UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒
x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~July 29, ~~2022~~

2023

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

For the transition period from to

Commission file number: 1-13536

Macy's, Inc.

(Exact name of registrant as specified in its charter)

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

151 West 34th Street, New York, New York 10001

(Address of Principal Executive Offices, including Zip Code)

(212) 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	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 ☒x No ☐o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒x No ☐o

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

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth 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 ☐o No ☒x

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 ~~November 26, 2022~~ July 29, 2023
Common Stock, $.01 par value per share						~~271,111,978~~273,634,211 shares

Table of Contents

TABLE OF CONTENTS

Table of Contents

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

39 Weeks Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

Net sales

$
5,230

$
5,440

$
16,178

$
15,794

Credit card revenues, net

206

213

601

568

Cost of sales

(3,204
)

(3,207
)

(9,856
)

(9,449
)
Selling, general and administrative expenses

(2,057
)

(1,973
)

(5,918
)

(5,618
)
Gains on sale of real estate

32

50

74

61

Impairment, restructuring and other costs

(15
)

—

(25
)

(21
)
Operating income

192

523

1,054

1,335

Benefit plan income, net

7

17

21

49

Settlement charges

(32
)

(8
)

(32
)

(90
)
Interest expense

(43
)

(53
)

(134
)

(212
)
Losses on early retirement of debt

—

(185
)

(31
)

(199
)
Interest income

1

—

3

1

Income before income taxes

125

294

881

884

Federal, state and local income tax expense

(17
)

(55
)

(213
)

(197
)
Net income

$
108

$
239

$
668

$
687

Basic earnings per share

$
0.40

$
0.78

$
2.43

$
2.21

Diluted earnings per share

$
0.39

$
0.76

$
2.37

$
2.17


	13 Weeks Ended				26 Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Net sales	$	5,130	$	5,600	$	10,112	$	10,948
Other revenue	150		234		341		451
Total revenue	5,280		5,834		10,453		11,399

Cost of sales	(3,176)		(3,422)		(6,164)		(6,652)
Selling, general and administrative expenses	(1,980)		(2,011)		(3,930)		(3,917)
Gains on sale of real estate	4		—		15		42
Impairment, restructuring and other costs	(4)		(2)		(6)		(10)
Operating income	124		399		368		862
Benefit plan income, net	4		7		8		14
Settlement charges	(122)		—		(122)		—
Interest expense, net	(36)		(42)		(73)		(89)
Losses on early retirement of debt	—		—		—		(31)
Income (loss) before income taxes	(30)		364		181		756
Federal, state and local income tax benefit (expense)	8		(89)		(48)		(195)
Net income (loss)	$	(22)	$	275	$	133	$	561
Basic earnings (loss) per share	$	(0.08)	$	1.01	$	0.49	$	2.02
Diluted earnings (loss) per share	$	(0.08)	$	0.99	$	0.48	$	1.97

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

Table of Contents

MACY’S, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(millions)

13 Weeks Ended

39 Weeks Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

Net income

$
108

$
239

$
668

$
687

Other comprehensive income (loss):

Actuarial gain (loss) on post employment and
   postretirement benefit plans, before tax

(161
)

(9
)

(161
)

53

Reclassifications to net income:

Amortization of net actuarial loss and prior service
   credit on post employment and postretirement
   benefit plans included in net income, before tax

5

7

15

27

Settlement charges, before tax

32

8

32

90

Tax effect related to items of other comprehensive
   income

32

(2
)

30

(43
)
Total other comprehensive income (loss), net of tax effect

(92
)

4

(84
)

127

Comprehensive income

$
16

$
243

$
584

$
814


	13 Weeks Ended				26 Weeks Ended
	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
Net income (loss)	$	(22)	$	275	$	133	$	561
Other comprehensive income (loss):
Actuarial gain on post employment and postretirement benefit plans, before tax	(1)		—		(1)		—
Reclassifications to net income:
Amortization of net actuarial loss and prior service credit on post employment and postretirement benefit plans included in net income, before tax	1		5		3		10
Settlement charges, before tax	122		—		122		—
Tax effect related to items of other comprehensive income	(31)		(1)		(32)		(3)
Total other comprehensive income, net of tax effect	91		4		92		7
Comprehensive income	$	69	$	279	$	225	$	568

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

Table of Contents

MACY’S, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(millions)

October 29, 2022

January 29, 2022

October 30, 2021

ASSETS

Current Assets:

Cash and cash equivalents

$
326

$
1,712

$
316

Receivables

204

297

212

Merchandise inventories

6,403

4,383

6,141

Prepaid expenses and other current assets

415

366

922

Total Current Assets

7,348

6,758

7,591

Property and Equipment - net of accumulated depreciation and
amortization of $4,957, $4,548 and $4,826

5,831

5,665

5,600

Right of Use Assets

2,699

2,808

2,808

Goodwill

828

828

828

Other Intangible Assets – net

433

435

435

Other Assets

1,091

1,096

1,017

Total Assets

$
18,230

$
17,590

$
18,279

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:

Short-term debt

$
183

$
—

$
140

Merchandise accounts payable

3,861

2,222

3,796

Accounts payable and accrued liabilities

2,678

3,086

2,735

Income taxes

21

108

—

Total Current Liabilities

6,743

5,416

6,671

Long-Term Debt

2,996

3,295

3,295

Long-Term Lease Liabilities

2,988

3,098

3,090

Deferred Income Taxes

884

983

970

Other Liabilities

1,144

1,177

1,245

Shareholders' Equity

3,475

3,621

3,008

Total Liabilities and Shareholders’ Equity

$
18,230

$
17,590

$
18,279


	July 29, 2023		January 28, 2023		July 30, 2022
ASSETS
Current Assets:
Cash and cash equivalents	$	438	$	862	$	300
Receivables	223		300		219
Merchandise inventories	4,129		4,267		4,610
Prepaid expenses and other current assets	411		424		387
Income tax receivable	70		—		—
Total Current Assets	5,271		5,853		5,516
Property and Equipment - net of accumulated depreciation and amortization of $4,905, $4,633 and $4,820	5,876		5,913		5,656
Right of Use Assets	2,692		2,683		2,715
Goodwill	828		828		828
Other Intangible Assets – net	431		432		433
Other Assets	1,206		1,157		1,194
Total Assets	$	16,304	$	16,866	$	16,342
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:

Merchandise accounts payable	$	1,978	$	2,053	$	2,290
Accounts payable and accrued liabilities	2,206		2,750		2,395
Income taxes	—		58		23
Total Current Liabilities	4,184		4,861		4,708
Long-Term Debt	2,997		2,996		2,995
Long-Term Lease Liabilities	2,975		2,963		3,008
Deferred Income Taxes	933		947		948
Other Liabilities	1,005		1,017		1,152
Shareholders' Equity	4,210		4,082		3,531
Total Liabilities and Shareholders’ Equity	$	16,304	$	16,866	$	16,342

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

Table of Contents

MACY’S, INC.

CONSOLIDATED STATEMENTS OF 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 29, 2022
$
3

$
517

$
5,268

$
(1,545
)

$
(622
)

$
3,621

Net income

286

286

Other comprehensive income

4

4

Common stock dividends
   ($0.1575 per share)

(45
)

(45
)
Stock repurchases

(600
)

(600
)
Stock-based compensation expense

13

13

Stock issued under stock plans

(54
)

53

(1
)
Balance at April 30, 2022

3

476

5,509

(2,092
)

(618
)

3,278

Net income

275

275

Other comprehensive income

3

3

Common stock dividends
   ($0.1575 per share)

(42
)

(42
)
Stock-based compensation expense

17

17

Stock issued under stock plans

(43
)

43

—

Balance at July 30, 2022
$
3

$
450

$
5,742

$
(2,049
)

$
(615
)

$
3,531

Net income

108

108

Other comprehensive loss

(92
)

(92
)
Common stock dividends
   ($0.315 per share)

(86
)

(86
)
Stock-based compensation expense

14

14

Stock issued under stock plans

(1
)

1

—

Balance at October 29, 2022
$
3

$
463

$
5,764

$
(2,048
)

$
(707
)

$
3,475


	Common Stock		Additional Paid-In Capital		Accumulated Equity		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance at January 28, 2023	$	3	$	467	$	6,268	$	(2,038)	$	(618)	$	4,082
Net income					155						155
Other comprehensive income									1		1
Common stock dividends ($0.1654 per share)					(45)						(45)
Stock repurchases							(25)				(25)
Stock-based compensation expense			14								14
Stock issued under stock plans			(108)				96				(12)
Balance at April 29, 2023	$	3	$	373	$	6,378	$	(1,967)	$	(617)	$	4,170
Net loss					(22)						(22)
Other comprehensive income									91		91
Common stock dividends ($0.1654 per share)			1		(46)						(45)
Stock-based compensation expense			16								16
Stock issued under stock plans			(38)				38				—
Balance at July 29, 2023	$	3	$	352	$	6,310	$	(1,929)	$	(526)	$	4,210

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

Table of Contents

MACY’S, INC.

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

(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

—

Balance at May 1, 2021

3

558

4,031

(1,137
)

(780
)

2,675

Net income

345

345

Other comprehensive income

115

115

Stock-based compensation expense

11

11

Stock issued under stock plans

(71
)

71

—

Balance at July 31, 2021
$
3

$
498

$
4,376

$
(1,066
)

$
(665
)

$
3,146

Net income

239

239

Other comprehensive income

4

4

Common stock dividends
($0.30 per share)

(92
)

(92
)
Stock repurchases

(300
)

(300
)
Stock-based compensation expense

11

11

Stock issued under stock plans

(2
)

2

—

Balance at October 30, 2021
$
3

$
507

$
4,523

$
(1,364
)

$
(661
)

$
3,008


	Common Stock		Additional Paid-In Capital		Accumulated Equity		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity
Balance at January 29, 2022	$	3	$	517	$	5,268	$	(1,545)	$	(622)	$	3,621
Net income					286						286
Other comprehensive income									4		4
Common stock dividends ($0.1575 per share)					(45)						(45)
Stock repurchases							(600)				(600)
Stock-based compensation expense			13								13
Stock issued under stock plans			(54)				53				(1)
Balance at April 30, 2022	$	3	$	476	$	5,509	$	(2,092)	$	(618)	$	3,278
Net income					275						275
Other comprehensive income									3		103
Common stock dividends ($0.1575 per share)					(42)						(42)
Stock-based compensation expense			17								17
Stock issued under stock plans			(43)				43				—
Balance at July 30, 2022	$	3	$	450	$	5,742	$	(2,049)	$	(615)	$	3,531

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

Table of Contents

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(millions)

39 Weeks Ended

October 29, 2022

October 30, 2021

Cash flows from operating activities:

Net income

$
668

$
687

Adjustments to reconcile net income to net cash provided by
operating activities:

Impairment, restructuring and other costs

25

21

Settlement charges

32

90

Depreciation and amortization

638

668

Stock-based compensation expense

44

32

Gains on sale of real estate

(74
)

(61
)
Benefit plans

15

27

Amortization of financing costs and premium on acquired debt

8

66

Deferred income taxes

(70
)

19

Changes in assets and liabilities:

Decrease in receivables

93

64

Increase in merchandise inventories

(2,019
)

(2,367
)
Increase in prepaid expenses and other current assets

(56
)

(44
)
Increase in merchandise accounts payable

1,636

1,758

Increase (decrease) in accounts payable and accrued liabilities

(300
)

73

Decrease in current income taxes

(73
)

(50
)
Change in other assets and liabilities

(79
)

(142
)
Net cash provided by operating activities

488

841

Cash flows from investing activities:

Purchase of property and equipment

(655
)

(230
)
Capitalized software

(328
)

(155
)
Disposition of property and equipment

122

118

Other, net

(8
)

64

Net cash used by investing activities

(869
)

(203
)
Cash flows from financing activities:

Debt issued

1,891

975

Debt issuance costs

(21
)

(9
)
Debt repaid

(1,998
)

(2,448
)
Debt repurchase premium and expenses

(29
)

(152
)
Dividends paid

(130
)

(46
)
Decrease in outstanding checks

(117
)

(97
)
Acquisition of treasury stock

(601
)

(294
)
Net cash used by financing activities

(1,005
)

(2,071
)
Net decrease in cash, cash equivalents and restricted cash

(1,386
)

(1,433
)
Cash, cash equivalents and restricted cash beginning of period

1,715

1,754

Cash, cash equivalents and restricted cash end of period

$
329

$
321

Supplemental cash flow information:

Interest paid

$
168

$
407

Interest received

3

1

Income taxes paid, net of refunds received

356

228


	26 Weeks Ended
	July 29, 2023		July 30, 2022
Cash flows from operating activities:
Net income	$	133	$	561
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment, restructuring and other costs	6		10
Settlement charges	122		—
Depreciation and amortization	433		413
Stock-based compensation expense	30		30
Gains on sale of real estate	(15)		(42)
Benefit plans	3		10
Amortization of financing costs and premium on acquired debt	5		5
Deferred income taxes	(46)		(38)
Changes in assets and liabilities:
Decrease in receivables	77		78
Decrease (increase) in merchandise inventories	138		(227)
Decrease (increase) in prepaid expenses and other current assets	10		(28)
(Decrease) increase in merchandise accounts payable	(53)		100
Decrease in accounts payable and accrued liabilities	(418)		(455)
Decrease in current income taxes	(121)		(72)
Change in other assets and liabilities	(33)		(42)
Net cash provided by operating activities	271		303
Cash flows from investing activities:
Purchase of property and equipment	(390)		(378)
Capitalized software	(174)		(204)
Disposition of property and equipment	32		73
Other, net	1		(6)
Net cash used by investing activities	(531)		(515)
Cash flows from financing activities:
Debt issued	—		850
Debt issuance costs	—		(21)
Debt repaid	(1)		(1,140)
Debt repurchase premium and expenses	—		(29)
Dividends paid	(90)		(87)
Decrease in outstanding checks	(35)		(172)
Acquisition of treasury stock	(38)		(601)
Net cash used by financing activities	(164)		(1,200)
Net decrease in cash, cash equivalents and restricted cash	(424)		(1,412)
Cash, cash equivalents and restricted cash beginning of period	865		1,715
Cash, cash equivalents and restricted cash end of period	$	441	$	303
Supplemental cash flow information:
Interest paid	$	82	$	108
Interest received	18		1
Income taxes paid, net of refunds received	215		305

Note: Restricted cash of $3 million ~~and $5 million have been~~is included ~~with~~within cash and cash equivalents for both the 3926 weeks ended ~~October~~July 29, ~~2022~~2023 and ~~October~~July 30, ~~2021, respectively.~~

2022.

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

~~MACY'S,~~

Table of Contents

MACY’S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	~~Organization and Summary of Significant Accounting Policies~~

1. Organization and Summary of Significant Accounting Policies

Nature of Operations

Macy's, Inc., 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)~~Bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and 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 ~~October~~July 29, ~~2022,~~2023, the Company's operations and operating segments were conducted through Macy's, Market by ~~Macy’s, Macy’s~~Macy's, Macy's Backstage, Bloomingdale's, Bloomingdale's The Outlet, ~~Bloomie’s,~~Bloomie's, and ~~bluemercury.~~

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 ~~29, 2022~~28, 2023 (the ~~"2021~~"2022 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the ~~2021~~2022 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 which may result in actual amounts differing from reported amounts.

The Consolidated Financial Statements for the 13 and 3926 weeks ended ~~October~~July 29, ~~2022~~2023 and ~~October~~July 30, ~~2021,~~2022, 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 3926 weeks ended ~~October~~July 29, ~~2022~~2023 and ~~October~~July 30, ~~2021~~2022 (which do not include the ~~Christmas~~holiday season) are not necessarily indicative of such results for the full fiscal year.

Reclassifications

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

Comprehensive Income

Total comprehensive income represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net income. For the Company, the only other components of total comprehensive income for the 13 and 3926 weeks ended ~~October~~July 29, ~~2022~~2023 and ~~October~~July 30, ~~2021~~2022 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of income ~~(loss)~~ before income taxes in the Consolidated Statements of Income. Amortization reclassifications out of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income) and are included in benefit plan income, net on the Consolidated Statements of Income. See Note 5, "Retirement Plans," for further information.

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

2.	~~Earnings Per Share~~

Recent Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (ASU 2022-04), which requires entities to disclose the key terms of supplier finance programs they use in connection with the purchase of goods and services, along with the amount of obligations outstanding at the end of each period and an annual rollforward of such obligations. ASU 2022-04 became effective for the Company beginning in 2023. The Company adopted ASU 2022-04 in the first quarter of 2023, with the exception of the rollforward information, which will be reflected in the fourth quarter, and the adoption did not have a material impact on the consolidated financial statements. See Note 7 for disclosures related to the Company's supplier finance programs.

2. Earnings Per Share

The following tables set forth the computation of basic and diluted earnings (loss) per share:


														13 Weeks Ended
														July 29, 2023					July 30, 2022
														Net Loss				Shares	Net Income				Shares
														(millions, except per share data)
Net income (loss) and average number of shares outstanding													Net income (loss) and average number of shares outstanding	$	(22)			272.8	$	275			270.1
Shares to be issued under deferred compensation and other plans													Shares to be issued under deferred compensation and other plans					1.0					1.0
														$	(22)			273.8	$	275			271.1
Basic earnings (loss) per share													Basic earnings (loss) per share			$	(0.08)				$	1.01
Effect of dilutive securities:													Effect of dilutive securities:
Stock options and restricted stock units													Stock options and restricted stock units					—					6.3
														$	(22)			273.8	$	275			277.4
Diluted earnings (loss) per share													Diluted earnings (loss) per share			$	(0.08)				$	0.99

	13 Weeks Ended													26 Weeks Ended
	October 29, 2022						October 30, 2021							July 29, 2023					July 30, 2022
	Net Income				Shares		Net Income				Shares			Net Income				Shares	Net Income				Shares
	(millions, except per share data)													(millions, except per share data)
Net income and average number of shares outstanding	$	108				271.0	$	239				305.8	Net income and average number of shares outstanding	$	133			272.5	$	561			276.3
Shares to be issued under deferred compensation and other plans						1.0						1.1	Shares to be issued under deferred compensation and other plans					1.0					1.0
	$	108				272.0	$	239				306.9		$	133			273.5	$	561			277.3
Basic earnings per share			$	0.40					$	0.78			Basic earnings per share			$	0.49				$	2.02
Effect of dilutive securities:													Effect of dilutive securities:
Stock options and restricted stock units						5.7						6.9	Stock options and restricted stock units					4.3					6.8
	$	108				277.7	$	239				313.8		$	133			277.8	$	561			284.1
Diluted earnings per share			$	0.39					$	0.76			Diluted earnings per share			$	0.48				$	1.97

39 Weeks Ended

October 29, 2022

October 30, 2021

Net Income

Shares

Net Income

Shares

(millions, except per share data)

Net income and average number of
   shares outstanding

$
668

274.6

$
687

309.3

Shares to be issued under deferred
   compensation and other plans

1.0

1.0

$
668

275.6

$
687

310.3

Basic earnings per share

$
2.43

$
2.21

Effect of dilutive securities:

Stock options and restricted
   stock units

6.4

6.7

$
668

282.0

$
687

317.0

Diluted earnings per share

$
2.37

$
2.17

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In addition to the stock options and restricted stock units reflected in the foregoing table, stock options to purchase ~~12.3 million and 14.3~~9.9 million shares of common stock and restricted stock units relating to ~~0.8 million and 1.0~~1.7 million shares of common stock were outstanding ~~at October~~as of July 29, ~~2022 and October 30, 2021, respectively,~~2023 but were not included in the computation of diluted earnings per share for the 26 weeks ended July 29, 2023 because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.

Stock options to purchase 12.2 million shares of common stock and restricted stock units relating to 2.3 million shares of common stock were outstanding as of July 30, 2022 but were not included in the computation of diluted earnings per share for the 13 and 26 weeks ended July 30, 2022 because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.

For the 13 weeks ended July 29, 2023, as a result of the net loss, stock options to purchase 9.9 million shares of common stock and restricted stock units relating to 10.0 million shares of common stock were excluded from the calculation of diluted earnings per share and, therefore, there was no difference in the 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.

3. Revenue

Net sales, which mainly consist of retail sales but also include merchandise returns, gift cards and loyalty programs, represented 97% and 96% of total revenue for the 13 and 26 weeks ended July 29, 2023 and July 30, 2022, respectively. Other revenue generating activities consist of credit card revenues as well as Macy's Media Network revenue.


	13 Weeks Ended				26 Weeks Ended
Revenues	July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
	(millions)
Women's Accessories, Shoes, Cosmetics and Fragrances	$	2,050	$	2,099	$	4,075	$	4,189
Women's Apparel	1,110		1,267		2,260		2,549
Men's and Kids'	1,110		1,220		2,128		2,306
Home/Other (a)	860		1,014		1,649		1,904
Total Net Sales	5,130		5,600		$	10,112	$	10,948

Credit card revenues, net	$	120	$	204	$	282	$	395
Macy's Media Network revenue, net (b)	30		30		59		56
Other Revenue	150		234		341		451

Total Revenue	$	5,280	$	5,834	$	10,453	$	11,399

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

(b)Macy's Media Network ("MMN") is an in-house media platform supporting both Macy's and Bloomingdale's customers through a broad variety of advertising formats running both on owned and operated platforms as well as offsite.

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

3.	~~Revenue~~

~~Net~~

Macy's accounted for 85% of the Company's net sales

~~Revenue is recognized when customers obtain control~~ for the 13 and 26 weeks ended July 29, 2023 and 86% for the 13 and 26 weeks ended July 30, 2022. In addition, digital sales accounted for 30% of ~~goods~~the Company's net sales for both the 13 weeks ended July 29, 2023 and ~~services promised by~~July 30, 2022, and 31% and 32% of the ~~Company. The amount of revenue recognized is based on~~Company's net sales for the ~~amount that reflects the consideration that is expected to be received in exchange for those respective goods~~26 weeks ended July 29, 2023 and ~~services. The Company's revenue generating activities include the following:~~

July 30, 2022, respectively.

Retail Sales

Retail sales include merchandise sales, inclusive of delivery income, licensed department income, sales of private brand goods directly to ~~third party~~third-party retailers and sales of excess inventory to third parties. Sales of merchandise are recorded at point of sale for in-store purchases or the time of shipment to the customer for digital purchases 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 accounted for 86% of the Company’s net sales for the 13 weeks ended October 29, 2022 and October 30, 2021 and 87% of the Company’s net sales for the 39 weeks ended October 29, 2022 and October 30, 2021. In addition, digital sales accounted for approximately 31% and 33% of the Company’s net sales for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively, and 31% and 34% of the Company’s net sales for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

~~Disaggregation of the Company's net sales by family of business for the 13 and 39 weeks ended October 29, 2022 and October 30, 2021 were as follows:~~

13 Weeks Ended

39 Weeks Ended

Net sales by family of business

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

(millions)

Women's Accessories, Intimate Apparel, Shoes, Cosmetics
and Fragrances

$
2,025

$
2,011

$
6,214

$
5,984

Women's Apparel

1,223

1,211

3,772

3,565

Men's and Kids'

1,153

1,194

3,459

3,350

Home/Other (a)

829

1,024

2,733

2,895

Total

$
5,230

$
5,440

$
16,178

$
15,794

~~(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 ~~$233~~$148 million, ~~$198~~$236 million and ~~$243~~$186 million as of ~~October~~July 29, ~~2022,~~2023, January ~~29,~~28, 2023 and July 30, 2022, ~~and October 30, 2021,~~ respectively. Included in prepaid expenses and other current assets is an asset totaling ~~$142~~$94 million, ~~$120~~$152 million and ~~$142~~$112 million as of ~~October~~July 29, ~~2022,~~2023, January ~~29,~~28, 2023 and July 30, 2022, ~~and October 30, 2021,~~ 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.

~~MACY'S, INC.~~

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

~~(Unaudited)~~

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 and other forms of tender. ~~The Company’s~~ Bloomingdale’s Loyallist and ~~bluemercury~~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 ~~$355~~ $340 million, ~~$481~~$399 million and ~~$500~~$386 million as of ~~October~~July 29, 2023, January 28, 2023 and July 30, 2022, ~~January 29, 2022 and October 30, 2021,~~ respectively.

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

Credit Card Revenues ~~net~~

In 2005, in connection with the sale of most of the Company's credit card accounts and related receivable balances to Citibank, the Company and Citibank entered into ~~an arrangement with Citibank, N.A. ("Citibank")~~a long-term marketing and servicing alliance pursuant to ~~sell~~ the ~~Company's private label and co-branded credit cards~~terms of a Credit Card Program Agreement ("Credit Card Program"). Subsequent to this initial arrangement and associated amendments, inon December 13, 2021, the Company entered into the sixth amendment to the amended and restated Credit Card Program ~~Agreement~~with Citibank (the "Program Agreement") ~~with Citibank.~~ . The changes to the Credit Card ~~Program’s~~Program's financial structure are not materially different from its previous terms. 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~~Company's profit share 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 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, ~~and Credit Card Program~~credit card funding costs and bad debt ~~reserves.~~

reserves and are a component of other revenue on the consolidated statements of income.

The Program Agreement expires March 31, 2030, subject to an additional renewal term of three years. The Program Agreement provides for, among other things, (i) the ownership by Citibank of the accounts 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 the foregoing accounts, (iv) the servicing of the foregoing accounts, and (v) the allocation between Citibank and the Company of the economic benefits and burdens associated with the foregoing and other aspects of the alliance. 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. The amounts earned under the Program Agreement related to the servicing functions are deemed adequate compensation and, accordingly, no servicing asset or liability has been recorded on the Consolidated Balance Sheets.

~~MACY'S, INC.~~

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

~~(Unaudited)~~

4.	~~Financing Activities~~

4. Financing Activities

The ~~following table shows~~Company did not borrow or repay any debt, outside of capital lease activity, during the ~~detail~~26 weeks ended July 29, 2023. In the 26 weeks ended July 30, 2022, the Company issued $425 million of ~~debt repayments:~~

5.875% senior notes due 2030 and $425 million of 6.125% senior notes due 2032 in a private offering and repaid $1.1 billion aggregate principal amount of senior notes and debentures.

39 Weeks Ended

October 29, 2022

October 30, 2021

(millions)

Revolving credit agreement

$
858

$
335

2.875% Senior notes due 2023

504

136

3.625% Senior notes due 2024

350

150

4.375% Senior notes due 2023

161

49

6.65% Senior debentures due 2024

117

4

6.9% Senior debentures due 2032

4

—

6.7% Senior debentures due 2034

2

—

6.7% Senior debentures due 2028

1

—

8.375% Senior notes due 2025

—

1,300

3.875% Senior notes due 2022

—

450

7.6% Senior debentures due 2025

—

19

9.5% Amortizing debentures due 2021

—

2

9.75% Amortizing debentures due 2021

—

1

$
1,997

$
2,446

As of ~~October~~July 29, ~~2022,~~2023 and ~~October~~July 30, ~~2021,~~2022, the Company had ~~$65~~$138 million and ~~$116~~$65 million of standby letters of credit outstanding under its revolving credit facility (“("ABL Credit ~~Facility”~~Facility"), respectively, which reduced the available borrowing capacity to ~~$2,935~~$2,862 million and ~~$2,825~~$2,935 million, respectively. The Company had no outstanding borrowings under the ABL Credit Facility of ~~$183 million~~as of ~~October~~July 29, ~~2022~~2023 and ~~$140 million as of October~~July 30, ~~2021.~~

2022.

During the 3926 weeks ended ~~October~~July 29, ~~2022 and October 30, 2021~~2023, the Company repurchased approximately ~~24 million and 13~~1.4 million shares of its common stock pursuant to ~~share~~existing stock purchase authorizations ~~existing at each period, respectively,~~ for a total of approximately ~~$600 million and $300 million, respectively.~~$25 million. As of ~~October~~July 29, ~~2022,~~2023, the Company had ~~$1.4 billion~~$1,375 million of authorization remaining under its share repurchase program. The Company may continue or, from time to time, suspend repurchases of shares under its share repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors.

5.	~~Retirement Plans~~

5. Retirement Plans

The Company has defined contribution plans that cover substantially all ~~colleagues~~employees 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 ~~colleagues,~~employees, 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.

In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible ~~colleagues~~employees 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.

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

In addition, certain retired ~~colleagues~~employees 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 ~~colleagues~~employees who were hired prior to a certain date and retire after a certain age with specified years of service. Certain ~~colleagues~~employees are subject to having such benefits modified or terminated.

~~MACY'S, INC.~~

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

~~(Unaudited)~~

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						39 Weeks Ended							13 Weeks Ended				26 Weeks Ended
	October 29, 2022			October 30, 2021			October 29, 2022			October 30, 2021				July 29, 2023		July 30, 2022		July 29, 2023		July 30, 2022
	(millions)						(millions)							(millions)
401(k) Qualified Defined Contribution Plan	$	21		$	20		$	66		$	59		401(k) Qualified Defined Contribution Plan	$	21	$	23	$	44	$	45
Pension Plan													Pension Plan
Service cost	$	—		$	—		$	—		$	1

Interest cost		14			11			44			36		Interest cost	$	22	$	15	44		29
Expected return on assets		(31	)		(39	)		(93	)		(122	)	Expected return on assets	(34)		(31)		(68)		(62)
Recognition of net actuarial loss		4			5			11			22		Recognition of net actuarial loss	1		4		3		8
	$	(13	)	$	(23	)	$	(38	)	$	(63	)		$	(11)	$	(12)	$	(21)	$	(25)
Supplementary Retirement Plan													Supplementary Retirement Plan
Interest cost		4			3			11			8		Interest cost	$	6	$	3	$	11	$	7
Recognition of net actuarial loss		3			3			9			10		Recognition of net actuarial loss	2		3		4		6
	$	7		$	6		$	20		$	18			$	8	$	6	$	15	$	13

Total Retirement Expense	$	15		$	3		$	48		$	14		Total Retirement Expense	$	18	$	17	$	38	$	33

Postretirement Obligations													Postretirement Obligations
Interest cost		1			1			2			1		Interest cost	$	1	$	1	$	2	$	1
Recognition of net actuarial gain		(1	)		(1	)		(4	)		(4	)	Recognition of net actuarial gain	(1)		(2)		(3)		(3)

Amortization of prior service credit		(1	)		—			(1	)		—		Amortization of prior service credit	(1)		—		(1)		—
	$	(1	)	$	—		$	(3	)	$	(3	)		$	(1)	$	(1)	$	(2)	$	(2)

In connection with the Company's defined benefit plans, for the 13 and 3926 weeks ended ~~October~~July 29, ~~2022,~~2023, the Company incurred a non-cash settlement charge of ~~$32~~$122 million. This charge relates to the pro-rata recognition of net actuarial losses associated with the Company's ~~Pension Plan and are the result of an increase in lump sum distributions associated with retiree distribution elections.~~

In connection with the Company's defined benefit plans, for the 13 and 39 weeks ended October 30, 2021, the Company incurred non-cash settlement charges of $8 million and $90 million, respectively. For the 13 weeks ended October 30, 2021, these charges relate to the pro-rata recognition of net actuarial losses associated with the Company's Pension Plan and are the result of an increase in lump sum distributions associated with retiree distribution elections. For the 39 weeks ended October 31, 2021, these charges relate to the pro-rata recognition of net actuarial losses associated with the Company’s Pension Plan and is the result of the transfer of pension obligations for certain retirees and beneficiaries under the Pension Plan through the purchase of a group annuity contract with an insurance company.~~The Company transferred $256 million of Pension Plan assets to the insurance company in the second quarter of 2021, thereby reducing its Pension Plan benefit obligations.~~

~~MACY'S, INC.~~

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

~~(Unaudited)~~

6.	~~Fair Value Measurements~~

6. 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

October 29, 2022

October 30, 2021

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

$
33

$
33

$
—

$
—

$
41

$
41

$
—

$
—


	July 29, 2023								July 30, 2022
			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	$	39	$	39	$	—	$	—	$	34	$	34	$	—	$	—

Table of Contents

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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.

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

October 29, 2022

October 30, 2021

Notional
Amount

Carrying
Amount

Fair
Value

Notional
Amount

Carrying
Amount

Fair
Value

(millions)

Long-term debt

$
3,007

$
2,996

$
2,371

$
3,295

$
3,295

$
3,377


	July 29, 2023						July 30, 2022
	Notional Amount		Carrying Amount		Fair Value		Notional Amount		Carrying Amount		Fair Value
	(millions)
Long-term debt	$	3,007	$	2,997	$	2,482	$	3,007	$	2,995	$	2,506

Nonfinancial Assets

The Company reviews the carrying amount of goodwill and intangible assets with indefinite lives for impairment annually and whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. For the Company's annual impairment assessment as of the end of fiscal May 2023, the Company elected to perform a qualitative impairment test on its goodwill and intangible assets with indefinite lives and concluded that it is more likely than not that the fair values exceeded the carrying values and therefore goodwill and intangible assets with indefinite lives were not impaired.

7. Supplier Finance Programs

The Company has agreements with third-party financial institutions to facilitate supply chain finance ("SCF") programs. The programs allow qualifying suppliers to sell their receivables, on an invoice level at the selection of the supplier, from the Company to the financial institution and negotiate their outstanding receivable arrangements and associated fees directly with the financial institution. Macy's, Inc. is not party to the agreements between the supplier and the financial institution. The supplier invoices that have been confirmed as valid under the SCF programs require payment in full by the financial institution to the supplier by the original maturity date of the invoice, or discounted payment at an earlier date as agreed upon with the supplier. The Company's obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by a supplier’s participation in the SCF programs.

All outstanding amounts related to suppliers participating in the SCF programs are recorded upon confirmation with the third-party institutions in merchandise accounts payable in the consolidated balance sheets, and associated payments are included in operating activities in the consolidated statements of cash flows. The Company's outstanding obligations as of July 29, 2023, January 28, 2023 and July 30, 2022 were $144 million, $63 million and $149 million, respectively.

Table of Contents

MACY'S, INC.

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

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

For purposes of the following discussion, all references to ~~"third~~"second quarter of ~~2022"~~2023" and ~~"third~~"second quarter of ~~2021"~~2022" are to the Company's 13-week fiscal periods ended ~~October~~July 29, ~~2022~~2023 and ~~October~~July 30, ~~2021,~~2022, respectively. References to ~~"2022"~~the "first half of 2023" or "2023" and ~~"2021"~~the "first half of 2022" or "2022" are to the ~~Company’s 39-week~~Company's 26-week fiscal periods ended ~~October~~July 29, 2023 and July 30, 2022, ~~and October 30, 2021,~~ respectively.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report, as well as the financial and other information included in the ~~2021~~2022 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 ~~2021~~2022 10-K (particularly in "Risk Factors" and in "Forward-Looking Statements"). This discussion includes Non-GAAP financial measures. For information about these measures, see the disclosure under the caption "Important Information Regarding Non-GAAP Financial Measures".

Quarterly Overview

Certain financial highlights are as follows:

•

~~Comparable sales for Macy’s, Inc. decreased 3.1% on an owned basis; and decreased 2.7% on an owned plus licensed basis compared to the third quarter of 2021.~~

◦•Macy's, Inc. comparable sales declined 8.2% on an owned basis and declined 7.3% on an owned-plus-licensed basis compared to the second quarter of 2022.

~~Macy’s brand comparable sales decreased 4.4% on an owned basis and 4.0% on an owned-plus-licensed basis compared to the third quarter of 2021.~~

◦Macy's comparable sales declined 9.2% on an owned basis and declined 8.2% on an owned-plus-licensed basis compared to the second quarter of 2022.

~~Bloomingdale’s comparable sales on an owned basis were up 5.3% and on an owned-plus-licensed basis were up 4.1% compared to the third quarter of 2021.~~

◦Bloomingdale's comparable sales declined 2.7% on an owned basis and declined 2.6% on an owned-plus-licensed basis compared to the second quarter of 2022.

~~Bluemercury comparable sales were up 14.0% on an owned and owned-plus licensed basis compared to the third quarter of 2021.~~

◦Bluemercury comparable sales increased 5.8% on an owned basis compared to the second quarter of 2022.•

~~Digital sales decreased 9% versus the third quarter of 2021. Digital penetration was 31% of net sales for the third quarter of 2022, a 2-percentage point decline from the third quarter of 2021.~~

•Digital sales decreased 10% versus the second quarter of 2022. Digital penetration was 30% of net sales for the second quarter of 2023, which remained flat compared to second quarter of 2022.•

~~Gross margin was 38.7%, compared to 41.0% in the third quarter of 2021.~~

•Other revenues were $150 million, down $84 million from the second quarter of 2022.•

~~Net credit card revenues were $206 million, down $7 million from the third quarter of 2021.~~

•Gross margin rate was 38.1%, compared to 38.9% in the second quarter of 2022.•

~~Selling, general and administrative ("SG&A") expense was $2.1 billion, up $84 million from the third quarter of 2021.~~ ~~SG&A expense as a percent of sales was 39.3%, 300 basis points higher compared to the third quarter of 2021.~~

•Selling, general and administrative ("SG&A") expense was $1,980 million, down $31 million from the second quarter of 2022. SG&A expense as a percent of total revenue was 37.5%, 300 basis points higher than the second quarter of 2022.•

~~Net income was $108 million in the third quarter of 2022, compared to $239 million in the third quarter of 2021.~~

•Net loss was $22 million in the second quarter of 2023, compared to net income of $275 million in the second quarter of 2022.•

The third quarter of 2022 had positive earnings before interest, taxes, depreciation and amortization ("EBITDA") of $392 million compared to EBITDA of $757 million during the third quarter of 2021. On an adjusted basis, EBITDA was $439 million for the third quarter of 2022, compared to $765 million during the third quarter of 2021.

•

Diluted earnings per share and adjusted diluted earnings per share were $0.39 and $0.52, respectively, during the third quarter of 2022. This compares to diluted earnings per share and adjusted diluted earnings per share of $0.76 and $1.23 for the third quarter of 2021, respectively.

•The second quarter of 2023 had earnings before interest, taxes, depreciation and amortization ("EBITDA") of $221 million compared to EBITDA of $614 million during the second quarter of 2022. On an adjusted basis, EBITDA was $347 million for the second quarter of 2023, compared to $616 million during the second quarter of 2022.•

~~Inventory was up 4.3% from the third quarter of 202~~1.

•Diluted loss per share was $(0.08) and adjusted diluted earnings per share was $0.26 during the second quarter of 2023. This compares to diluted earnings per share of $0.99 and adjusted diluted earnings per share of $1.00 for the second quarter of 2022.

•Merchandise inventories were down 10% from the second quarter of 2022.

Table of Contents

MACY'S, INC.

During the ~~third~~second quarter of ~~2022,~~2023, the Company continued to ~~execute~~invest in its ~~Polaris strategy and these actions impacted its operating results~~five growth vectors that represent strategic investments designed to target future long-term profitable sales growth:

•Macy's private brand reimagination - designed to drive customer loyalty, be a differentiator for the ~~period, notably:~~

•

Win With Fashion and Style: By offering a wide assortment of categories, products and brands from off-price to luxury, the Company continued to reach a broad and diverse range of customers during the third quarter. The Company is committed to providing quality fashion newness through a curation of premium owned and market brands, which is brought to life at

~~MACY'S, INC.~~

~~Macy’s through the~~ ~~Own Your Style~~ platform. Customer shopping trends shifted into occasion-based categories, such as career and tailored sportswear, fragrances, shoes, dresses and luggage rather than popular pandemic categories such as active, casual sportswear, sleepwear and soft home.

•

Deliver Clear Value: The Company is leveraging data analytics and pricing tools to efficiently plan, place and price inventory, including location level pricing, competitive pricing and point-of-sale (“POS”) pricing work. Throughout the third quarter, the Company maintained a mix of full-price, promotions and markdown items that, when combined with selectively higher tickets, resulted in an eighth consecutive quarter of average-unit-retail improvement. Inventory turn for the trailing 12 months remained relatively consistent with 2021.

•

Excel in Digital Shopping: While the Company experienced a deceleration in the growth of its digital channel during the third quarter as consumers shifted back to in-store shopping, the Company continued to make digital investments to serve customers’ lifestyle needs through the introduction of personalized and live shopping as well as ongoing refinement of existing online platforms, including the Company’s mobile app, which resulted in an increase in active app customers of 11% on a trailing 12-month basis. In addition, Macy’s Media Network, an in-house media platform that enables business-to-business monetization of advertising partnerships, generated net income of $31 million in the third quarter of 2022, an increase of 21% from the third quarter of 2021. Finally, the Company launched the Macy’s digital Marketplace in late September 2022, which features a collection of new brands, product and categories from third-party sellers, representing a pathway to introduce customers to new merchandise options while limiting inventory risk.

•

Enhance Store Experience: In the third quarter of 2022, consumers continued to shift shopping channels from digital to stores as they returned to in-store shopping. The Company continues to invest in physical stores to support its digitally-led omnichannel business model and build new capabilities to help make the shopping experience convenient and compelling. For example, the Company is advancing its off-mall, smaller format stores in 2022 by continuing to open additional locations, including two Market by Macy’s locations that opened in the third quarter of 2022. The Company also opened an additional Market by Macy’s location and a second Bloomie’s location in November 2022. Finally, the Company introduced permanent Toys “R” Us shops within all Macy’s locations during the third quarter with an encouraging initial response through a 63% increase in toy sales from the third quarter of 2021.

•

Modernize Supply Chain: The Company has continued to update its supply chain infrastructure and network, both upstream and downstream, while leveraging improved data and analytics capabilities in fulfillment strategies to meet customers' preference for speed and convenience while also improving inventory placement. The investments to-date have allowed the Company to strategically bring in seasonal product earlier and provided the added capacity to chase in-season trends. The Company is expanding and relocating distribution centers to support business growth and serve the growing customer base. This includes plans to open a modern, new facility in Texas in mid-2023 which is expected to continue to support stores in the region. In addition,business, complement national brands matrix and benefit gross margin. During the second quarter of 2023, Macy's launched On 34th, its first new private brand under the reimagination, with a strong customer response. Through 2026, the Company plans ~~to open a new fulfillment center in North Carolina in 2025.~~

•

Enable Transformation: The Company has continued to modernize its technology foundations to increase agility in reacting to customers and the market regardless of the channel in which customers interact. These activities include increasing the Company’s data science and analytics capabilities. The Company is committed to continue its transformation efforts by attracting and retaining talent through several initiatives designed to engage current and potential candidates.

~~In addition~~ to refresh or replace all existing brands in its private brand portfolio, and plans to introduce four new private brands in total, including On 34th.

•Macy's and Bloomie's small formats - play an integral role in supporting the ~~pillars~~omnichannel ecosystem. The Company expects to unlock the full potential of these small store formats by testing and learning in 2023 and potentially accelerating openings in 2024, if stores continue to outperform. Shortly after the second quarter of 2023, the Company opened its ninth Macy's small format location and in the second half of 2023, the Company expects to open three additional Macy's small format locations and one additional Bloomie's location.

•Digital marketplace - on a multi-year journey with marketplace, keeping a pulse on market dynamics and shifts to deliver the best experience for customers and sellers. As of the ~~Polaris strategy above,~~end of the second quarter of 2023, Macy's offered approximately 1,350 brands compared to 500 brands as of the end of the fourth quarter of 2022 and grew its gross merchandise value by over 116% from the first quarter of 2023. The Company also launched a Bloomingdale's marketplace in the second quarter of 2023.

•Luxury - attracting and retaining luxury customers through differentiated products, services and experiences at Bloomingdale's, Bluemercury and beauty at Macy's. Bloomingdale's is remodeling high profile stores that have relatively larger concentrations of luxury brands and products. To date, the Company has remodeled five Bloomingdale's locations. The second quarter of 2023 marked Bluemercury's tenth consecutive quarter of comparable sales growth, and active customer count on a trailing twelve-month basis increased 20%, driven primarily by new customers. At Macy's, the Company is ~~committed~~expanding its luxury offering with an emphasis on newness, freshness in its core market brands, and in-store animation and services, and expects to ~~providing value~~introduce six additional beauty remodels, bringing the total to ~~people, communities~~39 locations.

•Personalized offers and ~~the planet through the evolution of its~~ ~~Mission Every One~~ social purpose platform. In early November, the Company launched S.P.U.R. Pathways: Shared Purpose, Unlimited Reach, with its partner Momentus Capital. S.P.U.R. Pathways is a multi-year, multi-faceted program that ultimately will provide up to $200 million of funding. The Company is committed to contribute approximately $30 million over five years to empower new brandscommunication - amplifies strategies across the ~~Company’s network~~business to increase customer lifetime value and loyalty by improving relevance of ~~stores~~every interaction. As of the second quarter of 2023, digital and ~~broaden~~technology teams are in the ~~Company’s range~~initial stages of ~~suppliers. The funding is~~implementing multi-step and multi-channel tests designed to ~~advance entrepreneurial growth, close wealth gaps~~increase lifetime value and ~~address systemic barriers faced by diverse-owned and underrepresented businesses serving the retail industry.~~loyalty.

Table of Contents

MACY'S, INC.

Results of Operations


	Third Quarter of 2022						Third Quarter of 2021							Second Quarter of 2023							Second Quarter of 2022
	Amount			% to Net Sales			Amount			% to Net Sales				Amount			% to Net Sales		% to Total Revenue		Amount			% to Net Sales		% to Total Revenue
	(dollars in millions, except per share figures)													(dollars in millions, except per share figures)
Net sales	$	5,230					$	5,440					Net sales	$	5,130						$	5,600
Increase (decrease) in comparable sales		(3.1	)%					37.2	%
Credit card revenues, net		206			3.9	%		213			3.9	%
Other revenue													Other revenue	150			2.9	%			234			4.2	%
Total revenue													Total revenue	5,280							5,834
Cost of sales		(3,204	)		(61.3	)%		(3,207	)		(59.0	)%	Cost of sales	(3,176)			(61.9)	%			(3,422)			(61.1)	%
Selling, general and administrative expenses		(2,057	)		(39.3	)%		(1,973	)		(36.3	)%	Selling, general and administrative expenses	(1,980)					(37.5)	%	(2,011)					(34.5)	%
Gains on sale of real estate		32			0.6	%		50			0.9	%	Gains on sale of real estate	4					0.1	%	—					—	%
Impairment, restructuring and other costs		(15	)		(0.3	)%		—			—		Impairment, restructuring and other costs	(4)					(0.1)	%	(2)					—	%
Operating income		192			3.7	%		523			9.6	%	Operating income	124					2.3	%	399					6.8	%

Diluted earnings per share	$	0.39					$	0.76
Diluted earnings (loss) per share													Diluted earnings (loss) per share	$	(0.08)						$	0.99

Supplemental Financial Measure
Supplemental Financial Measures													Supplemental Financial Measures
Gross margin (a)	$	2,026			38.7	%	$	2,233			41.0	%	Gross margin (a)	$	1,954		38.1	%			$	2,178		38.9	%
Digital sales as a percentage of net sales		31	%					33	%				Digital sales as a percentage of net sales	30		%					30		%
Decrease in comparable sales													Decrease in comparable sales	(8.2)		%					(1.5)		%

Supplemental Non-GAAP Financial Measure
Increase (decrease) in comparable sales on an owned plus licensed basis		(2.7	)%					35.6	%
Supplemental Non-GAAP Financial Measures													Supplemental Non-GAAP Financial Measures
Decrease in comparable sales on an owned-plus-licensed basis													Decrease in comparable sales on an owned-plus-licensed basis	(7.3)		%					(1.6)		%
Adjusted diluted earnings per share	$	0.52					$	1.23					Adjusted diluted earnings per share	$	0.26						$	1.00
EBITDA	$	392					$	757					EBITDA	$	221						$	614
Adjusted EBITDA	$	439					$	765					Adjusted EBITDA	$	347						$	616

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

See pages 2425 to 2627 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

Comparison of the ~~Third~~Second Quarter of ~~2022~~2023 and the ~~Third~~Second Quarter of ~~2021~~

2022


	Third Quarter of 2022			Third Quarter of 2021				Second Quarter of 2023			Second Quarter of 2022
Net sales	$	5,230		$	5,440		Net sales	$	5,130		$	5,600
Increase (decrease) in comparable sales		(3.1	)%		37.2	%
Increase (decrease) in comparable sales on an owned plus licensed basis		(2.7	)%		35.6	%
Decrease in comparable sales							Decrease in comparable sales	(8.2)		%	(1.5)		%
Decrease in comparable sales on an owned-plus-licensed basis							Decrease in comparable sales on an owned-plus-licensed basis	(7.3)		%	(1.6)		%
Digital sales as a percent of net sales		31	%		33	%	Digital sales as a percent of net sales	30		%	30		%

Net sales for the ~~third~~second quarter of ~~2022~~2023 decreased for Macy’s and Bloomingdale’s, but improved for ~~Bloomingdale’s and bluemercury.~~Bluemercury. During the ~~third~~ quarter, ~~of 2022,~~net sales were impacted by macroeconomic conditions as consumer ~~shopping behavior~~spending in discretionary categories continued to ~~shift more towards occasion-based apparel, with~~be under pressure. Macy's experienced strength in categories that included beauty, particularly fragrances and prestige cosmetics, women's career sportswear, and ~~tailored sportswear, fragrances, shoes, dresses~~men's tailored. Active, casual and ~~luggage rather than pandemic~~sleepwear categories ~~such as active, casual sportswear, sleepwear and soft home. Digital sales decreased 9%~~underperformed compared to the ~~third~~second quarter of ~~2021 as a result~~2022. Owned average unit retail ("AUR") increased 4.7% due to ticket increases and category mix.

Table of ~~the shift in consumer behavior back to in-store shopping.~~

Contents

Third Quarter of 2022

Third Quarter of 2021

Credit card revenues, net

$
206

$
213

Credit card revenues, net as a percent of net sales

3.9
%

3.9
%
Proprietary credit card sales penetration

44.5
%

43.0
%

Net credit card revenues performance during the third quarter of 2022 was driven by similar factors to the first half of 2022: the continuation of the strong credit health of the credit card portfolio's customers, leading to lower levels of bad debt, higher credit sales and higher spending on the co-brand credit card.

MACY'S, INC.

Third Quarter of 2022

Third Quarter of 2021

Cost of sales

$
(3,204
)

$
(3,207
)
As a percent to net sales

61.3
%

59.0
%
Gross margin

$
2,026

$
2,233

As a percent to net sales

38.7
%

41.0
%


	Second Quarter of 2023					Second Quarter of 2022
	$			% to Net Sales		$			% to Net Sales
Credit card revenues, net	$	120		2.3	%	$	204		3.6	%
Macy's Media Network, net	30			0.6	%	30			0.5	%
Other revenue	$	150		2.9	%	$	234		4.2	%

Proprietary credit card sales penetration	43.1		%			43.1		%

The decrease in ~~the gross margin rate~~other revenues was primarily driven by a $84 million decrease in credit card revenues. This decrease reflects the impact of increases in delinquency rates within the credit card portfolio leading to an increase in ~~promotional~~estimated bad debt.


	Second Quarter of 2023			Second Quarter of 2022
Cost of sales	$	(3,176)		(3,422)
As a percent to net sales	61.9		%	61.1		%
Gross margin	$	1,954		$	2,178
As a percent to net sales	38.1		%	38.9		%

Gross margin rate and ~~clearance~~merchandise margin rate decreased 80 basis points and 130 basis points, respectively, in the second quarter of 2023 compared to the second quarter of 2022. The decrease in merchandise margin was primarily driven by increased markdowns, ~~to sell through slower moving categories at Macy’s, including casual apparel, soft home,~~unfavorable category mix shifts and ~~warmer weather seasonal goods. This was partially~~the impact of higher inventory shortage, offset by ~~higher average unit retail~~lower inbound freight costs driven by ~~higher ticket prices and favorable category mix particularly within occasion-based categories.~~

Third Quarter of 2022

Third Quarter of 2021

SG&A expenses

$
(2,057
)

$
(1,973
)
As a percent to net sales

39.3
%

36.3
%

~~SG&A expenses increased in third~~the Company's cost saving efforts. Delivery expense as a percent of net sales decreased 50 basis points from the second quarter of 2022 primarily due to improved carrier rates from contract renegotiations as well as lower fuel costs and lower vendor direct volume. Finally, inventory declined 10% year-over-year, driven by the Company's continued inventory discipline.


	Second Quarter of 2023			Second Quarter of 2022
SG&A expenses	$	(1,980)		$	(2,011)
As a percent to total revenue	37.5		%	34.5		%

SG&A expenses decreased in the second quarter of 2023 compared to the ~~third~~second quarter of ~~2021 both in dollars~~2022 due to effective implementation of cost saving initiatives and ~~as a percent to net sales.~~ongoing expense discipline. The increase in SG&A ~~expense dollars and~~expenses as a percent to ~~net sales corresponds with the Company filling a significant number of positions that were open~~total revenue in the ~~prior year as well as adjustments to colleague compensation to remain competitive and attract the best talent.~~

Third Quarter of 2022

Third Quarter of 2021

Gains on sale of real estate

$
32

$
50

~~The third~~second quarter of 2022 and 2021 asset sale gains were driven by the $32 million related to the sale of the Macy’s Westminster location and $33 million related to the sale of the Macy’s Baldwin Hills location, respectively.

Third Quarter of 2022

Third Quarter of 2021

Settlement charges

$
(32
)

$
(8
)

During the third quarter of 2022 and 2021, the Company recognized non-cash settlement charges of $32 million and $8 million, respectively, related to the pro-rata recognition of net actuarial losses associated with the Company’s defined benefit plans and are the result of an increase in lump sum distribution associated with retiree distribution elections.

Third Quarter of 2022

Third Quarter of 2021

Losses on early retirement of debt

$
—

$
(185
)

~~During the third quarter of 2021, the Company recognized $185 million of losses on early retirement of debt~~2023 was due to ~~the redemption of the entire outstanding $1.3 billion aggregate principal amount of its senior secured notes due 2025.~~

Third Quarter of 2022

Third Quarter of 2021

Net interest expense

$
(42
)

$
(53
)

~~The~~ ~~decrease~~a decline in ~~net interest expense, excluding losses on early retirement of debt, was primarily driven by interest savings associated with the financing activities completed in the first quarter of 2022.~~

Third Quarter of 2022

Third Quarter of 2021

Effective tax rate

13.6
%

18.7
%
Federal income statutory rate

21
%

21
%

~~The Company’s~~ effective tax rate varies from the federal income tax statutory rate of 21% in both periods, primarily driven by the impact of return-to-provision adjustments that were identified in connection with the filing of its U.S. federal income tax returns in the respective periods.

~~MACY'S, INC.~~

39 Weeks Ended
October 29, 2022

39 Weeks Ended
October 30, 2021

Amount

% to Net
Sales

Amount

% to Net
Sales

(dollars in millions, except per share figures)

Net sales

$
16,178

$
15,794

Increase in comparable sales

2.3
%

52.4
%

Credit card revenues, net

601

3.7
%

568

3.6
%
Cost of sales

(9,856
)

(60.9
)%

(9,449
)

(59.8
)%
Selling, general and administrative expenses

(5,918
)

(36.6
)%

(5,618
)

(35.6
)%
Gains on sale of real estate

74

0.5
%

61

0.4
%
Impairment, restructuring and other costs

(25
)

(0.2
)%

(21
)

(0.1
)%
Operating income

1,054

6.5
%

1,335

8.5
%

Diluted earnings per share

$
2.37

$
2.17

Supplemental Financial Measures

Gross margin (a)

$
6,322

39.1
%

$
6,345

40.2
%
Digital sales as a percentage of net sales

31
%

34
%

Supplemental Non-GAAP Financial Measures

Increase in comparable sales on an
owned plus licensed basis

2.3
%

52.5
%

Adjusted diluted earnings per share

$
2.60

$
2.91

EBITDA

$
1,681

$
1,962

Adjusted EBITDA

$
1,738

$
2,073

~~(b)~~

~~Gross margin is defined as net sales less cost of sales.~~

~~See pages 24 to 26 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.~~

~~Comparison of the 39 Weeks Ended October 29, 2022 and October 30, 2021~~

2022

2021

Net sales

$
16,178

$
15,794

Increase in comparable sales

2.3
%

52.4
%
Increase in comparable sales on an owned plus licensed basis

2.3
%

52.5
%
Digital sales as a percent of net sales

31
%

34
%

~~Net sales through the third quarter of 2022 increased as~~total revenue compared to the ~~same period in 2021 and the Company continued to experience an increase in comparable sales. Through the third~~second quarter of 2022, consumer shopping behavior shifted more towards occasion-based apparel, with strength in dresses, women’s and men’s shoes, career and tailored sportswear, luggage and fragrances. Pandemic-driven categories such as casual, activewear, sleepwear and soft home, underperformed the prior year. Digital sales decreased compared to the prior year period given a shift back to in-store shopping.

2022.

2022

2021

Credit card revenues, net

$
601

$
568

Credit card revenues, net as a percent of net sales

3.7
%

3.6
%
Proprietary credit card sales penetration

43.6
%

42.1
%


	Second Quarter of 2023		Second Quarter of 2022
Settlement charges	$	(122)	$	—

The increase in net credit card revenues was driven by the strong credit health of the credit card portfolio's customers leading to lower levels of bad debt, higher credit sales and higher spending on the co-brand credit card.

~~MACY'S, INC.~~

2022

2021

Cost of sales

$
(9,856
)

$
(9,449
)
As a percent to net sales

60.9
%

59.8
%
Gross margin

$
6,322

$
6,345

As a percent to net sales

39.1
%

40.2
%

The decrease in the gross margin rate was primarily driven by an increase in clearance and promotional markdowns in pandemic-related categories and seasonal merchandise. This was partially offset by higher average unit retail driven by higher ticket prices and favorable category mix particularly within occasion-based categories.

2022

2021

SG&A expenses

$
(5,918
)

$
(5,618
)
As a percent to net sales

36.6
%

35.6
%

SG&A expenses increased in the first nine months of 2022 both in dollars and as a percent to net sales. The increase in SG&A expense dollars and as a percent to net sales corresponds with the Company filling a significant number of positions that were open in the prior year as well as adjustments to colleague compensation to remain competitive and attract the best talent, including increasing the Company’s minimum wage to $15/hour starting May 1, 2022.

2022

2021

Gains on sale of real estate

$
74

$
61

The 2022 asset sale gains mainly consisted of gains from the sale of four properties, while the 2021 asset gains are mainly driven by the Baldwin Hills sale, coupled with less significant gains from the sale of approximately 12 other properties.

2022

2021

Impairment, restructuring and other costs

$
(25
)

$
(21
)

~~Impairment, restructuring and other costs in the first nine months of 2022 and 2021 primarily related to the write-off of capital software assets.~~

2022

2021

Settlement charges

$
(32
)

$
(90
)

During the ~~first nine months~~second quarter of ~~2022,~~2023, the Company recognized a non-cash settlement charge of ~~$32~~$122 million ~~primarily driven by an increase in lump sum distributions~~ associated with ~~retiree distribution elections. During the first nine months of 2021, the Company recognized a non-cash settlement charge of $90 million primarily driven by~~ the transfer of fully funded pension obligations for certain retirees and beneficiaries through the purchase of a group annuity contract with an insurance company.


	Second Quarter of 2023		Second Quarter of 2022
Net interest expense	$	(36)	$	(42)

The

decrease in net interest expense in the second quarter of 2023 compared to the second quarter of 2022 was primarily driven by an increase in interest income.

2022

2021

Losses on early retirement of debt

$
(31
)

$
(199
)


	Second Quarter of 2023		Second Quarter of 2022
Effective tax rate	26.7	%	24.5	%
Federal income statutory rate	21	%	21	%

InThe Company's effective tax rate varies from the federal income tax statutory rate of 21% in both periods, primarily driven by the effect of state and local taxes.

Table of Contents

MACY'S, INC.


	2023							2022
	Amount			% to Net Sales		% to Total Revenue		Amount			% to Net Sales		% to Total Revenue
	(dollars in millions, except per share figures)
Net sales	$	10,112						$	10,948
Other revenue	341			3.4	%			451			4.1	%
Total revenue	10,453							11,399
Cost of sales	(6,164)			(61.0)	%			(6,652)			(60.8)	%
Selling, general and administrative expenses	(3,930)					(37.6)	%	(3,917)					(34.4)	%
Gains on sale of real estate	15					0.1	%	42					0.4	%
Impairment, restructuring and other costs	(6)					(0.1)	%	(10)					(0.1)	%
Operating income	$	368				3.5	%	$	862				7.6	%

Diluted earnings per share	$	0.48						$	1.97

Supplemental Financial Measures
Gross margin (a)	$	3,948		39.0	%			$	4,296		39.2	%
Digital sales as a percentage of net sales	31		%					32		%
Increase (decrease) in comparable sales	(8)		%					5.1		%

Supplemental Non-GAAP Financial Measures
Increase (decrease) in comparable sales on an owned-plus-licensed basis	(7.2)		%					4.9		%
Adjusted diluted earnings per share	$	0.82						$	2.08
EBITDA	$	687						$	1,289
Adjusted EBITDA	$	815						$	1,299

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

See pages 25 to 27 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

Comparison of the 26 Weeks Ended July 29, 2023 and July 30, 2022


	2023			2022
Net sales	$	10,112		$	10,948
Increase (decrease) in comparable sales	(8.1)		%	5.1		%
Increase (decrease) in comparable sales on an owned-plus-licensed basis	(7.2)		%	4.9		%
Digital sales as a percent of net sales	31		%	32		%

Net sales for the first ~~nine months~~half of 2023 decreased for Macy’s and Bloomingdale’s but improved for Bluemercury as compared to the first half of 2022. Net sales were impacted by macroeconomic conditions as consumer spending in discretionary categories continued to be under pressure. Macy's experienced strength in categories that included fragrances, cosmetics, women's career sportswear, and men’s tailored. Categories such as casual, activewear,and sleepwear underperformed the prior year, and digital sales decreased 1% compared to the first half of 2022 as a result of the shift in consumer behavior. Owned AUR increased 4.7% from the first half of 2022 compared to the first half of 2023 due to ticket increases and category mix.

Table of Contents

MACY'S, INC.


	2023					2022
	$			% to Net Sales		$			% to Net Sales
Credit card revenues, net	$	282		2.8	%	$	395		3.6	%
Macy's Media Network, net	59			0.6	%	56			0.5	%
Other revenue	$	341		3.4	%	$	451		4.1	%

Proprietary credit card sales penetration	43.4		%			43.1		%

The decrease in other revenues was driven by a $113 million decrease in credit card revenues. This decrease reflects the impact of lower credit card sales as well as increases in delinquency rates within the credit card portfolio leading to an increase in estimated bad debt.


	2023			2022
Cost of sales	$	(6,164)		$	(6,652)
As a percent to net sales	61.0		%	60.8		%
Gross margin	$	3,948		$	4,296
As a percent to net sales	39.0		%	39.2		%

Gross margin rate and merchandise margin rate decreased 20 basis points and 100 basis points, respectively, during the first half of 2023 compared to the first half of 2022. The decrease in merchandise margin was driven by increased markdowns and shortage as well as an unfavorable product mix, offset by inbound freight costs savings. Delivery expense as a percent of net sales decreased 50 basis points from the first half of 2022 primarily due to improved carrier rates from contract renegotiations as well as lower fuel costs and lower vendor direct volume. Inventory declined 10% year-over-year driven by the Company's continued inventory discipline.


	2023			2022
SG&A expenses	$	(3,930)		$	(3,917)
As a percent to total revenue	37.6		%	34.4		%

SG&A expenses increased in the first half of 2023 both in dollars and as a percent to net sales. The increase in SG&A expense dollars corresponds with the Company’s investments in its colleagues, including increasing the Company’s minimum wage to $15/hour starting May 1, 2022, partially offset by effective implementation of cost saving initiatives. The increase in SG&A expenses as a percent to total revenue was due to a decline in total revenue year-over-year.


	2023		2022
Gains on sale of real estate	$	15	$	42

Asset sale gains in the first half of 2023 mainly related to the sale of the Company's Cheshire distribution center while the first half of 2022 mainly consisted of gains from the sale of four properties.


	2023		2022
Impairment, restructuring and other costs	$	(6)	$	(10)

Impairment, restructuring and other costs in the first half of 2023 and 2022 were primarily related to employee severance and write-off of investment assets, respectively.


	2023		2022
Settlement charges	$	(122)	$	—

During the first half of 2023, the Company recognized a non-cash settlement charge of $122 million associated with the transfer of fully funded pension obligations for certain retirees and beneficiaries through the purchase of a group annuity contract with an insurance company.

Table of Contents

MACY'S, INC.


	2023		2022
Net interest expense	$	(73)	$	(89)

The decrease in net interest expense for the first half of 2023 compared to the first half of 2022 was driven by an increase in interest income and interest savings associated with the financing activities completed in the first quarter of 2022.


	2023		2022
Losses on early retirement of debt	$	—	$	(31)

In 2022, losses on early retirement of debt were recognized due to the early payment of $1.1 billion ~~aggregate principal amount of~~ senior notes and debentures in ~~the first quarter of~~March 2022. In


	2023		2022
Effective tax rate	26.5	%	25.8	%
Federal income statutory rate	21	%	21	%

~~the first nine months of~~ ~~2021,~~ ~~losses on early retirement of debt were recognized~~ primarily due to the redemption of the entire outstanding $1.3 billion aggregate principal amount of Company’s senior secured notes due 2025 in the third quarter of 2021 as well as the repurchase of $500 million aggregate principal amount of notes in a tender offer in the first quarter of 2021.

2022

2021

Net interest expense

$
(131
)

$
(211
)

~~The~~ decrease in net interest expense, excluding losses on early retirement of debt, was primarily driven by interest savings associated with the redemption of the Company’s $1.3 billion aggregate principal amount of its senior secured notes due 2025 in August 2021, as well as the financing activities completed in the first quarter of 2022.

~~MACY'S, INC.~~

2022

2021

Effective tax rate

24.2
%

22.3
%
Federal income statutory rate

21
%

21
%

The ~~Company’s~~ Company's effective tax rate varies from the federal income tax statutory rate of 21% in both periods, ~~mainly~~primarily driven by the impact of state and local taxes.

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.~~ABL Credit Facility (as defined below). Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, lease obligations, merchandise purchase obligations, retirement plan benefits, and self-insurance reserves.

The Company believes that, assuming no change in its current business plan, its available cash, together with expected future cash generated from operations, the amount available under the ABL Credit Facility, and credit available in the market, will be sufficient to satisfy its anticipated needs for working capital, capital expenditures, and cash dividends for at least the next twelve months and the foreseeable future thereafter.

Merchandise purchase obligations represent future merchandise payables for inventory purchased from various suppliers through contractual arrangements and are expected to be funded through cash from operations.

Capital Allocation

The ~~Company’s~~Company's capital allocation goals include maintaining a healthy balance sheet and investment-grade credit metrics, followed by investing in growth initiatives and returning capital to shareholders through ~~modest yet~~ predictable dividends and ~~meaningful~~ share ~~repurchases.~~

repurchases with excess cash.

The Company ended the ~~third~~second quarter of ~~2022~~2023 with a cash and cash equivalents balance of ~~$326 million. This compares to a balance~~$438 million, an increase of ~~$316~~$138 million from $300 million at the end of the ~~third~~second quarter of ~~2021.~~2022. The Company is party to the ABL Credit Facility with certain financial institutions providing for a ~~$3 billion~~$3,000 million asset-based credit facility.


	2022			2021				2023		2022
Net cash provided by operating activities	$	488		$	841		Net cash provided by operating activities	$	271	$	303
Net cash used by investing activities		(869	)		(203	)	Net cash used by investing activities	(531)		(515)
Net cash used by financing activities		(1,005	)		(2,071	)	Net cash used by financing activities	(164)		(1,200)

Operating Activities

The decrease in net cash provided by operating activities was primarily driven by changes in accounts payable and accrued liabilities, which decreased in the third quarter of 2022 from 2021 fiscal year end compared to an increase in the third quarter of 2021 from 2020 fiscal year end.lower EBITDA. This was ~~largely driven~~offset by ~~certain expense prepayments that occurred at~~a cash flow benefit associated with decreases in merchandise inventory and merchandise payables related to inventory efficiencies realized during the ~~end~~first half of 2020, more significant bonus accruals at the end of 2021 compared to 2020 and a reduction in the Company’s gift card reserve due to lower gift card sales and lower redemption patterns as compared to historical levels.

2023.

Investing Activities

The ~~Company’s 2022~~Company's capital expenditures were ~~$983~~$564 million in the first half of 2023 compared to ~~$385~~$582 million ~~through~~in the ~~third quarter~~second half of ~~2021.~~2022. Capital expenditures in the current year are primarily focused on digital and technology investments, data and analytics, supply chain modernization and omni-channel capabilities. The ~~increase is mainly driven by investments~~Company's asset disposition activity was also lower in ~~its stores and distribution centers as well as its technology-based initiatives, including those that support~~ the ~~digital business, data science initiatives and~~first half of 2023 compared to the ~~simplification~~first half of ~~its technology structure.~~2022.

Table of Contents

MACY'S, INC.

Financing Activities

Dividends

The Company paid dividends totaling ~~$130~~$90 million and ~~$46~~$87 million in the first half of 2023 and 2022, ~~and 2021,~~ respectively.

~~In 2022, the~~ The Board of Directors declared regular quarterly dividends of ~~15.75~~16.54 cents per share on the ~~Company’s~~Company's common stock, which were paid on April ~~1, 2022,~~3, 2023 and July ~~1, 2022, and October~~ 3, ~~2022~~2023, to ~~Macy’s, Inc.~~Macy's shareholders of record at the close of business on March 15, ~~2022,~~2023 and June 15, ~~2022, and September 15, 2022,~~2023, respectively. ~~In 2021,~~

On August 25, 2023, the Company's Board of Directors declared a regular quarterly dividend of 1516.54 cents per share on ~~the Company’s~~its common stock, which ~~was~~will be paid on October ~~1, 2021~~2, 2023, to ~~Macy’s, Inc.~~Macy's shareholders of record at the close of business on September 15, ~~2021.~~

OnOctober 28, 2022, the Company's Board of Directors declared a regular quarterly dividend of 15.75 cents per share on its common stock, payable January 3, 2023, to shareholders of record at the close of business on December 15, 2022. 2023. Subsequent dividends will be subject to approval of the Board of Directors, which will depend on market and other conditions.

~~MACY'S, INC.~~

Stock Repurchases

On February 22, 2022, the Company announced that its Board of Directors authorized a new ~~$2.0 billion~~$2,000 million share repurchase program, which does not have an expiration date. During ~~2022 and 2021,~~the first quarter of 2023, the Company repurchased approximately ~~24.0 million and 13.0~~1.4 million shares of its common stock at an average cost of ~~$24.98 and $23.02~~$17.57 per share ~~respectively.~~ ~~As of October 29, 2022, $1.4 billion of shares remained available for repurchase~~on the open market under ~~the Company’s~~its share repurchase program. As of July 29, 2023, $1,375 million remained available under the authorization. The Company did not repurchase any shares of its common stock during the second quarter of 2023. Repurchases may be made from time to time in the open market or through privately negotiated transactions in accordance with applicable securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, on terms determined by the Company.

~~Debt Transactions~~

~~Beginning August 2021,~~ During the first quarter of 2023, the Company ~~completed a series~~also withheld approximately $12 million of ~~debt transactions that resulted in a $1.9 billion decrease in its long-term debt through~~shares for tax purposes associated with the ~~third quarter~~issuance of ~~2022. These transactions also contributed to a decrease in interest expense, a re-laddering of fixed interest rate debt maturities and an improvement in the Company’s leverage ratio.~~

certain stock awards.

Debt Transactions

As of ~~October~~July 29, ~~2022,~~2023 and ~~October~~July 30, ~~2021,~~2022, the Company had ~~$65~~$138 million and ~~$116~~$65 million of standby letters of credit outstanding under its ~~revolving credit facility (“~~ABL Credit ~~Facility”),~~Facility, respectively, which reduced the available borrowing capacity to ~~$2,935~~$2,862 million and ~~$2,825~~$2,935 million respectively. The Company hadno outstanding borrowings under the ABL Credit Facility of ~~$183 million~~ as of ~~October~~July 29, ~~2022~~2023 and ~~$140 million as of October~~July 30, ~~2021.~~

The Company may, from time to time, repurchase or otherwise retire, exchange or extend its outstanding debt and/or take other steps to reduce its outstanding debt or otherwise optimize its capital structure and improve its financial position. These actions may include open market debt repurchases, tender or exchange offers, negotiated repurchases, other retirements or redemptions of outstanding debt and/or opportunistic refinancing of debt or otherwise. The amount of debt that may be repurchased or otherwise retired or refinanced, if any, will depend on prevailing market conditions, trading levels of the Company’s debt, the Company’s cash position, compliance with debt covenants and other considerations.

~~Credit Ratings~~2022.

Contractual Obligations

As of ~~October~~July 29, ~~2022, the Company’s credit rating and outlook were as described in the table below.~~

	~~Moody's~~	~~Standard & Poor's~~	~~Fitch~~
~~Long-term debt~~	~~Ba1~~	BB	~~BBB-~~
~~Outlook~~	~~Stable~~	~~Positive~~	~~Stable~~

~~Subsequent to October 29, 2022, Standard & Poor’s upgraded the Company’s long-term debt rating to BB+ and the outlook to stable.~~

~~Contractual and Other Material Cash Obligations~~

~~As of~~ ~~October 29, 2022~~,2023, other than the financing transactions discussed above and in Note 4 to the accompanying Consolidated Financial Statements, there were no material changes to ~~our~~the Company's contractual ~~and other material cash~~ obligations and commitments outside the ordinary course of business since January ~~29, 2022,~~28, 2023, as reported in the ~~Company’s 2021~~Company's 2022 Form 10-K.

~~MACY'S, INC.~~

Guarantor Summarized Financial Information

The Company had $3,007 ~~million and $2,935~~ million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the ~~“Unsecured Notes”~~"Unsecured Notes") outstanding as of ~~October~~both July 29, ~~2022~~2023 and January ~~29, 2022, respectively,~~ 28, 2023 with maturities ranging from ~~2023~~2025 to 2043. The Unsecured Notes constitute debt obligations of ~~MRH~~Macy's Retail Holdings, LLC ("~~Subsidiary~~MRH" or "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~~Company's existing and future senior unsecured obligations, senior to any of the ~~Company’s~~Company's future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the ~~Company’s~~Company's subsidiaries that do not guarantee the Unsecured Notes. Holders of the ~~Company’s~~Company's secured indebtedness, including 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 related ~~guarantee~~guarantees are effectively subordinated to all of the Subsidiary ~~Issuer’s~~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 tables include combined financial information of the Obligor Group. Investments in subsidiaries of ~~$8,905~~$7,933 million and ~~$7,975~~$9,146 million as of ~~October~~July 29, ~~2022~~2023 and January ~~29, 2022,~~28, 2023, respectively, have been excluded from the Summarized Balance Sheets. Equity in earnings of non-Guarantor subsidiaries of ~~$487~~$307 million and ~~$1,568~~$708 million for the 13 and 3926 weeks ended ~~October~~July 29, ~~2022, respectively,~~2023, have been excluded from the Summarized Statement of Operations. The combined financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions within the Obligor Group eliminated.

Table of Contents

MACY'S, INC.

Summarized Balance Sheets

October 29, 2022

January 29, 2022

(in millions)

ASSETS

Current Assets

$
1,131

$
1,517

Noncurrent Assets

7,836

6,784

LIABILITIES

Current Liabilities

$
1,191

$
2,243

Noncurrent Liabilities (a)

12,402

10,407

~~(a)~~

~~Includes net amounts due to non-Guarantor subsidiaries of $6,709 million and $4,337 million as of October 29, 2022 and January 29, 2022, respectively.~~


	July 29, 2023		January 28, 2023
	(in millions)
ASSETS
Current Assets	$	945	$	1,154
Noncurrent Assets	7,449		8,261
LIABILITIES
Current Liabilities	$	1,633	$	1,958
Noncurrent Liabilities (a)	10,682		12,517

(a)Includes net amounts due to non-Guarantor subsidiaries of $4,038 million and $6,784 million as of July 29, 2023 and January 28, 2023, respectively.

Summarized Statement of Operations

13 Weeks Ended
October 29, 2022

39 Weeks Ended
October 29, 2022

(in millions)

Net Sales

$
205

$
691

Consignment commission income (a)

834

2,563

Cost of sales

(95
)

(334
)
Operating loss

(401
)

(942
)
Loss before income taxes (b)

(278
)

(526
)
Net income (loss)

(187
)

(287
)

~~(a)~~

~~Income pertains to transactions with ABL Borrower, a non-Guarantor subsidiary.~~


	13 Weeks Ended July 29, 2023		26 Weeks Ended July 29, 2023
	(in millions)
Net sales	$	227	$	443
Consignment commission income (a)	821		1,590
Other revenue	30		59
Cost of sales	(103)		(212)
Operating loss	(286)		(556)
Loss before income taxes (b)	(316)		(210)
Net loss	(202)		(6)

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

~~Includes $192 million and $613 million of dividend income from non-Guarantor subsidiaries for the 13 and 39 weeks ended October 29, 2022, respectively.~~

(b)Includes $128 million and $570 million of dividend income from non-Guarantor subsidiaries for the 13 and 26 weeks ended July 29, 2023, respectively.

Outlook and Recent ~~Development~~s

Developments

On ~~November 17, 2022,~~August 22, 2023, the Company ~~reaffirmed~~updated its annual ~~2022~~2023 guidance as follows:

•Other revenue is now expected to be approximately 3.2% of net sales, ~~guidance and raised its earnings guidance to account for improved expectations for~~with credit card revenues accounting for approximately 80% to 81% of other revenue;

•Gross margin rate is now expected to be between 38.3% and 38.6%;

•SG&A expense as a percent of total revenue and ~~interest~~as a percent to net sales is now expected to be approximately 35.2% to 35.6% and 36.4% to 36.7%, respectively;

•Asset sale gains are now expected to be approximately $50 million,

•Adjusted EBITDA as a percent of total revenue and as a percent of net sales is now expected to be approximately 8.7% to 9.4% and 9.0% to 9.7%, respectively;

•Interest expense ~~lower benefit plan income,~~is now expected to be approximately $160 million; and, ~~updated~~

•Diluted shares outstanding ~~estimates. The updates~~is now expected to ~~its annual 2022 guidance are as follows:~~

be approximately 279 million.•

~~Digital sales are expected to be approximately 33% of net sales~~

•

~~Net credit card revenues are now expected to be approximately 3.4% of net sales~~

Table of Contents

MACY'S, INC.

•

~~Benefit plan income is now expected to be approximately $21 million~~

•

~~Net interest expense is now expected to be approximately $180 million~~

•

~~Diluted shares outstanding are now expected to be approximately 281 million~~

•

~~Adjusted diluted earnings per share are now expected to be between $4.07 and $4.27~~

•

~~Capital expenditures are now expected to be approximately $1.2 billion~~

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~~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~~ that are not associated with the ~~Company’s~~Company's core operations and that may vary substantially in frequency and magnitude from period-to-period ~~provides~~from net income, diluted earnings per share attributable to Macy's, Inc. shareholders and EBITDA provide useful supplemental measures that assist in evaluating the Company's ability to generate earnings and leverage sales, respectively, and to more readily compare these metrics between past and future periods.

Management also believes that EBITDA and Adjusted EBITDA are frequently used by investors and securities analysts in their evaluations of companies, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. The Company uses certain non-GAAP financial measures as performance measures for components of executive compensation.

The Company does not provide reconciliations of the forward-looking non-GAAP measures of comparable owned plus licensed sales change, adjusted EBITDA as a percent of total revenue and as a percent to net sales and adjusted diluted earnings per share to the most directly comparable forward-looking GAAP measures because the timing and amount of excluded items 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.

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.

Changes in Comparable Sales

Comparable Sales vs. 13 Weeks Ended October 30, 2021

Macy's, Inc.

Macy's

Bloomingdale's

bluemercury

Increase (decrease) in comparable sales on an owned
   basis (Note 1)

(3.1
%)

(4.4
%)

5.3
%

14.0
%
Impact of departments licensed to third
   parties (Note 2)

0.4
%

0.4
%

(1.2
%)

0.0
%
Increase (decrease) in comparable sales on an owned plus
   licensed basis

(2.7
%)

(4.0
%)

4.1
%

14.0
%

~~MACY'S, INC.~~

Comparable Sales vs. 39 Weeks Ended October 30, 2021

Macy's, Inc.

Macy's

Bloomingdale's

bluemercury

Increase in comparable sales on an owned
   basis (Note 1)

2.3
%

0.7
%

13.4
%

14.9
%
Impact of departments licensed to third
   parties (Note 2)

0.0
%

0.0
%

(1.9
%)

0.0
%
Increase in comparable sales on an owned plus
   licensed basis

2.3
%

0.7
%

11.5
%

14.9
%

~~Notes:~~

~~(1)~~

Represents the period-to-period percentage change in net sales from stores in operation during the 13 and 39 weeks ended October 29, 2022 and the 13 and 39 weeks ended October 30, 2021. Such calculation includes all digital sales and excludes commissions from departments licensed to third parties. Stores impacted by a natural disaster or undergoing significant expansion or shrinkage remain in the comparable sales calculation unless the store, or material portion of the store, is closed for a significant period of time. 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 sales of the departments licensed to third parties) in its net sales. The Company does not, however, include any amounts in respect of licensed department sales (or any commissions earned on such sales) in its comparable sales in accordance with GAAP (i.e., on an owned basis). The amounts of commissions earned on sales of departments licensed to third parties are not material to its net sales for the periods presented.

~~Adjusted EBITDA as a Percent to Net Sales~~

The following is a tabular reconciliation of the non-GAAP financial ~~measures EBITDA, as adjusted to exclude certain items (“Adjusted EBITDA”), as a percent to net~~measure of changes in comparable sales on an owned-plus-licensed basis, to GAAP ~~net income as a percent to net~~comparable sales (i.e., on an owned basis), which the Company believes to be the most directly comparable GAAP financial measure.

13 Weeks Ended
October 29, 2022

13 Weeks Ended
October 30, 2021

(millions, except percentages)

Net sales

$
5,230

$
5,440

Net income

$
108

$
239

Net income as a percent to net sales

2.1
%

4.4
%

Net income

$
108

$
239

Interest expense - net

42

53

Losses on early retirement of debt

—

185

Federal, state and local income tax expense

17

55

Depreciation and amortization

225

225

EBITDA

$
392

$
757

Impairment, restructuring and other costs

15

—

Settlement charges

32

8

Adjusted EBITDA

$
439

$
765

Adjusted EBITDA as a percent to net sales

8.4
%

14.1
%


	13 Weeks Ended July 29, 2023 vs. 13 Weeks Ended July 30, 2022
	Macy's, Inc.		Macy's		Bloomingdale's
Decrease in comparable sales on an owned basis (Note 1)	(8.2	%)	(9.2	%)	(2.7	%)
Impact of departments licensed to third parties (Note 2)	0.9	%	1.0	%	0.1	%
Decrease in comparable sales on an owned-plus-licensed basis	(7.3	%)	(8.2	%)	(2.6	%)


	26 Weeks Ended July 29, 2023 vs. 26 Weeks Ended July 30, 2022
	Macy's, Inc.		Macy's		Bloomingdale's
Decrease in comparable sales on an owned basis (Note 1)	(8.1	%)	(8.9	%)	(3.3	%)
Impact of departments licensed to third parties (Note 2)	0.9	%	0.8	%	(0.1	%)
Decrease in comparable sales on an owned-plus-licensed basis	(7.2	%)	(8.1	%)	(3.4	%)

Table of Contents

MACY'S, INC.

39 Weeks Ended
October 29, 2022

39 Weeks Ended
October 30, 2021

(millions, except percentages)

Net sales

$
16,178

$
15,794

Net income

$
668

$
687

Net income as a percent to net sales

4.1
%

4.3
%

Net income

$
668

$
687

Interest expense - net

131

211

Losses on early retirement of debt

31

199

Federal, state and local income tax expense

213

197

Depreciation and amortization

638

668

EBITDA

$
1,681

$
1,962

Impairment, restructuring and other costs

25

21

Settlement charges

32

90

Adjusted EBITDA

$
1,738

$
2,073

Adjusted EBITDA as a percent to net sales

10.7
%

13.1
%


	Macy's, Inc.
	13 Weeks Ended July 30, 2022 vs. 13 Weeks Ended July 31, 2021		26 Weeks Ended July 30, 2022 vs. 26 Weeks Ended July 31, 2021
Decrease in comparable sales on an owned basis (Note 1)	(1.5	%)	5.1	%
Impact of departments licensed to third parties (Note 2)	(0.1	%)	(0.2	%)
Decrease in comparable sales on an owned-plus-licensed basis	(1.6	%)	4.9	%

Notes:

(1)Represents the period-to-period percentage change in net sales from stores in operation for both the entire 13 and 26 weeks ended July 29, 2023 and July 30, 2022. Such calculation includes all digital sales and excludes commissions from departments licensed to third parties. Stores impacted by a natural disaster or undergoing significant expansion or shrinkage remain in the comparable sales calculation unless the store, or material portion of the store, is closed for a significant period of time. 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. Macy's and Bloomingdale's license third parties to operate certain departments in their stores and online and receive commissions from these third parties based on a percentage of their net sales, while Bluemercury does not participate in licensed businesses. In its financial statements prepared in conformity with GAAP, the Company includes these commissions (rather than sales of the departments licensed to third parties) in its net sales. The Company does not, however, include any amounts in respect of licensed department sales (or any commissions earned on such sales) in its comparable sales in accordance with GAAP (i.e., on an owned basis). The amounts of commissions earned on sales of departments licensed to third parties are not material to its net sales for the periods presented.

EBITDA and Adjusted EBITDA

The following is a tabular reconciliation of the non-GAAP financial measure EBITDA and Adjusted EBITDA to GAAP net income, which the Company believes to be the most directly comparable GAAP measure.


	13 Weeks Ended July 29, 2023		13 Weeks Ended July 30, 2022		26 Weeks Ended July 29, 2023		26 Weeks Ended July 30, 2022
	(millions)



Net income (loss)	$	(22)	$	275	$	133	$	561
Interest expense - net	36		42		73		89
Losses on early retirement of debt	—		—		—		31
Federal, state and local income tax (benefit) expense	(8)		89		48		195
Depreciation and amortization	215		208		433		413
EBITDA	$	221	$	614	$	687	$	1,289
Impairment, restructuring and other costs	4		2		6		10
Settlement charges	122		—		122		—
Adjusted EBITDA	$	347	$	616	$	815	$	1,299

Table of Contents

MACY'S, INC.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

The following is a tabular reconciliation of the non-GAAP financial measures ofadjusted net income to GAAP net income and adjusted diluted earnings per share ~~excluding certain items identified below,~~ to GAAP ~~net income and~~ diluted earnings per share, which the Company believes to be the most directly comparable GAAP measures.


														Second Quarter of 2023				Second Quarter of 2022
														Net Income (Loss)		Diluted Earnings (Loss) Per Share		Net Income		Diluted Earnings Per Share
														(millions, except per share figures)
As reported													As reported	$	(22)	$	(0.08)	$	275	$	0.99
Impairment, restructuring and other costs													Impairment, restructuring and other costs	4		0.01		2		0.01
Settlement charges													Settlement charges	122		0.44		—		—

Income tax impact of certain items noted above													Income tax impact of certain items noted above	(33)		(0.11)		—		—
As adjusted to exclude certain items above													As adjusted to exclude certain items above	$	71	$	0.26	$	277	$	1.00

	Third Quarter of 2022						Third Quarter of 2021							2023				2022
	Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share				Net Income		Diluted Earnings Per Share		Net Income		Diluted Earnings Per Share
	(millions, except per share figures)													(millions, except per share figures)
As reported	$	108		$	0.39		$	239		$	0.76		As reported	$	133	$	0.48	$	561	$	1.97
Impairment, restructuring and other costs		15			0.05			—			—		Impairment, restructuring and other costs	6		0.01		10		0.04
Settlement charges		32			0.12			8			0.03		Settlement charges	122		0.44		—		—
Losses on early retirement of debt		—			—			185			0.59		Losses on early retirement of debt	—		—		31		0.11
Income tax impact of certain items noted above		(12	)		(0.04	)		(46	)		(0.15	)	Income tax impact of certain items noted above	(33)		(0.11)		(10)		(0.04)
As adjusted to exclude certain items above	$	143		$	0.52		$	386		$	1.23		As adjusted to exclude certain items above	$	228	$	0.82	$	592	$	2.08

2022

2021

Net Income

Diluted
Earnings
Per Share

Net Income

Diluted
Earnings
Per Share

(millions, except per share figures)

As reported

$
668

$
2.37

$
687

$
2.17

Impairment, restructuring and other
costs

25

0.09

21

0.07

Settlement charges

32

0.11

90

0.28

Losses on early retirement of debt

31

0.11

199

0.63

Income tax impact of certain items
noted above

(22
)

(0.08
)

(73
)

(0.24
)
As adjusted to exclude certain items above

$
734

$
2.60

$
924

$
2.91

Table of Contents

MACY'S, INC.

~~New Pronouncements~~

~~The Company does not expect that any recently issued accounting pronouncements will have a material effect on its consolidated financial statements.~~

~~Item 3.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to the ~~Company’s~~Company's market risk as described in the Company's ~~2021~~2022 10-K. For a discussion of the ~~Company’s~~Company's exposure to market risk, refer to the ~~Company’s~~Company's market risk disclosures set forth in Part II, Item 7A, ~~“Quantitative~~"Quantitative and Qualitative Disclosures About Market ~~Risk”~~Risk" of the ~~2021~~2022 10-K.

~~Item 4.~~

Item 4. Controls and Procedures.

The Company's Chief Executive Officer and Chief Financial Officer have carried out, as of ~~October~~July 29, ~~2022,~~2023, 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) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of ~~October~~July 29, ~~2022,~~2023, the Company's disclosure controls and procedures 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.

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.

Table of Contents

MACY'S, INC.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~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 Company’s financial position or results of operations.

Retail Hazardous Waste Matter. As previously reported, the District Attorneys for ten counties in California and the City of Los Angeles were investigating alleged non-compliance with laws and regulations enacted or adopted regulating the storage, transportation and disposal of hazardous waste in California at Macy’s stores and distribution centers. The offices and agencies involved were focused on disposal and return of cosmetic products. In August 2023, the Company entered into a Stipulation for Entry of Final Judgment and Injunction with the District Attorneys resolving the matter. The final judgment requires the Company to pay $1,925,000 (consisting of a civil penalty, reimbursement of attorney fees and investigative costs, and investment in compliance assurance program), enjoins the Company from violating California environmental laws, and requires employment of a designated California compliance employee, training of relevant employees, and periodic hazardous waste inspections, trash compactor/dumpster audits and status reporting. The consent judgment is in effect for five years, after which the Company may apply to have it terminated, and automatically terminates after seven years. The reserve for the loss is included within accounts payable and accrued liabilities on the Consolidated Balance Sheet as of July 29, 2023.

~~Item 1A.~~

Item 1A. Risk Factors.

There have been no material changes to the Risk Factors described in Part I, Item 1A."Risk Factors" in the Company's ~~2021~~2022 Form 10-K.

~~Item 5.~~

Item 5. Other Information.

On October 28, 2022, the Board of Directors of the Company approved an amendment to the advance notice provisions of the Amended and Restated By-Laws of the Company to change the timing of advance notice by stockholders required to make director nominations or bring business before an annual meeting of stockholders from not less than 60 days before the annual meeting to not earlier than 120 days and not later than 90 days prior to the one-year anniversary of the preceding year’s annual meeting (subject to adjustment if the scheduled annual meeting date differs from the anniversary date by more than 30 days). The amendment also makes changes to address Rule 14-19 under the Securities Exchange Act of 1934, as amended. The foregoing description is qualified by the full text of the amendment which is included as an exhibit to the Company’s Form 8-K filed on October 31, 2022 and is incorporated herein by reference.

Forward-Looking Statements

This report and other reports, statements and information previously or subsequently filed by the Company with the ~~SEC~~Securities and Exchange Commission 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 possible invalidity of the underlying beliefs and assumptions;~~

•the possible invalidity of the underlying beliefs and assumptions;•

~~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 successfully execute against its five growth vectors, including the ability to realize the anticipated benefits associated with the strategy;•

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;

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

general consumer shopping 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;

•general consumer shopping 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;•

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;

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

~~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 image and reputation;~~

•the Company's ability to remain competitive and relevant as consumers' shopping behaviors continue to migrate to digital shopping channels and other shopping channels and to maintain its brand image and reputation;•

possible systems failures and/or security breaches, including any security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach;

•possible systems failures and/or security breaches or other types of cybercrimes or cybersecurity attacks, including any security breach that results in the theft, transfer or unauthorized disclosure of customer,•

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

•

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

Table of Contents

MACY'S, INC.

•

~~the seasonal nature of the Company's business;~~

•

the effects of weather, natural disasters, outbreak of disease, 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;

employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach;

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

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

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

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

•the seasonal nature of the Company's business;•

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

•declines in the Company's credit card revenues;•

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 effects of weather and natural disasters, including the impact of climate change, 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 our consolidated results of operations, financial position and cash flows;•

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

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

~~our level of indebtedness;~~

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

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

•possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions, including supply chain disruptions, inventory shortage, labor shortages, wage pressures and rising inflation, and their related impact on costs;•

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

•possible actions taken or omitted to be taken by third parties, including customers, suppliers, business partners, competitors, banks and other financial institutions, and legislative, regulatory, judicial and other governmental authorities and officials;•

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

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

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;

•our level of indebtedness;•

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

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

~~labor shortages. and~~

•unstable political conditions, civil unrest, terrorist activities and armed conflicts, including the ongoing conflict between Russia and Ukraine;•

~~the amount and timing of future dividends and share repurchases.~~

•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;

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

•labor shortages

•the amount and timing of future dividends and share repurchases; and

•the Company's ability to execute on its strategies or achieve expectations related to environmental, social, and governance matters.

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.

Trading Arrangements

None of the Company's directors or "officers" (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K, during the Company's fiscal quarter ended July 29,

2023.

Table of Contents

MACY'S, INC.

~~Item 6.~~

Item 6. Exhibits.

~~3.1~~	~~Amended and Restated By-Laws of Macy’s, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed October 31, 2022)~~

22		List of Subsidiary Guarantors (incorporated by reference to Exhibit 22 to the Company’s ~~Quarterly~~Annual Report on Form ~~10-Q~~10-K (File No. 1-13536) for the ~~quarter~~fiscal year ended ~~July 30, 2022)~~January 28, 2023)

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~~July 29, ~~2022,~~2023, filed on ~~November 30, 2022,~~August 25, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of ~~Income,~~Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated of Changes in Shareholders' Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Table of Contents

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/ PAUL GRISCOM
				Paul Griscom Senior Vice President and Controller

Date: August 25, 2023

~~Date: November 30, 2022~~


		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Changes in Shareholders' Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures A bout Market Risk	28
Item 4.	Control and Procedures	28
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29

Item 5.	Other Information	29
Item 6.	Exhibits	31
SIGNATURES		32

	October 29, 2022		January 29, 2022		October 30, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	326	$	1,712	$	316
Receivables		204		297		212
Merchandise inventories		6,403		4,383		6,141
Prepaid expenses and other current assets		415		366		922
Total Current Assets		7,348		6,758		7,591
Property and Equipment - net of accumulated depreciation and amortization of $4,957, $4,548 and $4,826		5,831		5,665		5,600
Right of Use Assets		2,699		2,808		2,808
Goodwill		828		828		828
Other Intangible Assets – net		433		435		435
Other Assets		1,091		1,096		1,017
Total Assets	$	18,230	$	17,590	$	18,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	183	$	—	$	140
Merchandise accounts payable		3,861		2,222		3,796
Accounts payable and accrued liabilities		2,678		3,086		2,735
Income taxes		21		108		—
Total Current Liabilities		6,743		5,416		6,671
Long-Term Debt		2,996		3,295		3,295
Long-Term Lease Liabilities		2,988		3,098		3,090
Deferred Income Taxes		884		983		970
Other Liabilities		1,144		1,177		1,245
Shareholders' Equity		3,475		3,621		3,008
Total Liabilities and Shareholders’ Equity	$	18,230	$	17,590	$	18,279

	13 Weeks Ended				39 Weeks Ended
Net sales by family of business	October 29, 2022		October 30, 2021		October 29, 2022		October 30, 2021
	(millions)
Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances	$	2,025	$	2,011	$	6,214	$	5,984
Women's Apparel		1,223		1,211		3,772		3,565
Men's and Kids'		1,153		1,194		3,459		3,350
Home/Other (a)		829		1,024		2,733		2,895
Total	$	5,230	$	5,440	$	16,178	$	15,794

	39 Weeks Ended October 29, 2022						39 Weeks Ended October 30, 2021
	Amount			% to Net Sales			Amount			% to Net Sales
	(dollars in millions, except per share figures)
Net sales	$	16,178					$	15,794
Increase in comparable sales		2.3	%					52.4	%
Credit card revenues, net		601			3.7	%		568			3.6	%
Cost of sales		(9,856	)		(60.9	)%		(9,449	)		(59.8	)%
Selling, general and administrative expenses		(5,918	)		(36.6	)%		(5,618	)		(35.6	)%
Gains on sale of real estate		74			0.5	%		61			0.4	%
Impairment, restructuring and other costs		(25	)		(0.2	)%		(21	)		(0.1	)%
Operating income		1,054			6.5	%		1,335			8.5	%

Diluted earnings per share	$	2.37					$	2.17

Supplemental Financial Measures
Gross margin (a)	$	6,322			39.1	%	$	6,345			40.2	%
Digital sales as a percentage of net sales		31	%					34	%

Supplemental Non-GAAP Financial Measures
Increase in comparable sales on an owned plus licensed basis		2.3	%					52.5	%
Adjusted diluted earnings per share	$	2.60					$	2.91
EBITDA	$	1,681					$	1,962
Adjusted EBITDA	$	1,738					$	2,073

	13 Weeks Ended October 29, 2022			39 Weeks Ended October 29, 2022
	(in millions)
Net Sales	$	205		$	691
Consignment commission income (a)		834			2,563
Cost of sales		(95	)		(334	)
Operating loss		(401	)		(942	)
Loss before income taxes (b)		(278	)		(526	)
Net income (loss)		(187	)		(287	)

	13 Weeks Ended October 29, 2022			13 Weeks Ended October 30, 2021
	(millions, except percentages)
Net sales	$	5,230		$	5,440

Net income	$	108		$	239

Net income as a percent to net sales		2.1	%		4.4	%

Net income	$	108		$	239
Interest expense - net		42			53
Losses on early retirement of debt		—			185
Federal, state and local income tax expense		17			55
Depreciation and amortization		225			225
EBITDA	$	392		$	757
Impairment, restructuring and other costs		15			—
Settlement charges		32			8
Adjusted EBITDA	$	439		$	765
Adjusted EBITDA as a percent to net sales		8.4	%		14.1	%