-oriented customers.

~~Every Experience Matters~~, in-store and online. The Company's competitive advantage is the ability to combine the human touch in its physical stores with cutting-edge technology in its mobile applications and websites. Key to this point is the enhancement of a customer's experience~~as they explore our stores, mobile applications and websites, find their favorite styles, sizes and colors, and receive their purchases through the shopping channels they prefer.~~


4.	~~Funding our Future~~ ~~represents the decisions and actions the Company takes to identify and realize resourcesto fuel growth. This involves a focus on cost reduction and reinvestment as well as creating value from the Company's real estate portfolio.~~


5.	~~What’s New, What’s Next~~ explores and develops those innovations to turn consumer and technology trends to the Company's advantage and to drive growth. This includes exploring previously unmet customer needs and making smart investment decisions based on customer insights and analytics.

pandemic. The Company has taken, ~~a number~~and continues to take, numerous steps to promote health and safety at its stores and facilities, including establishment of ~~key steps over~~vaccine distribution sites at different corporate facilities, increasing safety equipment in stores, offering contactless shopping opportunities, providing company-supplied personal protection equipment and wellness checks for colleagues, performing enhanced cleaning and continuing to offer remote work plans for certain colleagues.

Under the ~~past couple~~terms of ~~years to position itself to successfully implement~~ the ~~North Star strategy. Specifically,~~Program Agreement between the Company ~~launched~~and Citibank, if sales decrease by more than 34% over a ~~new Star Rewards loyalty program~~twelve-month period as compared to the Benchmark Year, defined as the twelve-month period from July 2006 to June 2007 in ~~October 2017 focused on strengthening relationships with~~ the ~~Company's best customers, migrating existing customers~~Program Agreement, Citibank has the ability to ~~higher spending levels and attracting new or infrequent customers. The initial launch of~~provide written notice to terminate the ~~new program focused initially on proprietary cardholders with additional enhancements and expansion beyond proprietary cardholders planned for the future.~~

~~In August 2016, the Company announced its intention~~agreement prior to ~~close approximately 100 Macy’s stores, 74 of which were closed or announced to be closed by~~ the end of its current term. Based on the ~~third quarter of 2017. Further, in January 2017,~~results for the Company’s February 2021 fiscal period, sales for the most recent twelve-month period ended February 27, 2021, have decreased by more than 34% as compared to the Benchmark Year. On June 4, 2021, the Company ~~announced~~received a ~~series~~written notice of ~~actions~~termination of the Program Agreement from Citibank. The Company plans to ~~streamline~~continue negotiations with Citibank as well as evaluate a potential transfer of its ~~store portfolio, intensify cost efficiency efforts and execute its real estate strategy. In addition,~~Credit Card Program to another financial service entity. Upon receipt of the written notice of termination, the Company has ~~reorganized~~six months to exercise, or not exercise, an option to purchase the ~~field structure that supports the remaining stores and conducted a significant restructuring~~assets of the ~~Company's central operations~~Program Agreement, or nominate a third party to ~~focus resources on strategic priorities~~purchase such assets, and ~~reduce expense.~~

~~MACY'S, INC.~~

~~In August 2017,~~a subsequent six month period to complete such transfer, subject to potential extensions as more fully described in the Program Agreement. The Company and Citibank are required to continue to meet their respective obligations and provide support pursuant to the terms of the Program Agreement through this period. Given this timeline, the Company ~~announced a restructuring which included~~is confirming its guidance provided on May 18, 2021, for fiscal 2021 Credit Card Revenues, Net, equal to approximately 3% of Net Sales. The Company has not provided guidance for periods beyond fiscal 2021. The Company is currently unable to estimate the ~~consolidation of three functions (merchandising, planning and private brands) into a single merchandising function. During~~impact beyond fiscal 2021 this termination event or transfer might have on the ~~third~~Program Agreement or on the Company’s future financial results.

Although the Company has experienced recovery in operating results through the first quarter of ~~2017,~~2021 as compared to fiscal 2020, certain stores continued to operate under local governmental orders or restrictions. The full impact of COVID-19 will continue to depend on future developments, including the ~~Company recognized $33 million~~continued spread and duration of ~~costs primarily associated with this restructuring effort~~the outbreak, variant strains of COVID-19, the availability and distribution of effective medical treatments or vaccines as well as ~~a restructuring within~~any related federal, state or local governmental orders or restrictions. In addition, numerous uncertainties continue to surround the ~~marketing function. Additional financial~~pandemic and ~~operational impacts~~its ultimate impact on the Company, including the timing and extent of ~~such restructuring actions include future annual savings of approximately $38 million, some~~any recovery in consumer traffic and spending, and potential delays, interruptions and disruptions in the Company’s supply chain, all of which ~~may~~are highly uncertain and cannot be ~~used for reinvestment~~predicted. Further discussion of the risks and uncertainties posed by the COVID-19 pandemic are disclosed in “Risk Factors” under Part I Item 1A of the ~~business, and savings~~Company’s 2020 Form 10-K.

Quarterly Overview

During the first quarter of ~~approximately $.01 per diluted share in~~2021, the Company continued to build on the momentum of the fourth quarter of ~~2017.~~2020 and exceeded its expectations from both a sales and profit standpoint. The profitable first quarter results were driven by disciplined cost and inventory management through the ongoing execution of the Company’s Polaris strategy, including investments in its digital platforms. Additionally, the Company’s performance during the first quarter of 2021 reflects the benefits from rapidly improving macroeconomic conditions, driven by the government’s stimulus program and heightened consumer confidence resulting from the roll-out of the COVID-19 vaccinations.

MACY'S, INC.

In evaluating the performance of the first quarter of 2021, the Company considered its results against the first quarter of 2020 as well as the first quarter of 2019 given the impact of the pandemic and the closure of the Company’s stores during the first and second quarters of 2020. Certain financial highlights are as follows:

•

Comparable sales were up 62.5% on an owned basis; and up 63.9% on an owned plus licensed basis compared to the first quarter of 2020. Compared to 2019, this reflects a comparable sales decline of 10.5% on an owned basis and 10.0% on an owned plus licensed basis.

•

Digital sales grew 34% over the first quarter of 2020 and 32% over the first quarter of 2019. Digital penetration was at 37% of net sales for the first quarter of 2021.

•

Gross margin was 38.6%, compared to 17.1% in the first quarter of 2020, representing an improvement of approximately 21.5 percentage points. Compared to the first quarter of 2019, gross margin was up 40 basis points.

•

Net credit card revenues were $159 million, up $28 million from the first quarter of 2020, and representing 3.4% of sales. Net credit card revenues were down $13 million from the first quarter of 2019 but saw a 30 basis point improvement as a percent of net sales.

•

Selling, general and administrative ("SG&A") expense was $1.7 billion, up $150 million from first quarter of 2020.Compared to the first quarter of 2019, SG&A expenses were down approximately 17%. SG&A expense as a percent of sales was 37.1%, down from 52.9% in the first quarter of 2020 and 130 basis points lower than the first quarter of 2019.

•

Net income was $103 million in the first quarter of 2021, compared to a net loss of $3,581 million in the first quarter of 2020 and net income of $136 million in the first quarter of 2019. On an adjusted basis, net income improved from a loss of $630 million in the first quarter of 2020 to net income of $126 million for the first quarter of 2021. This compares to adjusted net income of $137 in the first quarter of 2019.

•

The first quarter of 2021 had positive earnings before interest, taxes, depreciation and amortization ("EBITDA") of $454 million compared to negative EBITDA of $3,873 million during the first quarter of 2020. EBITDA was $446 million for the first quarter of 2019. On an adjusted basis, EBITDA was $473 million and 10.1% of net sales, a loss of $689 million and (22.8%) of net sales, and $447 million and 8.1% of net sales for the first quarters of 2021, 2020, and 2019, respectively.

•

Diluted earnings per share and adjusted diluted earnings per share were $0.32 and $0.39, respectively, during the first quarter of 2021. These include an earnings impact of $0.01 related to gains on the sale of real estate. This compares to a diluted loss per share and adjusted diluted loss per share of $11.53 and $2.03, respectively, for the first quarter of 2020. These include an earnings impact of $0.04 related to gains on sale of real estate. This compares to diluted earnings per share and adjusted diluted earnings per share of $0.44 for the first quarter of 2019. Earnings during the first quarter of 2019 included $0.10 related to gains on sale of real estate.

•

Inventory was down 14.1% from the first quarter of 2020.

•

The Company ended the first quarter of 2021 in a strong liquidity position with approximately $1.8 billion in cash and full borrowing capacity in its asset-based credit facility.

During the first quarter of 2021, the Company continued to execute its Polaris strategy and these actions impacted its operating results for the period, notably:

•

Win With Fashion and Style: The Company experienced sales improvement from off-price to luxury. In merchandise, strengths continued in pandemic-driven products and categories but the Company also saw dormant categories improve their performance trend compared to the fourth quarter of 2020, notably dresses and men’s tailored clothing. The Company has added hundreds of new brands and categories over the past year and its flexibility in inventories has enabled the Company to respond to new customer demands in emerging categories such as toys, health and wellness, pet and home décor.

•

Deliver Clear Value: The Company is improving and expanding location-level pricing and strategically shifting its markdown cadence. With these actions, higher full price sell-throughs and related higher merchandise margins are being achieved. Along with advancing data-led capabilities in merchandising pricing, allocation and personalization, these collective activities are expected to improve average unit retail and gross margin performance.

MACY'S, INC.

•

Excel in Digital Shopping: The Company improved fundamental digital offerings during the first quarter of 2021 and took specific actions to attract customers with an under-40 demographic, including the launch of a contemporary site within macys.com. The Company continued to experience growth in its digital channels as previously disclosed and the Macys brand specifically saw double-digit increases in site visits and higher conversation rates as compared to the first quarters of 2020 and 2019.

•

Enhance Store Experience: Store sales continued to improve throughout the quarter and as compared to the fourth quarter of 2020, with a sequential improvement in comparable store sales from the fourth quarter of nearly 890 basis points. By maintaining leaner inventory levels, the Company’s stores have improved their layouts for easier navigation and to provide customers a more streamlined shopping experience.

•

Modernize Supply Chain: The Company has continued to update its supply chain infrastructure and network, while leveraging improved data and analytics capabilities in fulfillment strategies to meet customers' desire for speed and convenience. The Company is navigating supply chain disruptions by adjusting freight strategies and working closely with brand partners to prioritize product.

•

Enable Transformation: The Company has continued to modernize its technology foundations to ensure agility to react to customers and the market regardless of the channel in which customers interact. These activities are coupled with others to build out data science and analytics capabilities with a focus on areas to provide competitive differentiation.

The Company began to see its Platinum, Gold and Silver Star Rewards customers re-engage with the Macy’s brand during the first quarter of 2021, with the average customer spend up 10% compared to the first quarter of 2019 and an 11 percentage point improvement from the fourth quarter of 2020. The Company’s ~~real estate strategy is designed~~Bronze Star Rewards tier continued to ~~create value through both monetization~~grow and ~~redevelopment~~had 3.2 million active customers during the quarter. During the first quarter of ~~certain assets:~~

~~In January 2016,~~2021, the Company ~~completed a $270~~acquired 4.6 million ~~real estate transaction~~new Macy’s customers, of which approximately 47% occurred through Macy’s digital channel.

MACY'S, INC.

Results of Operations

The Company’s operations during the first quarter of 2020 were significantly impacted by the closure of its stores due to ~~recreate~~the COVID-19 pandemic. The Company’s performance during the first quarter of 2021 showed significant improvement over the results of the prior year period as it continued to recover from the pandemic.

Comparison of the First Quarter of 2021 and the First Quarter of 2020

	First Quarter of 2021						First Quarter of 2020
	Amount			% to Net Sales			Amount			% to Net Sales
	(dollars in millions, except per share figures)
Net sales	$	4,706					$	3,017
Credit card revenues, net		159			3.4	%		131			4.3	%

Cost of sales		(2,889	)		(61.4	)%		(2,501	)		(82.9	)%
Selling, general and administrative expenses		(1,748	)		(37.1	)%		(1,598	)		(52.9	)%
Gains on sale of real estate		6			0.1	%		16			0.5	%
Impairment, restructuring and other costs		(19	)		(0.4	)%		(3,184	)		(105.5	)%
Operating income (loss)		215			4.6	%		(4,119	)		(136.5	)%
Benefit plan income, net		15						9
Losses on early retirement of debt		(11	)					0
Interest expense, net		(79	)					(47	)
Income (loss) before income taxes		140						(4,157	)
Federal, state and local income tax benefit (expense)		(37	)					576
Net income (loss)	$	103					$	(3,581	)

Diluted earnings (loss) per share	$	0.32					$	(11.53	)

Supplemental Financial Measure
Gross margin (a)	$	1,817			38.6	%	$	516			17.1	%

Supplemental Non-GAAP Financial Measure
Diluted earnings (loss) per share, excluding the impact of certain items	$	0.39					$	(2.03	)

(a)	Gross margin is defined as net sales less cost of sales.

Net Sales

Net sales for the first quarter of 2021 increased $1.7 billion, or 56.0%, compared to the first quarter of 2020. The Company’s first quarter of 2021 sales showed steady recovery across all three brands - Macy's, ~~Brooklyn store.~~Bloomingdale's and bluemercury. Digital sales during the first quarter of 2021 improved 34% compared to the first quarter of 2020 and accounted for approximately 37% of net sales. The Company ~~continues to own and operate the first four floors and lower level~~experienced strength across all of its ~~existing nine-story retail store, which is currently being reconfigured and remodeled. The remaining portion~~major merchandise categories driven by the continued recovery of ~~the store and~~ its nearby parking facility were sold to Tishman Speyer in a single sales transaction. As the sales agreement required the Company to conduct certain redevelopment activities within the store, the Company is recognizing the gain on the transaction, approximately $250 million, under the percentage of completion method of accounting over the redevelopment period. Accordingly, $166 million has been recognized to-date, of which $117 million was recognized through fiscal 2016 and $49 million has been recognized during 2017.

In fiscal 2016, the Company had property and equipment sales, primarily related to real estate, totaling $673 million in cash proceeds and recognized real estate gains of $209 million. These proceeds include the cash received from the sale of the Company's 248,000 square-foot Union Square Men’s building in San Francisco for approximately $250 million in January 2017. The Company will use part of the proceeds to consolidate the Men’s store into its main Union Square store. The Company is leasing back the Men's store propertystores as ~~it completes the reconfiguration of the main store. The Company is expected to recognize a gain of approximately $235 million in January 2018.~~

~~In January 2017, the Company finalized the formation of a strategic alliance with Brookfield Asset Management, a leading global alternative asset manager, to create increased value~~well as continued growth in its real estate portfolio. Under the alliance, Brookfield has an exclusive right for up to 24 months to create a "pre-development plan" for each of approximately 50 Macy’s real estate assets, with an option for Macy’s to continue to identify and add assets into the alliance. The breadth of opportunity within the portfolio ranges from the additional development on a portion of an asset (such as a Company-controlled land parcel adjacent to a store) to the complete redevelopment of an existing store. Once a "pre-development plan" is created, the Company has the option to accept the "pre-development plan" and then either contribute the asset into a joint venture for the development plan to commence or sell the asset to Brookfield. If the Company chooses to contribute the asset into a joint venture, the Company may elect to participate as a funding or non-funding partner. After development, the joint venture may sell the asset and distribute proceeds accordingly. Based on the analysis conducted to date, preliminary indications point to a likelihood that Brookfield will recommend proceeding with redevelopment on roughly two thirds of the assets subject to the alliance.

~~In February 2017, the Company sold its downtown Minneapolis store and parking facility for $59 million of proceeds and recognized a gain of approximately $47~~digital channel.

Credit Card Revenues, Net

Net credit card revenues were $159 million in the first quarter of ~~2017.~~

~~In April 2017, the Company launched a marketing effort for the upper floors~~2021, an increase of ~~its flagship State Street Macy's store in downtown Chicago. Development and increased utilization of the upper floors are expected~~$28 million, or 21.0%, compared to ~~drive more foot traffic to the store.~~

In May 2017, the Company signed a contract to sell an additional two floors of the downtown Seattle Macy's store; four floors were sold in a similar transaction in fiscal 2015. This transaction closed in September 2017 for approximately $50$131 million ~~of proceeds and the Company~~ recognized ~~a gain of approximately $40 million~~ in the ~~third~~first quarter of ~~2017.~~

~~In 2017,~~2020. This increase was driven by improvement in the ~~Company opened new Macy’s stores~~credit card portfolio's delinquency rates and bad debt, partially offset by a decrease in ~~Murray, UT and Los Angeles, CA as well as a Bloomingdale’s store~~proprietary credit card sales penetration, down approximately 400 basis points, at 42.0% in Kuwait under a license agreement with Al Tayer Group, LLC. The Company expects to open new Macy's and Bloomingdale's stores in Al Maryah Central in Abu Dhabi, UAE, in fiscal 2018 under a license agreement with Al Tayer Group, LLC and two additional Bloomingdale's stores in San Jose, CA and Norwalk, CT in fiscal 2019.

Both Macy's off-price business, Macy's Backstage, and its clearance strategy, Last Act, have been successful in providing unique value opportunities to both existing and new Macy's customers. The Company has rolled out Last Act to all families of business and is currently focused on opening new Macy's Backstage stores within existing Macy's store locations. In the ~~third~~first quarter of ~~2017, the Company opened 7 new Macy’s Backstage stores within existing Macy’s stores, bringing the total locations in operation~~2021 compared to ~~52 (7 freestanding and 45 inside Macy's stores) as of October 28, 2017.~~

~~MACY'S, INC.~~

The Company is focused on accelerating the growth of its luxury beauty products and spa retailer, bluemercury, by opening additional freestanding bluemercury stores in urban and suburban markets, enhancing its online capabilities and adding bluemercury products and boutiques to Macy's stores. 8 new freestanding bluemercury locations were opened46.0% in the ~~third~~first quarter of ~~2017 and 3 additional locations are expected to open later~~2020.

Gross Margin

Gross margin was 38.6% in the ~~fiscal year. As of October 28, 2017, the Company is operating 155 bluemercury locations (135 freestanding and 20 inside Macy's stores).~~

~~Results of Operations~~

~~Comparison of the~~ ~~Third Quarter of 2017~~ ~~and the~~ ~~Third Quarter of 2016~~

Third Quarter of 2017 Third Quarter of 2016
Amount % to Sales Amount % to Sales
(dollars in millions, except per share figures)
Net sales $ 5,281
$ 5,626

Decrease in sales (6.1 ) % (4.2 ) %
Decrease in comparable sales (4.0 ) % (3.3 ) %
Cost of sales (3,175 ) (60.1 ) % (3,386 ) (60.2 ) %
Gross margin 2,106
39.9
% 2,240
39.8
%
Selling, general and administrative expenses (1,995 ) (37.8 ) % (2,112 ) (37.5 ) %
Gains on sale of real estate 65
1.2
% 41
0.7
%
Restructuring and other costs (33 ) (0.6 ) % —
—
%
Settlement charges (22 ) (0.4 ) % (62 ) (1.1 ) %
Operating income 121
2.3
% 107
1.9
%
Interest expense - net (74 ) (81 )
Income before income taxes 47
26

Federal, state and local income tax expense (13 ) (11 )
Net income 34
15

Net loss attributable to noncontrolling interest 2
2

Net income attributable to Macy's, Inc. shareholders $ 36
0.7
% $ 17
0.3
%

Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ .12
$ .05

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of restructuring and other costs and settlement charges $ .23
$ .17

~~Net Sales~~

~~Net sales for the~~ ~~third~~first quarter of ~~2017~~ ~~decreased $345 million or 6.1%~~2021 compared to 17.1% in the first quarter of 2020. The increase in the gross margin rate in the first quarter of 2021 compared to the ~~third~~first quarter of ~~2016~~ ~~due~~2020 was driven primarily by inventory productivity and the execution

MACY'S, INC.

of the Polaris strategy. Due to ~~fiscal year-end 2016~~the impact of COVID-19 and store closures, ~~and~~ the ~~decline in comparable sales, which were negatively impacted by hurricane activity during the quarter and warmer than expected fall weather. The decrease in comparable sales on an owned basis for the~~ ~~third~~first quarter of ~~2017~~ ~~was 4.0% compared to the third quarter of 2016. The decrease in comparable sales~~2020 included an approximate $300 million inventory write-down from markdowns on ~~an owned plus licensed basis for the third quarter of 2017 was 3.6% compared to the~~ ~~third quarter of 2016~~. Sales during the quarter were strongest in fine jewelry, fragrances, dresses, active apparel, men's tailored clothing, and shoes, excluding boots. Sales were weakest in cold weather businesses including coats, boots and winter accessories. Sales were also soft in home related businesses. The Company’s digital business continued its strong growth with double digit gains in the third quarter of 2017. Geographically, regional trends were relatively consistent except for hurricane impacted areas. In addition, lower international tourism sales contributed to the decline of sales in the ~~third quarter of 2017~~ ~~compared to the~~ ~~third quarter of 2016~~.

~~Cost of Sales~~

~~The cost of sales rate as a percent to net sales for the~~ ~~third quarter of 2017~~ decreased to 60.1% compared to 60.2% for the third quarter of 2016. This decrease in the cost of sales rate as a percent to net sales was due in part to lower inventory levels at the end of the quarter, including less clearance merchandise subject to liquidation. The application of the last-in,

~~MACY'S, INC.~~

~~first-out ("LIFO") retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales in either period.~~

fashion merchandise.

Selling, General and Administrative Expenses

~~Selling, general and administrative ("~~

SG~~&A")~~&A expenses for the ~~third~~first quarter of ~~2017~~ ~~decreased $117~~2021 increased $150 million ~~or 5.5%~~ from the ~~third~~first quarter of ~~2016. The SG&A rate~~2020 but decreased as a ~~percent to~~percentage of net sales ~~of 37.8% was 30 basis points~~by 15.8 percentage points. The increase in SG&A expense dollars corresponds with higher net sales but the improvement in the ~~third quarter of 2017, as compared~~SG&A expense rate reflects the expense management strategies implemented by the Company in response to the ~~third quarter of 2016. SG&A expenses in~~COVID-19 pandemic as well as execution against the ~~third quarter of 2017~~ included reduced expenses due to the year-end 2016 stores closures and the impact of restructuring activities. These reductions were partially offset by continued investments in digital growth, strategic initiatives in shoes and jewelry, and the expansion of Macy's Backstage and bluemercury. Income from credit operations was $161 million in the ~~third quarter of 2017, a decrease of $4 million compared to $165 million recognized in the~~ ~~third quarter of 2016~~ in part due to lower proprietary credit card penetration. Income from credit operations excludes costs related to new account originations and fraudulent transactions incurred on the Company’s private label credit cards.

~~Gains on Sale of Real Estate~~

~~The~~ ~~third quarter of 2017~~ included asset sale gains of $65 million, including approximately $40 million related to the downtown Seattle Macy's location and $22 million related to the Macy's Brooklyn transaction. This compares to $41 million of asset sale gains recognized in the ~~third quarter of 2016, inclusive of approximately $9 million related to the Macy's Brooklyn transaction and $32 million related to various asset sales to General Growth Properties.~~

Polaris strategy.

Impairment, Restructuring and Other Costs

~~Restructuring and other costs were $33 million for~~

During the ~~third~~first quarter of ~~2017~~ ~~and include charges associated with severance activities as well as other human resource related costs associated with organizational restructuring. No such charges were recognized in~~2021, the ~~third quarter of 2016~~.

~~Settlement Charges~~

The third quarters of 2017 and 2016 included $22 million and $62 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses and are the result of an increase in lump sum distributions associated with store closings, a voluntary separation program and organizational restructuring, and periodic distribution activity.

~~Net Interest Expense~~

Net interest expense for the third quarter of 2017 decreased $7 million from the third quarter of 2016 due to a reduction in the Company's debt from $7.5 billion as of the end of the third quarter of 2016 to $6.3 billion as of the end of the third quarter of 2017. This reduction of approximately $1.2 billion is due to the maturity and repurchase of certain of the Company's borrowings.

~~Effective Tax Rate~~

The Company's effective tax rate of 27.7% for the third quarter of 2017 and 42.3% for the third quarter of 2016 differ from the federal income tax statutory rate of 35%, and on a comparative basis, principally because of the effect of state and local income taxes, including the settlement of various tax issues and tax examinations.

~~Net Income Attributable to Macy's, Inc. Shareholders~~

~~Net income attributable to Macy's, Inc. shareholders for the~~ ~~third quarter of 2017~~ ~~increased $19 million compared to the~~ ~~third quarter of 2016. The~~ ~~third quarter of 2017~~ ~~included $21 million of after tax~~Company incurred impairment, restructuring and other costs ~~and $14~~totaling $19 million, primarily related to capitalized software assets. During the first quarter of 2020, primarily as a result of the COVID-19 pandemic, the Company incurred non-cash impairment charges totaling $3,150 million driven by recognition of $3,070 million of ~~after tax retirement plan settlement charges, while the~~ ~~third~~goodwill impairment and $80 million of impairments on long-lived tangible and right of use assets. The first quarter of ~~2016~~ ~~included $37 million of after tax retirement plan settlement charges. The~~ ~~third quarter of 2017~~2020 also included ~~higher gains associated with the sale of real estate as well as lower SG&A, interest expense and a lower effective tax rate. These favorable results were partially offset by lower net sales in the~~ ~~third quarter of 2017~~.

~~Diluted Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

~~Diluted earnings per share for the~~ ~~third quarter of 2017~~ ~~increased $.07 compared to the~~ ~~third quarter of 2016, reflecting higher net income. Excluding the impact~~$34 million of restructuring and other costs ~~and settlement charges, diluted earnings per share for the~~ ~~third quarter of 2017~~ ~~increased $.06 or 35.3% compared to the~~ ~~third quarter of 2016~~.

~~MACY'S, INC.~~

~~Comparison of the 39 Weeks Ended October 28, 2017 and October 29, 2016~~

2017 2016
Amount % to Sales Amount % to Sales
(dollars in millions, except per share figures)
Net sales $ 16,171
$ 17,263

Decrease in sales (6.3 ) % (5.2 ) %
Decrease in comparable sales (4.0 ) % (4.0 ) %
Cost of sales (9,794 ) (60.6 ) % (10,370 ) (60.1 ) %
Gross margin 6,377
39.4
% 6,893
39.9
%
Selling, general and administrative expenses (5,853 ) (36.1 ) % (6,139 ) (35.5 ) %
Gains on sale of real estate 176
1.1
% 76
0.4
%
Impairments, restructuring and other costs (33 ) (0.2 ) % (249 ) (1.4 ) %
Settlement charges (73 ) (0.5 ) % (81 ) (0.5 ) %
Operating income 594
3.7
% 500
2.9
%
Interest expense - net (237 ) (276 )
Net premiums on early retirement of debt (1 ) —

Income before income taxes 356
224

Federal, state and local income tax expense (140 ) (85 )
Net income 216
139

Net loss attributable to noncontrolling interest 6
5

Net income attributable to Macy's, Inc. shareholders $ 222
1.4
% $ 144
0.8
%

Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ .73
$ .46

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of impairments, restructuring and other costs, settlement charges and net premiums on early retirement of debt $ .95
$ 1.11

~~Net Sales~~

Net sales for 2017 decreased $1,092 million or 6.3% compared to 2016 due to fiscal year-end 2016 store closures and the decline in comparable sales. The decrease in comparable sales on an owned basis for 2017 was 4.0% compared to 2016. The decrease in comparable sales on an owned plus licensed basis for 2017 was 3.6% compared to 2016. Sales during 2017 were strongest in active apparel, fine jewelry, fragrances, furniture/mattresses and women's shoes. Sales were weaker in housewares and tabletop. The Company’s digital business continued its strong growth at both macys.com and bloomingdales.com. Geographically, the Company’s strongest business was in the Southwest region.

~~Cost of Sales~~

The cost of sales rate as a percent to net sales for 2017 increased to 60.6% compared to 60.1% for 2016. The increase in the cost of sales rate as a percent to net sales was due in part to high year-end inventory levels as well as margin pressures in the beauty business and home related businesses. The application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales in either period.

~~Selling, General and Administrative Expenses~~

SG&A expenses for 2017 decreased $286 million or 4.7% from 2016. The SG&A rate as a percent to net sales of 36.1% was 60 basis points higher in 2017 as compared to 2016. SG&A expenses in 2017 included reduced expenses from the year-end 2016 stores closures and the impact of restructuring activities, partially offset by investments in digital growth, strategic initiatives in shoes and jewelry, and initiatives at bluemercury and Macy's Backstage. Income from credit operations was $524 million in 2017, compared to $528 million in 2016. Income from credit operations excludes costs related to ~~new account originations~~severance activity and ~~fraudulent transactions incurred on the Company’s private label credit cards.~~

~~MACY'S, INC.~~

~~Gains on Sale of Real Estate~~

2017 included asset sale gains of $176 million, including $47 million related to the downtown Minneapolis property, $49 million related to the Macy's Brooklyn transaction, and $40 million related to the downtown Seattle Macy's location. This compares to $76 million of asset sale gains recognized in 2016, inclusive of approximately $24 million related to the Macy's Brooklyn transaction and $32 million related to various asset sales to General Growth Properties.

~~Impairments, Restructuring and Other Costs~~

~~Impairments, restructuring and~~ other ~~costs of $33 million for 2017 and $249 million for 2016 include charges associated with store closings and severance activities as well as other human resource related~~ costs associated with organizational ~~restructuring.~~

~~Settlement Charges~~

2017 and 2016 included $73 million and $81 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses and are the result of an increase in lump sum distributionsrestructuring, primarily associated with ~~store closings, a voluntary separation program and organizational restructuring, and periodic distribution activity.~~

~~Net~~ the Polaris strategy.

Interest Expense,

Net

Net interest expense, excluding losses on early retirement of debt, was $79 million during the first quarter of 2021, compared to $47 million during the first quarter of 2020. The increase is primarily driven by interest paid with respect to the $1,300 million of secured notes issued in June 2020.

Effective Tax Rate

The Company’s effective tax rate was 26.3% for ~~2017 decreased $39 million from 2016 due~~the first quarter of 2021 compared to the federal income statutory tax rate of 21%. The effective tax rate was impacted by the tax shortfalls associated with the vesting and cancellation of certain stock-based compensation awards.

Diluted Earnings (Loss) Per Share

Diluted earnings per share were $0.32 for the first quarter of 2021 compared to a ~~reduction in~~diluted loss per share of $11.53 for the ~~Company's debt~~first quarter of 2020, reflecting higher net income as ~~discussed previously within the quarterly review.~~

~~Net Premiums on Early Retirement of Debt~~

The Company repurchased approximately $247 million face value of senior notes and debentures in 2017. The debt repurchases were made in the open market for a total cash cost of approximately $257 million, including expenses related to the transactions. As a result of the ~~debt repurchases, the Company recognized $1 million in expenses and fees net of premiums on acquired debt in 2017.~~

~~Effective Tax Rate~~

~~The Company's effective tax rate of 39.3% for 2017 and 37.9% for 2016 differ~~continued recovery from the federal income tax statutory rate of 35%, and on a comparative basis, principally because of the effect of state and local income taxes, including the settlement of various tax issues and tax examinations as well as the recognition of approximately $12 million of net tax deficiencies in 2017 associated with share-based payment awards due to the adoption of ASU 2016-09, ~~Improvements to Employee Share-Based Payment Accounting. Historically, the Company had recognized such amounts as an offset to accumulated excess tax benefits previously recognized in additional paid-in capital.~~

~~Net Income Attributable to Macy's, Inc. Shareholders~~

Net income attributable to Macy's, Inc. shareholders for 2017 increased $78 million or 54.2% compared to 2016. The increase from 2017 to 2016 is primarily attributable to higher asset sale gains in 2017 as well as the fact that 2016 included $152 million of after tax impairments, restructuring and other costs compared to $21 million of after tax restructuring and other costs in 2017. These favorable changes as well as lower SG&A, retirement plan settlement charges and interest expense were partially offset by lower net sales and gross margin in 2017.

~~Diluted Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

~~Diluted earnings per share for 2017 increased $.27 or 58.7% compared to 2016, reflecting higher net income. Excluding~~ the impact of ~~impairments, restructuring and other costs, settlement charges, and~~ the ~~net premiums on the early retirement of debt, diluted earnings per share for 2017 decreased $.16 or 14.4% compared to 2016.~~

~~MACY'S, INC.~~

COVID-19 pandemic.

Cash Flow, Liquidity and Capital Resources

The Company's principal sources of liquidity are cash from operations, cash on hand and the asset-based credit facility described ~~below.~~

below

The COVID-19 outbreak and related store closure in 2020 negatively impacted the Company’s liquidity in 2020. The Company proactively took steps to increase available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures, suspension of the Company's quarterly dividend and executing additional financing transactions during the second quarter of 2020. While the Company has obtained additional financing and, as of May 1, 2021, estimates that it has sufficient cash on hand and other capital resources to cover the Company's reasonably foreseeable working capital, capital expenditure and debt service and other cash requirements in both the near term and over the longer term, the continued uncertainty associated with the COVID-19 pandemic could have a significant impact on the Company’s cash flow and liquidity and further actions may be required to improve the Company’s cash position.

Operating Activities

Net cash provided by operating activities ~~in 2017~~for the first quarter of 2021 was ~~$389~~$494 million,, compared to ~~$308~~net cash used by operating activities of $164 million ~~provided~~ for the first quarter of 2020. The increase in ~~2016, primarily~~operating cash flows period over period is due to significant improvement in the Company’s EBITDA, offset partly by lower cash outflows for merchandise inventories, net of merchandise payables, resulting from lower inventory levels as of October 28, 2017 compared to October 29, 2016. These lower cash outflows offset other negative cash flow items including lower sales and higher income taxes paid in 2017.

working capital benefits.

Investing Activities

Net cash used by investing activities was ~~$346~~$74 million ~~in 2017,~~ for the first quarter of 2021, compared to ~~net cash used by investing activities~~$113 million for the first quarter of ~~$491 million~~2020. The decrease period over period is primarily due to a reduction in ~~2016. Investing activities for 2017 include purchases of property and equipment totaling~~ ~~$359 million~~ ~~and capitalized software of~~ ~~$191 million~~,capital spending compared to ~~purchases~~2020 as a result of ~~property~~the Company's updated plan for capital expenditures in response to the COVID-19 pandemic and ~~equipment totaling~~ ~~$451 million~~ ~~and capitalized software of~~ ~~$230 million~~ in 2016. Additionally, the Company received cash of $212 million from the disposition of property and equipment in 2017, primarily related to real estate transactions, as compared to $138 million received in 2016.

alignment with its Polaris strategy.

MACY'S, INC.

Financing Activities

Net cash used by ~~the Company for~~ financing activities was ~~$806~~$300 million for ~~2017, including debt payments~~the first quarter of ~~$554 million and payment of $346 million of cash dividends. These cash outflows were partially offset~~2021, driven by ~~an increase~~a decrease in outstanding checks of $80 million. For 2017, the Company repurchased approximately $247 million face value of senior notes and debentures. During the second quarter of 2017, the Company repaid at maturity $300 million of 7.45% senior debentures due July 2017.

checks. Net cash ~~used~~provided by ~~the Company for~~ financing activities was ~~$469 million for 2016, including payment of $344 million of cash dividends, $230~~$1,148 million for the ~~acquisition~~first quarter of ~~the Company's common stock, primarily under its share repurchase program, and repayment of $174 million of debt. These outflows were partially offset~~2020, driven by~~$31 million~~ ~~from~~ the issuance of ~~common stock, primarily~~$1,500 million of debt related to a draw on the ~~exercise~~Company’s revolving credit agreement, partly offset by cash dividend payments of ~~stock options.~~

$117 million and a decrease in outstanding checks. See below for further discussion of the Company’s financing activities during the first quarter of 2021.

On ~~November 27, 2017, the Company commenced~~March 17, 2021, Macy’s Retail Holdings, LLC (“MRH”), a ~~cash tender offer ("tender offer") to purchase up to $400~~direct, wholly owned subsidiary of Macy’s, Inc., completed an offering of $500 million in aggregate principal amount of ~~certain~~5.875% senior notes due 2029 (the “2029 Notes”) in a private offering (the “Notes Offering”). The 2029 Notes mature on April 1, 2029. The 2029 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on a senior unsecured basis by Macy’s, Inc. MRH used the net proceeds from the Notes Offering, together with cash on hand, to fund the tender offer discussed below.

On March 17, 2021, the Company completed a tender offer in which $500 million of senior notes and debentures ~~with stated interest rates ranging from 6.375% to 10.25%~~were tendered for early settlement and ~~maturities ranging from fiscal years 2021 to 2037.~~purchased by MRH on March 17, 2021. The purchased senior notes and debentures included $156 million of 3.875% senior notes due 2022, $136 million of 2.875% senior notes due 2023, $49 million of 4.375% senior notes due 2023, $150 million of 3.625% senior notes due 2024, $5 million of 6.65% senior debentures due 2024, and $4 million of 7.6% senior debentures due 2025. The total cash cost for the tender offer ~~expires on December 22, 2017,~~was $17 million with ~~an early tender date on December 8, 2017.~~the remainder funded through the net proceeds from the Notes Offering discussed above. The Company ~~expects to record the redemption premium and other costs related to these repurchases as net premiums on~~recognized $11 million of losses associated with this early retirement of debt on the Consolidated Statements of ~~Income~~Operation during the ~~fourth~~first quarter of ~~2017.~~

2021.

The Company is party to aan asset-based credit ~~agreement~~facility (“the ABL Credit Facility”) with certain financial institutions providing for a $2,941 million revolving credit ~~borrowings~~facility (the “Revolving ABL Facility”), including a swingline sub-facility and ~~letters~~a letter of credit sub- facility. The Company may request increases in the size of the Revolving ABL Facility up to an additional aggregate principal amount ~~not~~of $750 million.

The ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to ~~exceed $1,500 million (which may be increased~~the sum of (a) 90% of the net orderly liquidation percentage of eligible inventory, minus (b) customary reserves. Amounts borrowed under the ABL Credit Facility are subject to ~~$1,750 million~~interest at a rate per annum equal to (i) prior to the Step Down Date (as defined in the ABL Credit Facility), at the Company’s option, either (a) adjusted LIBOR plus a margin of 2.75% to 3.00% or (b) a base rate plus a margin of 1.75% to 2.00%, in each case depending on revolving line utilization and (ii) after the Step Down Date, at the Company’s option, either (a) adjusted LIBOR plus a margin of 2.25% to 2.50% or (b) a base rate plus a margin of 1.25% to 1.50%, in each case depending on revolving line utilization. The ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type.

The ABL Credit Facility also requires (1) the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any fiscal quarter on or after April 30, 2021 if (a) certain events of default have occurred and are continuing or (b) Availability plus Suppressed Availability (each as defined in the ABL Credit Facility) is less than the greater of (x) 10% of the Loan Cap (as defined in the ABL Credit Facility) and (y) $250 million, in each case, as of the end of such fiscal quarter and (2) prior to April 30, 2021, that the Company ~~subject~~not permit Availability plus Suppressed Availability to be lower than the ~~willingness~~greater of ~~existing or new lenders to provide commitments for such additional financing) outstanding at any particular time. The agreement is set to expire May 6, 2021.~~(x) 10% of the Loan Cap and (y) $250 million. As of ~~October 28, 2017,~~May 1, 2021, no such events had occurred triggering such requirement.

As of May 1, 2021, the Company ~~did not have any borrowings or~~had $158 million of standby letters of credit outstanding under ~~its credit facility.~~

the ABL Credit Facility, which reduces the available borrowing capacity. The ~~Company is party to a $1,500~~borrowing capacity of the ABL Credit Facility was $2,444 million ~~unsecured commercial paper program. The Company may issue~~ and ~~sell commercial paper in an aggregate amount outstanding at any particular time not to exceed its then-current combined borrowing availability under its bank credit agreement. As of October 28, 2017,~~ the Company ~~did not have any~~had no borrowings outstanding under ~~its commercial paper program.~~

the ABL Credit Facility as of May 1, 2021.

Contractual Obligations

As of ~~October 28, 2017~~May 1, 2021, other than the ~~Company was required~~financing transactions discussed above and in Note 5 to ~~maintain a specified interest coverage ratio for~~ the ~~latest four quarters~~accompanying Consolidated Financial Statements, there were no material changes to our contractual obligations and commitments outside the ordinary course of ~~no less than 3.25 and a specified leverage ratio~~business since January 30, 2021, as ~~of and for~~reported in the latest four quarters of no more than 3.75 under the credit agreement. The Company's interest coverage ratio for the third quarter of 2017 was 7.92 and its leverage ratio at October 28, 2017 was 2.36, in each case as calculated in accordance with the credit agreement.

On October 27, 2017, the Company announced that the Board of Directors declared a quarterly dividend of 37.75 cents per share on its common stock, payable January 2, 2018, to Macy's shareholders of record at the close of business on December 15, 2017.

~~MACY'S, INC.~~

Company’s 2020 Form 10-K.

Capital Resources

Management believes that, with respect to the Company's current operations, its cash on hand and funds from operations, together with ~~its credit facility~~the ABL Credit Facility and other capital resources, will be sufficient to cover the Company's reasonably foreseeable working capital, capital expenditure and debt service requirements and other cash requirements in both the near term and over the longer term.

MACY'S, INC.

The Company's ability to generate funds from operations may be affected by numerous factors, including the COVID-19 pandemic, general economic conditions and levels of consumer confidence and demand; however, the Company expects to be able to manage its working capital levels and capital expenditure amounts so as to maintain sufficient levels of liquidity. To the extent that the Company's cash balances from time to time exceed amounts that are needed to fund its immediate liquidity requirements, the Company will consider alternative uses of some or all of such excess cash. Such alternative uses may include, among others, the redemption or repurchase of debt, equity or other securities through open market purchases, privately negotiated transactions or otherwise, and ~~the funding~~payment of ~~pension related obligations.~~dividends. Depending upon its actual and anticipated sources and uses of liquidity, conditions in the capital markets and other factors, the Company will from time to time consider the issuance of debt or other securities, or other possible capital markets transactions, for the purpose of raising capital which could be used to refinance current indebtedness or for other corporate ~~purposes,~~purposes.

Guarantor Summarized Financial Information

The Company had $3,243 million and $3,246 million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the “Unsecured Notes”) outstanding as of May 1, 2021 and January 30, 2021, respectively, with maturities ranging from 2022 to 2043. The Unsecured Notes constitute debt obligations of MRH ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent" and together with the "Subsidiary Issuer," the "Obligor Group"), and are fully and unconditionally guaranteed on a senior unsecured basis by Parent. The Unsecured Notes rank equally in right of payment with all of the Company’s existing and future senior unsecured obligations, senior to any of the Company’s future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the Company’s subsidiaries that do not guarantee the Unsecured Notes. Holders of the Company’s secured indebtedness, including the ~~redemption or repurchase of debt, equity or other securities through open market purchases, privately negotiated transactions or otherwise,~~Notes and any borrowings under the ABL Credit Facility, will have a priority claim on the assets that secure such secured indebtedness; therefore, the Unsecured Notes and the ~~funding of pension~~ related ~~obligations.~~

~~The Company intends from time~~guarantee are effectively subordinated to time to consider additional acquisitions of, and investments in, retail businesses and other complementary assets and companies. Acquisition transactions, if any, are expected to be financed from one or moreall of the Subsidiary Issuer’s and Parent and their subsidiaries’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.

The following ~~sources: cash~~tables include combined financial information of the Obligor Group. Investments in non-Guarantor subsidiaries of $6,342 million and $6,126 million as of May 1, 2021 and January 30, 2021, respectively, have been excluded from the Summarized Balance Sheets. Equity in earnings of non-Guarantor subsidiaries of $428 million for the first quarter of 2021 has been excluded from the Summarized Statement of Operations. The combined financial information of the Obligor Group is presented on ~~hand, cash from operations, borrowings under existing or new credit facilities~~a combined basis with intercompany balances and transactions within the ~~issuance of long-term debt or other securities, including common stock.~~Obligor Group eliminated.

Summarized Balance Sheets

	May 1, 2021		January 30, 2021
	(in millions)
ASSETS
Current Assets	$	1,422	$	1,297
Noncurrent Assets		6,807		7,491

LIABILITIES
Current Liabilities	$	1,990	$	2,216
Noncurrent Liabilities (a)		9,906		10,145

(a)	Includes net amounts due to non-Guarantor subsidiaries of $2,819 million and $2,702 million as of May 1, 2021 and January 30, 2021, respectively.

MACY'S, INC.

Summarized Statement of Operations

	First Quarter of 2021
	(in millions)
Net Sales	$	157
Consignment commission income (a)		713
Cost of sales		(109	)
Operating income		(251	)
Loss before income taxes (b)		(132	)
Net loss		(110	)

(a)	Income pertains to transactions with ABL Borrower, a non-Guarantor subsidiary

(b)	Includes $215 million of dividend income from non-Guarantor subsidiaries

Outlook and Recent Developments

The Company's operations are impacted by competitive pressures from department stores, off-price stores, specialty stores, mass merchandisers, online retailers and all other retail channels. The Company's operations are also impacted by general consumer spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects of weather or natural disasters and other factors over which the Company has little or no control.

In recent years, consumer spending levels have been affected to varying degrees by a number of factors, including modest economic growth, uncertainty regarding governmental spending and tax policies, unemployment levels, tightened consumer credit, an improving housing market and a fluctuating stock market. In addition, consumer spending levels of international customers are impacted by the strength of the U.S. dollar relative to foreign currencies. These factors have affected, to varying degrees, the amount of funds that consumers are willing and able to spend for discretionary purchases, including purchases of some of the merchandise offered by the Company.

All economic conditions ultimately affect the Company's overall operations. However, the effects of economic conditions can be experienced differently and at different times, in the various geographic regions in which the Company operates, in relation to the different types of merchandise that the Company offers for sale, or in relation to each of the Company's branded operations.

On November 9, 2017, the Company issued a press release to report its preliminary earnings for the third quarter of 2017 and reaffirmed its previously provided guidance for fiscal 2017. In summary, the Company expects ~~comparable sales~~the COVID-19 pandemic to have a material impact on ~~an owned basis to decline between 2.2 percent~~its financial condition, results of operations and ~~3.3 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 3.0 percent. Total sales are expected to be down between 3.2 percent and 4.3 percent~~cash flows from operations in fiscal 2017. Total sales for fiscal 2017 reflect a 53rd week, whereas comparable sales are on a 52-week basis. As previously announced in August 2017, the Company expects a 1 cent increase in adjusted earnings per diluted share due to the restructuringfuture periods. The extent of ~~the merchandising operations. The Company now expects adjusted earnings per diluted share of between $3.38 and $3.63 in fiscal 2017, excluding~~ the impact of the ~~anticipated settlement charges, restructuring~~COVID-19 pandemic on the Company's operational and ~~other costs and net premiums and fees associated with debt repurchases. Excluding the impact~~financial performance depends on future developments outside of the ~~anticipated fourth quarter gain on~~Company's control, including the ~~sale~~duration and spread of the ~~Union Square Men’s building~~pandemic and related actions taken by federal, state and local government officials, and international governments to prevent disease spread. On May 18, 2021, the Company disclosed, in ~~San Francisco and~~connection with its preliminary first quarter of 2021 earnings release, its updated estimates of performance expectations for fiscal 2021, which have been revised from the performance expectations disclosed on February 23, 2021. The revisions are due to the Company’s performance for the first quarter of 2021, combined with the faster than anticipated ~~settlement charges, restructuring and other costs and net premiums and fees associated with debt repurchases, adjusted earnings per diluted share of $2.91 to $3.16 are expected in fiscal 2017.~~economic recovery from the COVID-19 pandemic.

•

Net sales are expected to be between $21,725 million and $22,225 million, an increase between 25% to 28% compared to fiscal 2020. Annual digital sales are estimated at approximately $8 billion.

•

Gross margin is expected to increase by up to 8 percentage points from 2020.

•

SG&A expense as a percentage of net sales is expected to improve approximately 135 basis points compared to 2019 levels.

•

Earnings before interest, taxes, depreciation and amortization, excluding the impact of certain items, are expected to be approximately 9% to 9.5% of net sales.

•

Net interest expense is expected to be approximately $320 million.

•

The effective tax rate, excluding the impact of certain items, is expected to be approximately 25%.

~~MACY'S, INC.~~

•

Adjusted diluted earnings per share are expected to be between $1.71 and $2.12.

Important Information Regarding Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures provide users of the Company's financial information with additional useful information in evaluating operating performance. Management believes that providing supplemental changes in comparable sales on an owned plus licensed basis, which includes adjusting for the impact of ~~growth in~~ comparable sales of departments licensed to third parties, assists in evaluating the Company's ability to generate sales growth, whether through owned businesses or departments licensed to third parties, ~~on a comparable basis,~~ and in evaluating the impact of changes in the manner in which certain departments are operated. Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure which the company believes provides meaningful information about its operational efficiency by excluding the impact of changes in tax law and structure, debt levels and capital investment. In addition, management believes that excluding certain items from EBITDA, net income (loss) and diluted earnings (loss) per share ~~attributable to Macy's, Inc. shareholders~~ that are ~~no longer~~not associated with the Company’s core operations and that may vary substantially in frequency and magnitude from period-to-period provides useful supplemental measures that assist in evaluating the Company's ability to generate earnings and ~~leverage sales and~~ to more readily compare these metrics between past and future periods.

The ~~reconciliation~~Company does not provide reconciliations of the forward-looking non-GAAP ~~financial measure~~measures of ~~changes in comparable sales on an owned plus licensed basis~~adjusted EBITDA and adjusted diluted earnings per share to GAAP comparable sales (i.e., on an owned basis) is in the same manner as illustrated below, where the impact of growth in comparable sales of departments licensed to third parties is the only reconciling item. In addition, the Company does not provide the most directly comparable forward-looking GAAP ~~measure of diluted earnings per share attributable to Macy’s, Inc. shareholders excluding certain items~~measures because the timing and amount of excluded items ~~(e.g., impairments, restructuring and other costs, retirement plan settlement charges and net premiums on the early retirement of debt)~~ are unreasonably difficult to fully and accurately estimate.

For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

MACY'S, INC.

Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company's financial position, results of operations or cash flows and should therefore be considered in assessing the Company's actual and future financial condition and performance. Additionally, the amounts received by the Company on account of sales of departments licensed to third parties are limited to commissions received on such sales. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.

~~MACY'S, INC.~~

~~Change~~

Changes in Comparable Sales

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

Third Quarter of 2017 Third Quarter of 2016

Decrease in comparable sales on an owned basis (note 1) (4.0 )% (3.3 )%
Impact of growth in comparable sales of departments licensed to third parties (note 2) 0.4 % 0.6 %
Decrease in comparable sales on an owned plus licensed basis (3.6 )% (2.7 )%

2017 2016

Decrease in comparable sales on an owned basis (note 1) (4.0 )% (4.0 )%
Impact of growth in comparable sales of departments licensed to third parties (note 2) 0.4 % 0.5 %
Decrease in comparable sales on an owned plus licensed basis (3.6 )% (3.5 )%

~~Notes:~~

	Comparable Sales vs. 13 Weeks Ended
~~(1)~~	May 2, 2020
Increase in comparable sales on an owned basis (Note 1)		62.5	%
Comparable sales growth impact of departments licensed to third parties (Note 2)		1.4	%
Increase in comparable sales on an owned plus licensed basis		63.9	%

	Comparable Sales vs. 13 Weeks Ended
	May 4, 2019
Decrease in comparable sales on an owned basis (Note 1)		(10.5	)%
Comparable sales growth impact of departments licensed to third parties (Note 2)		0.5	%
Decrease in comparable sales on an owned plus licensed basis		(10.0	)%

Notes:

(1)

Represents the period-to-period percentage change in net sales from stores in operation ~~throughout~~during the ~~year presented~~13 weeks ended May 1, 2021 and the ~~immediately preceding year~~13 weeks ended May 2, 2020 and May 4, 2019, respectively. Such calculation includes all ~~online~~digital sales ~~excluding~~and excludes commissions from departments licensed to third parties. Stores impacted by a natural disaster or undergoing ~~remodeling,~~significant expansion or ~~relocation~~shrinkage remain in the comparable sales calculation unless the store, or material portion of the store, is closed for a significant period of time. No stores have been excluded as a result of the COVID-19 pandemic. Definitions and calculations of comparable sales may differ among companies in the retail industry.

(2)

Represents the impact of including the sales of departments licensed to third parties occurring in stores in operation throughout the year presented and the immediately preceding year and all online sales in the calculation of comparable sales. The Company licenses third parties to operate certain departments in its stores and online and receives commissions from these third parties based on a percentage of their net sales. In its financial statements prepared in conformity with GAAP, the Company includes these commissions (rather than ~~the~~ sales of the departments licensed to third parties) in its net sales. The Company does not, however, include any amounts ~~with~~in respect toof licensed department sales (or any commissions earned on such sales) in its comparable sales in accordance with GAAP (i.e., on an owned basis). The ~~Company believes that the~~ amounts of commissions earned on sales of departments licensed to third parties are not material to its ~~results of operations~~net sales for the periods presented.

MACY'S, INC.

~~Diluted Earnings Per Share Attributable~~

Adjusted EBIT and EBITDA as a Percent to ~~Macy's, Inc. Shareholders, Excluding Certain Items~~

Net Sales

The following is a tabular reconciliation of the non-GAAP financial ~~measure of diluted earnings per share attributable~~measures EBIT and EBITDA, as adjusted to ~~Macy's, Inc. shareholders, excluding~~exclude certain items (“Adjusted EBIT” and “Adjusted EBITDA”), as a percent to net sales to GAAP ~~diluted earnings per share attributable~~net income as a percent to ~~Macy's, Inc., shareholders,~~net sales, which the Company believes to be the most directly comparable GAAP financial measure.

	13 Weeks Ended May 1, 2021			13 Weeks Ended May 2, 2020			13 Weeks Ended May 4, 2019
	(millions, except percentages)
Net sales	$	4,706		$	3,017		$	5,504

Net income (loss)	$	103		$	(3,581	)	$	136

Net income (loss) as a percent to net sales		2.2	%		(118.7	)%		2.5	%

Net income (loss)	$	103		$	(3,581	)	$	136
Impairment, restructuring and other costs	$	19		$	3,184		$	1
Interest expense - net		79			47			47
Losses on early retirement of debt		11			—			—
Federal, state and local income tax expense (benefit)		37			(576	)		27
Adjusted EBIT	$	249		$	(926	)	$	211
Adjusted EBIT as a percent to net sales		5.3	%		(30.7	)%		3.8	%

Add back depreciation and amortization		224			237			236
Adjusted EBITDA	$	473		$	(689	)	$	447
Adjusted EBITDA as a percent to net sales		10.1	%		(22.8	)%		8.1	%

Third Quarter of 2017 Third Quarter of 2016

Diluted earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
Add back the pre-tax impact of restructuring and other costs .11
—
Add back the pre-tax impact of settlement charges .07
.20
Deduct the income tax impact of certain items identified above (.07 ) (.08 )
Diluted earnings per share attributable to Macy's, Inc. shareholders,
excluding certain items $ .23
$ .17

2017 2016

Diluted earnings per share attributable to Macy's, Inc. shareholders $ .73
$ .46
Add back the pre-tax impact of impairments, restructuring and other costs .11
.80
Add back the pre-tax impact of settlement charges .24
.26
Add back the pre-tax impact of net premiums on the early retirement of debt (note 1) —
—
Deduct the income tax impact of certain items identified above (.13 ) (.41 )
Diluted earnings per share attributable to Macy's, Inc. shareholders,
excluding certain items $ .95
$ 1.11

~~Note:~~


~~(1)~~	~~The impact during the 39 weeks ended October 28, 2017 represents a value less than $.01 per diluted share attributable to Macy’s, Inc. shareholders.~~

~~MACY'S, INC.~~

~~New Pronouncements~~

~~In May 2014,~~

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share

The following is a tabular reconciliation of the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers~~,non-GAAP financial measures of net income (loss) and diluted earnings (loss) per share, excluding certain items identified below, to GAAP net income (loss) and diluted earnings (loss) per share, which establishes principles to report useful information to financial statements users about the nature, timing and uncertainty of revenue from contracts with customers. ASU No. 2014-09 along with various related amendments comprise ASC Topic 606, ~~Revenue from Contracts with Customers~~, and provide guidance that is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. The new standard and its related updates are effective for the Company beginning on February 4, 2018. On the effective date, the Company will apply the new guidance retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the methods of adoption and has not yet decided on the methodbelieves to be ~~applied when~~ the ~~new revenue guidance is effective.~~most directly comparable GAAP measures.

	First Quarter of 2021						First Quarter of 2020						First Quarter of 2019
	Net Income			Diluted Earnings Per Share			Net Income (Loss)			Diluted Earnings (Loss) Per Share			Net Income		Diluted Earnings Per Share
	(millions, except per share figures)
As reported	$	103		$	0.32		$	(3,581	)	$	(11.53	)	$	136	$	0.44
Impairment, restructuring and other costs		19			0.06			3,184			10.25			1		-
Losses on early retirement of debt		11			0.03			-			-			-		-
Income tax impact of certain items noted above		(7	)		(0.02	)		(233	)		(0.75	)		-		-
As adjusted to exclude certain items above	$	126		$	0.39		$	(630	)	$	(2.03	)	$	137	$	0.44

The Company currently estimates the material impacts to its consolidated financial statements to include gross presentation of its estimates for future sales returns and related recoverable assets, presenting income from credit operations as a separate component of revenue and recognizing revenue for online transactions upon shipment rather than delivery. In addition, the gains for certain real estate transactions will generally be recognized earlier than under current guidance due to consideration of the guidance in ASU No. 2017-05, ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)~~ ~~and the new lease standard discussed below.~~

New Pronouncements

The Company does not expect the new guidance to materially impact the revenue recognition associated with gift card breakage as well as the accounting for its warranty arrangements, loyalty programs and other customer incentive arrangements. The Company is continuing to evaluate the impact of the new standards and the final determinations of the impact of the new guidance may differ from these initial estimates.

~~In February 2016, the FASB~~that any recently issued ~~ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, which requires lessees to recognize substantially all leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right of use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard is effective for the Company on February 3, 2019, with early adoption permitted. The new standard is to be adopted utilizing a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company has not yet decided whether it will early adopt the new standard but the Company currently plans to elect the majority of the standard's available practical expedients on adoption.

The Company expects that the new lease standard will have a material impact on the Company's consolidated financial statements. While the Company is continuing to assess the effects of adoption, the Company currently believes the most significant changes relate to the recognition of new ROU assets and lease liabilities on the consolidated balance sheets for real property and personal property operating leases as well as changes to the timing of recognition of certain real estate asset sale gains in the consolidated statements of income due to application of the new sale-leaseback guidance and ASU No. 2017-05 as discussed above. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and ROU assets upon adoption. A significant change in leasing activity between the date of this report and adoption is not expected.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715)~~, which requires employers to disaggregate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest costs, expected return on plan assets, amortization of prior service cost or credits and actuarial gains and losses) separately and outside a subtotal of operating income. The income statement guidance requires application on a retrospective basis. The new standard is effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial position, results of operations, and related disclosures. The Company plans to adopt this standard on February 4, 2018.

~~The Company does not anticipate that the adoption of any other recent~~ accounting pronouncements will have a material ~~impact~~effect on ~~the Company's~~its consolidated financial ~~position, results of operations or cash flows.~~

statements.

MACY'S, INC.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to the Company’s market risk as described in the Company's ~~2016~~2020 10-K. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the ~~2016~~2020 10-K.


Item 4.	Controls and Procedures.

The Company's Chief Executive Officer and Chief Financial Officer have carried out, as of ~~October 28, 2017~~,May 1, 2021, with the participation of the Company's management, an evaluation of the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange ~~Act.~~Act of 1934 (the "Exchange Act"). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of ~~October 28, 2017~~May 1, 2021, the Company's disclosure controls and procedures ~~are~~were effective to provide reasonable assurance that information required to be disclosed by the Company in reports the Company files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (the "SEC") rules and forms, and that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~There~~

From time to time adoption of new accounting pronouncements, major organizational restructuring and realignment occurs for which the Company reviews its internal control over financial reporting. As a result of this review, there were no changes in the Company's internal control over financial reporting that occurred during the Company's most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

MACY'S, INC.

PART II - OTHER INFORMATION


Item 1.	Legal Proceedings.

The Company and its subsidiaries are involved in various proceedings that are incidental to the normal course of their businesses. As of the date of this report, the Company does not expect that any of such proceedings will have a material adverse effect on ~~the~~the Company’s financial position or results of operations.


Item 1A.	Risk Factors.

~~There~~

Except as set forth below, there have been no material changes to the Risk Factors described in Part I, ~~"Item~~Item 1A."Risk Factors" in the Company's ~~2016~~2020 Form 10-K.


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

The ~~following table provides information regarding~~risk factor “If cash flows from our private label credit card decrease, our financial and operational results may be negatively impacted” is deleted and replaced as follows:

If cash flows from our private label credit card decrease, our financial and operational results may be negatively impacted.

We previously sold most of our credit accounts and related receivables to Citibank (in its role as the ~~Company's purchases~~issuer of ~~Common Stock during~~our credit card). Following the sale, we share in the economic performance of the credit card program with Citibank. Deterioration in economic or political conditions could adversely affect the volume of new credit accounts, the amount of credit card program balances and the ability of credit card holders to pay their balances. These conditions could result in the Company receiving lower payments under the credit card program.

Under the terms of the credit card program, Citibank has the right to terminate the agreement prior to the end of the current term if sales decrease by more than 34% over a twelve-month period as compared to the fiscal twelve-month period from July 2006 to June 2007 (the “Benchmark Year”). Based on the results of our February 2021 fiscal period, sales for the most recent twelve-month period then ended have decreased by more than 34% as compared to the Benchmark Year. On June 4, 2021, we received a written notice of termination of the Program Agreement from Citibank. We plan to continue negotiations with Citibank as well as evaluate a potential transfer of its credit card program to another financial service entity. Upon receipt of the written notice of termination, we have six months to exercise, or not exercise, an option to purchase the assets of the credit card program, or nominate a third ~~quarter~~party to purchase such assets, and a subsequent six month period to complete such transfer, subject to potential extensions as more fully described in the credit card program agreement. Both parties are required to continue to meet their respective obligations and provide support pursuant to the terms of ~~2017~~.



	~~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)~~
~~July 30, 2017 – August 26, 2017~~	—	—	—	~~1,716~~
~~August 27, 2017 – September 30, 2017~~	—	—	—	~~1,716~~
~~October 1, 2017 – October 28, 2017~~	—	—	—	~~1,716~~
	—	—	—

~~___________________~~

~~(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~~ ~~October 28, 2017. All authorizations are cumulative and do not have an expiration date. As of~~ ~~October 28, 2017~~, $1,716 million of authorization remained unused. The Company may continue, discontinue or resume purchases of Common Stock under these or possible future authorizations in the open market, in privately negotiated transactions or otherwise at any time and from time to time without prior notice.

the credit card program agreement this period. We cannot assure that future negotiations with Citibank will be successful. In addition, an amended or new credit card program may be on terms less favorable to us than the current credit card program.

Credit card operations are subject to many federal and state laws that may impose certain requirements and limitations on credit card providers. Citibank and our subsidiary bank, FDS Bank, may be required to comply with regulations that may negatively impact the operation of our private label credit card. This negative impact may affect our revenue streams derived from the sale of such credit card accounts and our financial results.

MACY'S, INC.


Item 5.	Other Information.

On June 4, 2021, the Company received notice from Citibank that it was exercising its right to terminate the Program Agreement, among the Company, FDS Bank, Macy’s Credit and Customer Services, Inc., Macy’s West Stores, Inc., Bloomingdales, Inc., Department Stores National Bank and Citibank.

The Program Agreement provides for, among other things, (i) the ownership by Citibank of the Company’s credit card accounts and related receivable balances purchased by Citibank, (ii) the ownership by Citibank of new accounts opened by the Company’s customers, (iii) the provision of credit by Citibank to the holders of the credit cards associated with those accounts, (iv) the servicing of those accounts and (v) the allocation between Citibank and the Company of the economic benefits and burdens associated with the credit card program. As part of the Program Agreement, the Company receives payments for providing a combination of interrelated services and intellectual property to Citibank in support of the program. Pursuant to the Program Agreement, the Company continues to provide certain servicing functions related to the accounts and related receivables owned by Citibank and receives compensation from Citibank for these services.

Under the terms of the Program Agreement, Citibank has the right to terminate the agreement prior to the end of the current term if sales decrease by more than 34% over a twelve-month period as compared to the fiscal twelve-month period from July 2006 to June 2007 (the “Benchmark Year”). Based on the results of the Company’s February 2021 fiscal period, sales for the most recent twelve-month period then ended decreased by more than 34% as compared to the Benchmark Year (an “Adverse Sales Development” under the Program Agreement). Although written notice of termination has been received, the Company is in on-going discussions with Citibank concerning the credit card program.

Upon receipt of the written notice of termination, the Company has six months to exercise, or not exercise, an option to purchase the assets of the Program Agreement, or nominate a third party to purchase such assets, and a subsequent six month period to complete such transfer, subject to potential extensions as more fully described in the Program Agreement. The Company and Citibank are required to continue to meet their respective obligations and provide support pursuant to the terms of the Program Agreement through this period.Given this timeline, the Company is confirming its guidance provided on May 18, 2021, for fiscal 2021 Credit Card Revenues, Net, equal to approximately 3% of Net Sales. The Company has not provided guidance for periods beyond fiscal 2021.

Forward-Looking Statements

This report and other reports, statements and information previously or subsequently filed by the Company with the SEC contain or may contain forward-looking statements. Such statements are based upon the beliefs and assumptions of, and on information available to, the management of the Company at the time such statements are made. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (i) statements preceded by, followed by or that include the words "may," "will," "could," "should," "believe," "expect," "future," "potential," "anticipate," "intend," "plan," "think," "estimate" or "continue" or the negative or other variations thereof, and (ii) statements regarding matters that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties, including risks and uncertainties relating to:

•

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;

competitive pressures from department and 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 successfully execute against its Polaris strategy, including the ability to realize the anticipated benefits associated with the strategy;

~~the Company's ability to remain competitive and relevant as consumers' shopping behaviors migrate to other shopping channels;~~

•

the success of the Company’s operational decisions, such as product sourcing, merchandise mix and pricing, and marketing and strategic initiatives, such as growing its digital channels, expanding off-mall and modernizing its technology and supply chain infrastructures;

general consumer-spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects of the weather or natural disasters;

•

general consumer shipping behaviors and spending levels, including the shift of consumer spending to digital channels, 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;

~~conditions to, or changes in the timing of, proposed transactions, including planned store closings, and changes in expected synergies, cost savings and non-recurring charges;~~

•

competitive pressures from department stores, specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, and all other retail channels, including digitally-native retailers, social media and catalogs;

MACY'S, INC.

•

the Company’s ability to remain competitive and relevant as consumers’ shopping behaviors continue to migrate to online and other shopping channels and to maintain its brand and reputation;

~~the success of the Company's operational decisions (e.g., product curation, marketing programs) and strategic initiatives;~~

•

possible systems failures and/or security breaches, including any security breach that results in the theft, transfer or unauthorized disclosure of customer, colleague 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;~~

•

the cost of colleague benefits as well as attracting and retaining quality colleagues;

~~transactions involving our~~

•

transactions and strategy involving the Company's real estate portfolio;

•

the seasonal nature of the Company's business;

~~possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions;~~

•

conditions to, or changes in the timing of, proposed transactions, and changes in expected synergies, cost savings and non-recurring charges;

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;

•

the potential for the incurrence of charges in connection with the impairment of intangible assets, including goodwill;

~~changes in relationships with vendors and other product and service providers;~~

•

possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions;

~~currency, interest and exchange rates and other capital market, economic and geo-political conditions;~~

•

~~unstable political conditions, civil unrest, terrorist activities and armed conflicts;~~

•

changes in relationships with vendors and other product and service providers;

~~the possible inability of the Company's manufacturers or transporters to deliver products in a timely manner or meet the Company's quality standards;~~

•

our substantial level of indebtedness;

~~the Company's reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional health pandemics, and regional political~~

•

currency, interest and exchange rates and other capital market, economic and geo-political conditions;

~~duties, taxes, other charges and quotas on imports;~~

•

unstable political conditions, civil unrest, terrorist activities and armed conflicts;

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 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.

In addition to any risks and uncertainties specifically identified in the text surrounding such forward-looking statements, the statements in the immediately preceding sentence and the statements under captions such as "Risk Factors" in this report and in reports, statements and information filed by the Company with the SEC from time to time constitute cautionary statements identifying important factors that could cause actual amounts, results, events and circumstances to differ materially from those expressed in or implied by such forward-looking statements.

MACY'S, INC.

Item 6.

Exhibits.

4.1		Indenture dated as of March 17, 2021 by and among Macy’s Retail Holdings, LLC as issuer, Macy’s, Inc. as guarantor and U.S. Bank National Association as trustee, relating to Macy’s Retail Holdings, LLC’s 5.875% Senior Notes due 2029 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 17, 2021)
~~Item 6.~~	~~Exhibits.~~


10.1		2021-2023 Performance-Based Restricted Stock Unit Terms and Conditions under the 2018 Equity and Incentive Compensation Plan*
~~31.1~~
22		List of Subsidiary Guarantors (incorporated by reference to Exhibit 22 to the Company’s Annual Report on Form 10-K (file No. 1-13536) for the fiscal year ended January 30, 2021)

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)

32.1		Certification by Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act

32.2		Certification by Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act

101		The following financial statements from Macy's, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~October 28, 2017,~~May 1, 2021, filed on ~~December 4, 2017,~~June 7, 2021, formatted in ~~XBRL:~~iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of ~~Income,~~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 ~~(v)~~(vi) the Notes to Consolidated Financial Statements.

104	*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Constitutes a compensatory plan or arrangement. Portions of this exhibit have been omitted.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MACY’S, INC.

	~~MACY’S, INC.~~
By:
	~~By:~~	/s/ ELISA D. GARCIA
			Elisa D. Garcia Executive Vice President, Chief Legal Officer and Secretary

	By:		/s/ ~~FELICIA WILLIAMS~~PAUL GRISCOM
		~~Felicia Williams~~ ~~Executive~~	Paul Griscom Senior Vice President ~~Controller~~ and ~~Enterprise Risk~~ ~~(Principal Accounting Officer)~~ Controller

Date: ~~December 4, 2017~~

June 7, 2021


(State or other jurisdiction of incorporation or organization)
~~Incorporated in Delaware~~		(I.R.S. Employer Identification No.
		~~13-3324058~~)

☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




	13 Weeks Ended						39 Weeks Ended
	October 28, 2017			October 29, 2016			October 28, 2017			October 29, 2016
Net sales	$	5,281		$	5,626		$	16,171		$	17,263
Cost of sales	(3,175		)	(3,386		)	(9,794		)	(10,370		)
Gross margin	2,106			2,240			6,377			6,893
Selling, general and administrative expenses	(1,995		)	(2,112		)	(5,853		)	(6,139		)
Gains on sale of real estate	65			41			176			76
Impairments, restructuring and other costs	(33		)	—			(33		)	(249		)
Settlement charges	(22		)	(62		)	(73		)	(81		)
Operating income	121			107			594			500
Interest expense	(76		)	(82		)	(244		)	(279		)
Net premiums on early retirement of debt	—			—			(1		)	—
Interest income	2			1			7			3
Income before income taxes	47			26			356			224
Federal, state and local income tax expense	(13		)	(11		)	(140		)	(85		)
Net income	34			15			216			139
Net loss attributable to noncontrolling interest	2			2			6			5
Net income attributable to Macy's, Inc. shareholders	$	36		$	17		$	222		$	144
Basic earnings per share attributable to Macy's, Inc. shareholders	$	.12		$	.05		$	.73		$	.46
Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.12		$	.05		$	.73		$	.46




	October 28, 2017			January 28, 2017			October 29, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	534		$	1,297		$	457
Receivables	219			522			262
Merchandise inventories	7,065			5,399			7,587
Income tax receivable	—			—			60
Prepaid expenses and other current assets	432			408			454
Total Current Assets	8,250			7,626			8,820
Property and Equipment - net of accumulated depreciation and amortization of $5,330, $4,856 and $5,625	6,742			7,017			7,149
Goodwill	3,897			3,897			3,897
Other Intangible Assets – net	491			498			499
Other Assets	835			813			909
Total Assets	$	20,215		$	19,851		$	21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	22		$	309		$	938
Merchandise accounts payable	3,173			1,423			3,375
Accounts payable and accrued liabilities	3,162			3,563			2,930
Income taxes	34			352			—
Total Current Liabilities	6,391			5,647			7,243
Long-Term Debt	6,297			6,562			6,563
Deferred Income Taxes	1,553			1,443			1,548
Other Liabilities	1,750			1,877			2,129
Shareholders' Equity:
Macy's, Inc.	4,231			4,323			3,789
Noncontrolling interest	(7		)	(1		)	2
Total Shareholders’ Equity	4,224			4,322			3,791
Total Liabilities and Shareholders’ Equity	$	20,215		$	19,851		$	21,274



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,077		$	5,861		$	(2,657	)	$	5,281
Cost of sales	—		(1,391		)	(4,441		)	2,657			(3,175		)
Gross margin	—		686			1,420			—			2,106
Selling, general and administrative expenses	—		(813		)	(1,182		)	—			(1,995		)
Gains on sale of real estate	—		24			41			—			65
Restructuring and other costs	—		(1		)	(32		)	—			(33		)
Settlement charges	—		(8		)	(14		)	—			(22		)
Operating income (loss)	—		(112		)	233			—			121
Interest (expense) income, net:
External	1		(76		)	1			—			(74		)
Intercompany	—		(34		)	34			—			—
Equity in earnings (loss) of subsidiaries	35		(61		)	—			26			—
Income (loss) before income taxes	36		(283		)	268			26			47
Federal, state and local income tax benefit (expense)	—		59			(72		)	—			(13		)
Net income (loss)	36		(224		)	196			26			34
Net loss attributable to noncontrolling interest	—		—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	36	$	(224	)	$	198		$	26		$	36
Comprehensive income (loss)	$	61	$	(201	)	$	212		$	(13	)	$	59
Comprehensive loss attributable to noncontrolling interest	—		—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	61	$	(201	)	$	214		$	(13	)	$	61



	Third Quarter of 2017							Third Quarter of 2016
	Amount				% to Sales			Amount				% to Sales
	(dollars in millions, except per share figures)
Net sales	$	5,281						$	5,626
Decrease in sales	(6.1		)	%				(4.2		)	%
Decrease in comparable sales	(4.0		)	%				(3.3		)	%
Cost of sales	(3,175		)		(60.1	)	%	(3,386		)		(60.2	)	%
Gross margin	2,106				39.9		%	2,240				39.8		%
Selling, general and administrative expenses	(1,995		)		(37.8	)	%	(2,112		)		(37.5	)	%
Gains on sale of real estate	65				1.2		%	41				0.7		%
Restructuring and other costs	(33		)		(0.6	)	%	—				—		%
Settlement charges	(22		)		(0.4	)	%	(62		)		(1.1	)	%
Operating income	121				2.3		%	107				1.9		%
Interest expense - net	(74		)					(81		)
Income before income taxes	47							26
Federal, state and local income tax expense	(13		)					(11		)
Net income	34							15
Net loss attributable to noncontrolling interest	2							2
Net income attributable to Macy's, Inc. shareholders	$	36			0.7		%	$	17			0.3		%

Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.12						$	.05

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of restructuring and other costs and settlement charges	$	.23						$	.17



	2017							2016
	Amount				% to Sales			Amount				% to Sales
	(dollars in millions, except per share figures)
Net sales	$	16,171						$	17,263
Decrease in sales	(6.3		)	%				(5.2		)	%
Decrease in comparable sales	(4.0		)	%				(4.0		)	%
Cost of sales	(9,794		)		(60.6	)	%	(10,370		)		(60.1	)	%
Gross margin	6,377				39.4		%	6,893				39.9		%
Selling, general and administrative expenses	(5,853		)		(36.1	)	%	(6,139		)		(35.5	)	%
Gains on sale of real estate	176				1.1		%	76				0.4		%
Impairments, restructuring and other costs	(33		)		(0.2	)	%	(249		)		(1.4	)	%
Settlement charges	(73		)		(0.5	)	%	(81		)		(0.5	)	%
Operating income	594				3.7		%	500				2.9		%
Interest expense - net	(237		)					(276		)
Net premiums on early retirement of debt	(1		)					—
Income before income taxes	356							224
Federal, state and local income tax expense	(140		)					(85		)
Net income	216							139
Net loss attributable to noncontrolling interest	6							5
Net income attributable to Macy's, Inc. shareholders	$	222			1.4		%	$	144			0.8		%

Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.73						$	.46

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of impairments, restructuring and other costs, settlement charges and net premiums on early retirement of debt	$	.95						$	1.11

Delaware		13-3324058