M - Earnings call transcript Q1 2020

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Operator

Please standby, we’re about to begin. Good morning, everyone, and welcome to the Macy’s, Inc.

First Quarter 2020 Earnings Call. Today’s hour-long conference is being recorded. I’d now like to turn the call over to Mr. Investor of Head McGuire, Relations. Mike sir. Please go ahead,

Mike McGuire

host today thanks Thank remarks share, on us quarter and results. the Felicia we’ll and and Interim after our discuss Felicia you, Good morning, XXXX have call session. on me Jeff Alan. Williams, for With Jeff this CEO; to question-and-answer a first Gennette, Chairman joining our everyone, are CFO. conference and our to call prepared several which

who quick constraints want you time Given and ask questions of people participate, the that to the please to number we one follow-up. your limit with a

In September a as addition the Investors housekeeping update second and posted section before quarter day, results hosting and the current be X, as and facts well in presentation our press the a website, We’ll releasing our our release, information macysinc.com. The an some earnings to performance. one additional our to is we have of this later and Polaris time, regarding This couple the in open. that typical I strategy of that be call due we’ll do market than of associated call. summarizes timing item figures on remarks, slide operating our quarter to this share. prepared presentation to earnings the mainly our providing weeks call on to delayed addition Wednesday, At report. is second our

differ subject Securities that Reform to are calendar. that mind Harbor subject Keep all your These of the and discussing So non-GAAP results of contained cause mentioned in detailed XXXX. results actual discussion certain uncertainties the uncertainties and In of filings Commission. operations, Securities forward-looking and Act financial and provisions Litigation statements today. materially company’s be the mark Private measures. from will providing these expectations the assumptions with to is our could forward-looking we Safe please risks to of the Exchange the in A statements factors are

find earnings can additional non-GAAP information of on financial in well these and our measures presentation release section regarding located as used website. Investors You our our as others the

today’s conclusion will on our be the for call, being reminder, website. and of after available a A archived will this two one approximately call on our hours it As replay be year. website webcast is

Now, I’d over turn to like this to Jeff.

Jeff Gennette

quick morning, by an and in the you briefly results, you start for restructuring Mike, line the stores the week, Thanks, we I questions. last through our I will to good and we’re walk to going what quarter announced everyone. give strategy, your want for first our then about you the touching reopened. seeing Felicia us. on business Thanks Polaris I’ll that and joining up are final open will give and a update as update we’re on

stores COVID-XX communication, closed XX previous our from from as Macy’s know, you our May through March As were impacted significantly X.

As out modeled. we reopened strongly than we initially stores, sale started

with for the we do a future. a leveraged the be However, opened. most Inc. foreseeable than more smaller, will now are anticipate stores gradual recovery recent company Macy’s, development, COVID

to get you Can months company financial weekly guys taken our We the actions the basis. payroll three including reducing rate, cut over furlough hear a burn the a of We on me? have process. significantly past through series stable cash

Felicia Williams

Jeff. you can We hear now,

Jeff Gennette

from Felicia, Okay, great. Did you hear, the beginning?

Felicia Williams

Yes. stopped process. We the at furlough

Jeff Gennette

I great. guys. Okay, apologize,

we stores, We departing we service as some the and back several levels network. base next align for the approximately goodbye to action week, took and customer with rate, across to reductions staffing I Beginning strong Inc. many next our really colleagues, supply the our anticipated to reducing service want but remaining together culture corporate will navigate furloughed sales. that painful, contributions organization, their flexibility our I This to a that talent. gives support our the resiliency, refinance of the but reducing the their included to X,XXX colleagues. we by colleagues and well to support It’s and cost colleagues necessary know headcount been welcome as Macy’s, said retail in need for business significantly payroll And a have chain months So last we cash our deep for tough of to glad during us liquidity burn weekly most recovery. express come gratitude process. week, cut We few that I’m years. furlough my we back the our through

take you I of well quarter, into So you sense first now all in only remain to fact, as are how through is six the looking. Macy’s details Felicia reopened, of closed. of brand can Nearly give a want we second our the stores the quarter. business And stores

As and in mentioned stores, our colleagues to customers trend in stronger sales very health our back remain as new earlier, few stores happy standard. weekly Both than safety adapted as saw the most strong reopen, on modest stores we customers improvement sales stores. market were with a In steady, encouraging basis. Digital modeled were be to each initial sales and reopened in and we signs. have our a

that to the momentum we quarter, the still a a through and in remind back-half you work you. of So market the uncertainty conservative year. high things Bloomingdale’s as call will us Macy’s and that the take in Bluemercury causes But approach in second sin brands. out to particular I Three this the I for degree of that felt we’ve we seen want there’s

a this will our and encouraged as health hours swing of safety do First, home. the full reduced regional the shutdown, in still flexible a high and incredible recognize resilience shown expect stores currently for degree of we a on I are of a priority, remain to customers to throughout have our in I And meet in COVID-XX if some parts country. disruptions. store while pandemic plan have group stores. consumers confidence temporarily resurgent we not that of single of stay top guide and our colleagues place Most regional us The to do we impact any through in national work game is the demand. anticipate ability stores another are a will and is we to team to our they’ve their want need crisis. flexibility and close or future

of This malls stores malls impact COVID-XX other our reopened, stores are we COVID-XX reclosed in which services where resurgence. store while traffic. our closed have with the of many remain the – areas many operate Second, or open, And maybe close. does in the that and are in

we stores. reasons two There that seeing flagship the and earlier Third, slowly for urban than large are are our more are opening stores this.

the that disappearance virtual affected spending, soon. expect in second, by do dense international the were not most to pandemic; areas and First, these stores located are of tourism anytime we urban recover which

stronger modeled. The reopened have were that than started So overall, stores our seeing weekly to model – we remained we improvement modulate. open,

acquired where or expect Our the new all in rate based the this brands and year. encouraging back-half pleased to metrics, conservative may younger And to are we customer performance, not pandemic it’s strong back-half will react that stores meet and year. with customer improve, our our growth are the digital pulling view in may results of we the If coming the demand. are XX%. now very mobile shown go, taking acquisition, through continue double-digit customers engagement our to trend more business through running on and a see has sales, the newly we’re And digital of Dotcom the By that of into trends we aggressively down at about traffic, a core customer. conversion, healthy half the diverse business. through of Conversely,

convert time, business, valuable We’re sales and working many I also pockets also you areas to of which customers. of strategies across shoppers, our on to been to particularly our and hard the a Dotcom we’re brief retain at over And are including want add. new ready furniture online. improvements soft strong them home organization. these omni Beauty, update provide customers all most seeing to have

As you we Atlanta the office San consolidating February, that into we recall, our in and team our York be New facilities. digital Francisco and would closing announced

appointed restructure pulling ground and is with a mid-March, together talent. strong of new in rebuild. Matt that team We mix has Macy’s Matt a with of everyone is and Head working experience. While have retail continued we the late experience since leader has strong a very the remotely e-commerce been a colleagues new Baer, running extensive Dotcom hit acquired March, Digital and

turn remainder going that, to through to I’m you take over year. give looking sense it to you Felicia? at the So how of a with of the Felicia quarter and we’re the

Felicia Williams

everyone. morning, and you, Thank Jeff, good

in quarter we reported noted, full I reporting of impairment impairment, are Jeff will these moment. first our were just touch previously excluded results, financial a from which our on As results. charges inclusive

foreseeable decrease plus the we of XX XX on and colleagues, write-down, by XX.X% our the primarily and $X.X improvement dictated we of Its million, delivered XX $XXX down on of on its points for far quarter, from our percentage the an XX% last million of a first of closed as pandemic. last margin To includes basis year, to As an in of previously will nearly the basis, $X through first percentage given the billion inventory was feel sales billion, a reaching year. quarter, but of We We been is down licensed March was compared discussed, of points expense story more effects on summarize future. and quarter. SG&A from owned merchandise. XX.X%, stores approximate last increase Gross the credit end continue this results year revenue than from an XX% from store our were year. the last the the $XXX an closures impact generated rate have recorded COVID-XX to fashion furlough comparable of quarter

versus $XX the asset in the of million XXXX. We $XX in gains also sale quarter recorded million first quarter of

year. a $X.XX Adjusted sale impairment interest to benefit it EPS of million are $XXX income gains your $XX rate tax million, in to $X.XX of which $X.X $X.XX EPS $X.XX, a several asset the tax loss I and last of of Summing represented of attention. quarter, adjusted costs year, the respectively. an and of items, XX.X%. versus of was million, up, recognized in we we call $XXX restructuring million of about saw net more $XXX expense which million loss want quarter There effective all than and representing compared net income of Additionally, last of

impairment took quarter. charges the me we on let in briefly first the touch First,

projections. the goodwill intangible our capitalization our us said, we our assets, quarter. long-term and financial during and impacted to impairment, many decline long-lived sustained indefinite live our to has the us business, other update COVID-XX required requiring As for a of including aspects causing assets impacts in test These market pandemic

reporting Bluemercury’s billion these our impairment the goodwill unit, result the tests, a was of majority associated vast with impairment of of our while related The approximately $X.X reporting recognized. unit. goodwill As to was Macy’s remainder

of to we million addition, that the was of stores the over group couple years. recognized that In primarily approximately closing $XX related asset long-lived of next anticipate impairment we

to want implications the I Jeff remind restructuring financial the of discussed. Secondly, you of

we stores, in in the to our we cost a the centers of shared, our areas, we anticipated actions are base base. reduction reduction the a pandemic. as to If the But near-term, levels be from expectations, recovers As position in both we our to savings will are expect for distribution cost headcount. call permanent we as expect layer impact as our to our better put related the operations. the The headcount, through business recovers we in business additional corporate entirely and these with near-term above well the our and sales performance, planning in align as management

we of approximately million basis. savings $XXX are million annualized this expecting $XXX and year expense an approximately such, As on

these Additionally, which, in for million the quarter of will second incur $XXX activities, costs expect be to recorded of restructuring related we this severance, will restructuring charges largely be in year. to tact. majority as These the approximately

the billion said growth. the additive profitability. line Recall allow targeted Polaris of billion addition, base in our at for year-end balance that are from allowing will approximately in annual we strategy. Polaris $X.X savings rightsizing of some February, $X.X XXXX Accordingly, will savings us stabilize be to expense to this line and top taken In our through expense the to would grow the we better our that and bottom savings, line, totals which anticipated targeting the the by now bottom and restructure us organization Day to be then Investor

into some us drive our initiatives. back invested to growth of the will savings strategic business And be through allowing the

Act. CARES Lastly, we are from benefiting the

payroll the allowance know, employee credit you for and of As provisions, Act tax losses. notably, taxes payroll several for deferral of provides certain income tax carryback operating the retention,

between XX% of and current our impact tax the charges. the estimate rate Act, CARES and XX%, impact we from excludes and Given the income the annual tax restructuring foresee impairment is effective this

really in recall, to March, withdrew our you hold. COVID-XX pandemic guidance XXXX take began as the we As will

an many and to guidance continue landscape, impacting we are factors consumer time. that, unprecedented Given new and operate behavior providing remains that there uncontrollable environment unknown in not at retail this and we the

it However, year. like thinking to as some the relates I would the our to current rest share of of

have to taking various the a We our the model and modeled we will of to year. are Ultimately, forecasting. for scenarios continue conservative approach back-half

the not planning in were to are are already the a lockdown mindful fall, certain for we severe country. we of if COVID-XX parts we recur are While of in seeing what

cautious of unpredictable such, back-half year. here our have regional and we pleased about performance And planned they there. may the for in remain slow be with store ongoing, an by reopened, flare-ups that but the been As headwinds recovery as we we while have have impacted

basis stores, international international point urban operations. the doors tourism limitations And only comps the by the recently which For XXXX, a example, for just in drag flagship over remainder In impacted accounted at saw risk our our on are assuming have tourism We mentioned. tourism sales quarter, drops these the international and are XX reopened, we X% the that of and are of first no on Jeff for tourism international in year. for center decline disproportionately higher sales. from

stores the to started So the middle X quarter impact expect second account in significantly low expect to all with first the third improvement until bearing comp quarter, said. strong we quarter, with lower fully is all significant. these the for stores of expected of reflect we exiting our XX% February. the we over and each mind improve percentage in on of brands mid-XX performance into the scenario quarter, to stores did growth, comp culminate points to no Taking sequentially into account, range. the our and opened expect opened reflects X This crisis resilience position the down we sales second comps the well But at we that In down, have shared roughly fourth total pre-pandemic of quarter XXXX company the quarter, approximately than the with with quarter. Taking future. the this as Jeff in second quite digital and also you not this through the off in us comps

this business to In in sales average We our the will first we penetration expect to we year, XX%. our of saw of annual digital digital the digital outperform. that quarter And continue approximately penetration mid-XXs. currently expect

saw single-digit While to season, we customers the increase shift shopping teens quarter, expect high in year-over-year digital continues. first as the we low continue a as online fall the a reduction sales in pandemic in to

to mix merchandise expected further digital expectations mid associated a in gross despite quarter-over-quarter. we full-year such, are delivery from slow As to for to margin projecting are add low recovery the teens in cost a towards sales. digital to improve increase margin, The shift

spoke. merchandise as we Our gross first each now the when in margins result, improved from last improvement from to quarter a with levels, in on margin second we And has quarter improve thereafter. quarter expect outlook

on well of our strong to positioned spring are we perspective year, the and back-half from We plan clean seasonal seen the been enter inventory a sell-throughs We’ve the our committed inventory we’ve for third merchandise. position. an inventory, quarter clearing to in and clearance

sales levels in base. in see year, of SG&A, our our this to the than with slow restructuring be rate cash elevated given fall gross percent recent our points. as regard last season aggressive of year by the of even SG&A So actions percentage moving With expect we single-digit lower fall margin a our lower expected to weekly all to burn pieces, mid rate are to measures,

you and the be facility. our new season, debt interest For anticipating mid last million the higher help year. better due are And year, our secured $XXX of could fall this to approximately asset-backed to think than percentage points about utilization expense, low financing single-digit we expected for to

be the credit we consumer The from far actions potential the in that as discussed, by previously benefit overall. profit will the on consumer ending the debt and and credit challenges. trends, government have retail effect tightening have continue July. portfolio mitigate higher income COVID-XX as taken to proud of from quick our pandemic bad Finally, negatively share stimulus and our I’m reaching we of and company these to anticipate of loss the had environment impacted has of company effects will decisive a many

a to prudent pandemic, of headwind. turn it back the feel we With for impact continue to I’ll Jeff. its over of remainder while well anticipate we ourselves taking the We the the that. positioned are that have year. weather approach to continued we’ll And

Jeff Gennette

So Felicia. thank you,

before the the expect So want for line questions, on from looking in in to can we how detailed September sense I us we work the at open a we’re strategy give X. that update Polaris of do up announced a you including you February,

customer So But right pandemic where our to strategy the intensified COVID-XX rethink were invest to and the Polaris behavior us accelerated that and caused for has us. impact underway, best already resources. sales shifts is the

our details strategy loyalty role. We’ll our call all quarter the on second to will X.X including again earnings the plans formats. X. and parts that February, we off-mall you give are in category And our of launched So so strategy expand as as September in continue, there parts The well digital there having will parts like certainly chain. the strategy refocus likely will There’s personalization, top but perhaps that flexible is and supply accelerate. very accelerate, are a of tactics we efficient will that of Polaris in loyalty. list, the we merchandise We we pause, of new the

the down Macy’s, seasons challenging in competitive have particularly And U.S. weathered opportunity crisis. this for there’s many up most our the and advance. questions. the one to We’ve we’re ready we’ve that, of compete. to last going your Inc. sometime a XXXX the past for go and And landscape history. restructure, brands know organizational to Thank over Macy’s And as history with retailed. comes we So the and have Bloomingdale’s company’s we we’re few line taken months, the actions will Spring But that along for is market in pick the certainly share. in with as shift, that us and you up with refinancing known challenge that opportunity. over closing, week’s long see open

Operator

[Operator Boss with first Thank We’ll JPMorgan. our ahead, caller, Instructions] go Please take Matthew you, sir. sir.

Matthew Boss

thanks. Great,

Jeff, that negative brick-and-mortar at neighborhood’s comp the So, maybe the hold the store of your you XXX top the location to for mall-based doors the year leading at relative what’s XX% between XX% range it And doors? seeing you’re today, time? maybe relative flagship negative to and tourist back-half your this comps is to that’s the

Jeff Gennette

Yes. Thanks, Matt.

recently So look as I And day-by-day. changes fluid. example say, at and off is just an situation Most our kind really stores in Texas. of first of the it Arizona that, Florida.

kind So what versus in started is those trend tend states, of COVID noticeably better, worse we we where gradually and states surge state, we get based brick-and-mortar improving. the those business the particular would to Dotcom in particular on Conversely, those in in too.

So – your happen. things aggregate a I of see to question, couple but in

the there’s off, So of performance regional kind just of first our differences in stores.

previous the more of your times, that mall our coasts slowly. ones back are is about coming this stores is grade are strongest. that pandemic heartland are question The neighborhood And the most to our that interesting versus were affected about by kind best. the performing the are So

popular expect or our at So magnet because not at some are that, would stores. that, they some flagship more traffic of you of

business their of have stores distancing, neighborhood basics. you they kind very the look those certainly. services, shop to these And the at that’s malls. them affecting so of would take shopping when just that go many But you reopened, doors trips traffic. specialty magnet reopened, the for entertainment, within theaters, social they you have flagship, these look When a focused particularly and about is have restaurants, of domestic, magnet not some past flagships, malls place curtail, some for think and for which magnets you versus has as that’s of regional look tourism international has well in at of some So both go comfortable really which into the tourism, many where And – done years, where at been the it’s those when communities on there as the definitely been disappeared.

tell faith react longer-term. to the – the the things So, effect I of the lower the as are to on on huge but these over it in some mentioned, trends and quickly. magnets improve, we we malls flagships when stores you that if those still we short-term will And very recovery, side ready is of have

At taking of shift resources. conservative We’re businesses how and top we’re moment, our terms a we’re on view the of in change, funding it.

either approach the business that So XX%, down hopeful But expense we I’m how in make wanted we that’s than but be prudent an – our a to direction. to very it’ll planning. the better

what to everyday. flexible staying we we’re learn So

Matthew Boss

makes That And gross sense. Great. maybe follow-up just margin. on a

we even line So if said or for guess, inventory XXXX, reasonable top to a second and to target stabilized what’s to is the quarter demand maybe I I by XXXX. you think exiting margin gross realigned trend timeline into saw in a late back your before How back to margin. pandemic? think, to XXXX, get long view? the similar get you entered margin take XX.X% what we pandemic gross Meaning, gross to it were to I would the where

Jeff Gennette

take you to want one? do that Felicia,

Felicia Williams

virtually. It’s meet Yes. Hi, Matt to – nice Matthews. you

difficult, imagine, the XXXX. possibly And very entering the as end may And I is about get – we a we we – fact are have normal back – Jeff beyond that outlined I to discussed, until not headlines can modeling the modeling we environment current predicting talked that we’ve earlier. given because of and XXXX, our as so recovery, in the year you slow

too sequentially give this projection I fall you to for I then get us that It’s to year. that just But soon gross are you better could margins, beyond level. we get XX.X% expecting for precisely of back relative definitive reiterating tell I tell QX. for you and didn’t include that so when to their we And can’t – the QX can QX assets any to and QX

Matthew Boss

Great.

Jeff Gennette

that. – the margin call. certainly give QX to Matt, I add our a has gross would And digital our you an penetration update on total of of as on on penetration We’ll this increased But business. obviously,

– how committed that. gross margin certainly so about we’re have sight strategies of But and we getting level lots we’ve And very back to there. we we’re historical of cover lines got on

Matthew Boss

Okay, sounds Thanks, good. Jeff.

Operator

All right.

Next, to Chen with we’ll go Oliver Cowen.

Oliver Chen

Hi. The margin well momentum encouraging that? what competitors? was you Thank up. inventory merchandise are thoughts you’re planning your you. as XQ think And as What about what and environment planning for in was XQ driving we your promotional as the as, scenario monitor analysis,

Felicia Williams

Yes. the improved quarter. Hi, merchandise Oliver. margins Yes, our in second

We’re selling improvement category. our in in seeing – merchandise sell-throughs in last clearance of our act our the of

we If that $XXX quarter, allow in took and occur. second you primarily the go first recall, merchandise. into write-down as on reverse promotional to The they related inventory, Oliver, quarter our to a normal fashion pricing million the to activity

in which And so the drove merchandise improvement the of we merchandise, sales through the have clearance margins. been really our pleased with

inventory back-half to of expectations, are ratio year, back-half of the be the we get that in of And in lot in enter stock the line our we with will confident As feedback, sales starting our sorry. with the a I’m down really to year. line

our seek appropriately in line fashion have expectations. levels with We

so quarter the the clean And for really to with newness expect inventory and we customers. enter freshness third that

Oliver Chen

have terms what’s stimulus of, you evolving the your the to control environment payments you’re with unemployment, in and are at regarding Jeff, in may how much and and helped that in as well consumer what some business as monitor you looking For near-term? the planning factors stimulus

Jeff Gennette

Felicia as said as they think So in her look in I and that, checks, the our business, reopened. at when well as stores think, comments, you our certainly that we both as helped online stimulus

that we’re So carefully. watching

We’re obviously rates watching the carefully. unemployment

behavior. customer the all watching We’re

what’s think our I amount the new about business coming the of are during our happened encouraging to is things one brands. COVID of that customers into

is And more customer. particularly lower income than seeing And diverse, what customer a core our that it a online. see so and has slightly a younger, you we’re

do So them that our be focused omni-channel How to technique those to that on over how time? we’re very we beyond and first so do is our transaction? opportunity through behavior. customer to get And customers hold marketing we see big personalization

Oliver Chen

Great. Thank you.

Operator

our Chuck All Haskett. Grom take We’ll Gordon right. with question from next

Chuck Grom

Hey, I’m little if on could comments have elaborate thanks. believe flare-ups and could just I Texas just traffic. bit? to that that Florida, your Arizona Good and probably morning. speak wondering you just the a wondering if in you impacted recent Jeff,

Jeff Gennette

Yes.

is weeks saw it since really inside. that So Governor the definitely safe to reopened. being about made Abbott – think, what comment the one two we was I We first Texas Chuck, that stay markets there’s of

And based what Texas trend opened as state we it on that sequential actually of that that previous we your in the the expected was in seeing a So X to each on two And on first, which opened heard XX%. were most we we at like improvement calls, Georgia, what that when comments when on we you states Abbott two drop that in in and we commented widespread we on to comment, when that. really XX made a And us we it were and be that was chat, were look And fireside then low at when level, down X saw, actually came Texas or point Texas May week. humming were was opened that our that performed but along. sales about a X, point first there that saw we rate, based the reopened. rate that is we Governor weeks malls, ago, saw right state you brick-and-mortar

wasn’t inside is where digital but the it. that’s up. what brick-and-mortar it’s where became, whole it coming watching went cover But back it’s it of little business bit. did didn’t just It XX carefully Now some we’re a gap in point, the cover modulating, between that

where And I that think, regional see they’re to carefully we’re fully anticipating national But watching where to shutdown. don’t we’re go flare-ups yet. know we what that’s then, So while – pandemic going. do expect we’re not a the we going is

Chuck Grom

to Jeff. you’re you Thanks, try helpful. what members permanent the on spoke customers into some curious brand. them getting taking steps to front, today That’s Oliver’s And I’m Macy’s digital to Okay. this then convert Macy’s? the to but new to obviously question,

Jeff Gennette

So, – second, thought. – is yes, for of really at that’s doing, talking is look coming they we’re you when which whatever a what about how digital using the they’re our of all in

at have about that to and to looking direct and techniques starting personalization purchase messaging e-mails, we’re content other they or them. cohorts that do and see We like what they they

certainly focused for our much think, customers. new all on, experience it’s to better I We’re attractive customers, gotten our really has digital just and more

at our So better. look the been for look at if has operation if you you content [indiscernible], checkout

sell-through or Our rates click-through been rates better have been have better.

checkout. We’re really focused seamless a on of having more

of and We’re our customers as an all clearly the core fulfillment customers these options giving retailer. omni-channel all

now, right So expect of had that go was And we of – that through about dramatically curbside. fulfill XX% as digital through gone XXXX, the we about demand in result of stores as being our business has fourth our up will BOSS, we X% digital satisfied and box our quarter. a we’re

them customers these to So transactions starting get opportunity the and online more with stores. to give come reasons then to new also into

units, construct – look and these got you focused value at that breakdown look we so with coming of in. the of So many business demographically it the that these profile talking for of us. have store And we’re many about new like customers, Backstage. we’re of the Since we about that’s because a It on that. our items Backstage are really at in fits when customers

we of are relationship. those to doing third, some So of first, make them and sure that what get we’re these the second, lifelong customers, examples

Chuck Grom

Jeff. Thanks, helpful. That’s

Operator

All right.

from Guggenheim. come Drbul line will Bob next the of Your question with

Robert Drbul

good Hi, morning.

the of questions side. inventory couple on a Just follow-up

back. you you you addressing vendor lot getting and just want using more are terms to, to a of or a little of moving how – you’re aligned normalized inventories support? where to last Backstage approaching and the you’re bit of vendor of terms how utilizing lot are elaborate you Can a support more in it In Are is that level? to getting

Felicia Williams

mean Bob, did you level more normalized inventory? low of

Robert Drbul

Exactly. Yes.

Felicia Williams

Yes.

inventory demand. we digital as fulfillment the where curbside fulfillment And at increased the store the it’s so our the using handle to about really time, reopened, and started to as But think accelerated could convert began if store stores facilities happened then we and our well. we’re or for in, we to same closed stores you inventory into just store as we a e-commerce what that we reopen,

sell-throughs in able were clearance newness we took, ability the to on to get through about as combined of we anticipate the in and nice age the really side, such the that then the inventory in and merchandise actually quarter positions activity of and other buying the in and some multitasking And promotional And July. again very We and into that June. reopened, think fashion the down given manage our May, in second seats pricing the so, you store, back were particularly and stores and replenishment taking aggressively we month as well the seat our down. take beginning with month

amazing tremendous. And so, say, big picture, and would vendor I our been partners have Bob, what

some categories our in soft Jeff of As base. the trying had shared duties brand we home, service said, furniture and as have customer amazing stronger partnership the we’re our clearly with of vendors, to

we’re balance we back-half we’re using said, order where of we in about quarter we the good fulfilling, will they receipts us of enter high year give manage store our that to degree the how clean really with feel how really the Before we’ve inventory. in comfort to the a actions second inventory, the taken

Robert Drbul

then about on of business, just – And seeing expectation the can credit the what performance you on credit question revenue, throughout you’re the your talk Okay. my follow-up is portfolio?

Felicia Williams

Yes.

XX%, consumer well of one, credit categories, make would impact spending back-half about as modeling watching stimulus a you consumer face those also we government the closed, the to banks about And had as watching the aging year. last bad trend, as can of on some tightening. was government that cautious and metrics, first our XXXX. they the we the the package, penetration decisions same that it our And clear other And to look that from consumer have would will new in number closely, benefit, as was received, many whether to and was our hard upticks stores down we don’t, imagine, year metrics trends our was account XX% bad are are we for the that they go those as share, hard if as the that as over activity the then delayed the behavior, portfolio profit debt, so credit and because checks how at thinking – portfolios different significantly. which into for look And they we spring. because packages which we spend, categories but that at consumer watching a But debt would people consumer impact And say headwinds, anticipate, measure And will is mainly particularly back-half then But stimulus benefit the of our in unemployment tend renew we’re as year. consumer quarter, Bob, of that a what to point it’s behavior. portfolio. as rate there the that, credit factors, the some we’re was we were

Robert Drbul

Okay, Felicia. great. very Thank much, you

Operator

Okay.

ISI. go we’ll with to Next, Omar Saad Evercore

Omar Saad

bit Thanks, to love couple Felicia, more a of Jeff. Thanks, the for areas question. A get taking detail. I’d little

across the then what a you’re move? talking bit corporate organizational are X,XXX the buying merchant acceleration Maybe And or it you Or given is restructuring percentage going I And more changes does changes? And a just across kind a ongoing of planners? of to have of just board the reflect and here? corporate could the cut financial corporate a kind does it and of organization Is on the headcount reflect? reduction. percentage it headcount, Thanks. and how Is it talk it total reallocate more planners Or First, the inventory of as we broad-based what types going little a follow-up. forward, of Board? structure positions? the an

Jeff Gennette

Hey, Omar.

XX% February. we the you it took after Polaris that at look about X,XXX, in was from over the announced corporate when we the of So, cuts yes, headcount

I that areas you So we certain not be we would significant. we area were which it in an was of that to there company best-in-class. “Hey, there – And areas the these said, to But that was question, are your have the to tell touch. didn’t

and vision you really when you And to digital, banners, and when the and think – about advantage. of has looked think we enabled you been Macy’s to from grow Bloomingdale’s, our omni-channel brand the leveraging company fortify luxury. by off-price So by at about our say focus that’s that, our

what of that business pieces we So okay, those we best-in-class. at, to want are looked be really

protects our includes fashion capability, wanted curate our leadership digital best-in-class to which interactions really our stores. fashion We So merchandising ability unique to private online. and and our our fortify and on brands platforms it simple convenient in and

continues So making digital customers get that omni-channel our better. full the for sure experience the to and

was So And two created was in those investing reinvest our we were we to really the and value this laser – opportunity sure that. that where wanted cost things customer that on make focus reduction set. to

the of So don’t kind to to other the company, obviously, the X,XXX complexion the best-in-class be we much, areas would what where deeper digital was but of in you see of affected cuts. not have was,

so really of on layers. And all focused them of spans extremely We painful.

above really keep see customer-facing – You’d to disproportionate possible. percentage the we a in at and look not those intact President and on amount the tried at Vice as higher the well colleagues, – and nearly and manager level as as director you what a colleague, when range, as the the the

and those hours. we can we Now a have colleagues, we’re that elastic can lot said flex, when colleagues of have expand go are we And sales. – to

of was it goes, bulk So level, some regional the those our really talking wherever at the the the well really leadership. levels as was at we that with corporate the of was our opportunities have cuts, I colleagues. But as X,XXX about. volume And

Omar Saad

Is to the seems I subdued forecasts on That’s view fashion more career and the some the a like more? business a XX% second-half? you you and could causing is to commerce XX%, giving appreciate current bridging Do kind helpful relative lack the is going mentioned, to of early sizably think guys also much that flare-ups I an helpful. your second like And expecting, that’s you the XX%, gap, to it running aren’t as demand second-half, build aren’t Or about occasions the what other But over I work growing, view waves. consumers of materializing? stores wanted in if context. it’s that on we as of maybe what’s wearing business the minus think in it down it ask, at about have then are wearing trends you’re

Jeff Gennette

of the it composite you shifted. When our sales, look at definitely

I’d affecting what that is is I our say mostly say the total that is would what So pandemic trend. it’s

that and store, have And department what – is subside favor. I – in unique over ability basically accelerate so we will – to think a And really categories are time. I’m that that those as a

how are now, stores is you update. right is looking every about think think, house And that. their moment well and talking so when opportunities at people you for big about around ticket golden look home to performing, I a having looking retailer When

definitely for going full-service just or has suit a forever, categories hit. a look suitings been opportunities Those ticket having have And luggage a taken Bloomingdale’s you’ve you I the categories, while, or categories have believe. up social casual, and extremely got about retail a to are or not talk home are heard be taken that So Beauty apparel they’ve hit, dress dress interesting but don’t dresses categories, compressed online, what’s categories, active then that brand that and categories like got direct stronger soft strong. very, like look And of the than in big Macy’s, you very at new, is And seen presence and brick-and-mortar still strong. to been everybody you’ve categories, going have dress we’ve is, at kind we’ve we’re historically. of those emerging when expand vendor a what categories, in. lots are shirts when

we’re department react consumer at looking So, store is going where a to as this. to opportunity the on

And powerful those do be your to going to going will brick-and-mortar than right make that’s ever, magnets, about really and the not our digital and do against the department can what be how most on it’s idea the more most laser-focused network, the it’s up of we that Boss’s question, we’re brick-and-mortar, profitability really through when think, to �� we’ll is our the So going And the come bulk to ever. the are the to as digital we’re test back. in where you digital a to well that’s now. shift on the going sales believe business entire question, make about we’re of our and up We base categories flagships But chunk of fulfillment drop what the I going this brick-and-mortar, It’s I as I Matt sales. think pandemic. the stores of sell, I trends in about think think business. to a think, fall

I that’s robustly going think I they’re back short over time do come think lived, to well. as but

Omar Saad

Thanks for insights. the

Operator

to we’ll William next, Reuter go America. with of All right. Bank And

William Reuter

expectations in upon Hi, curious also expectations XXXX, that good or assuming just declining of demand in year your was based over next sales correct? the and the expect are expectations morning. you I quarter, your fourth capital what working sales,

Felicia Williams

said. repeat bit I’ll last one. you of sorry, you the feedback. that a And I’m part what just can take little I’m getting of

William Reuter

be cash upon Sorry. a that demand of be I the working capital your the capital in was somewhat challenging, wondering then the prepared And levels XXXX still assumed expect based what fourth your of working that we you’ve continuing next remarks year? quarter? assuming in commentary are expectations would source if could about

Felicia Williams

some we’re managing move management really of as with we second I Big the into want you would year. which thinking I through quarter. factors when really guys the second say, I fall capital inventory in about on our through – in the are the the working quarter the and give you to many back-half the definitely the picture, think will outlook beyond update to positions pace and at go we in strong me say, more trying

need We’re to in do receipts the here, we’re this ability fall situation extent sales well we’ve lean where to we being into I seen in up categories and flex into said, holiday. going pick also up But that and as the that conservative. and the

some there. to ourselves And give so need we flexibility

we of different to we about go XXXX the asset-backed the about double now working our and going capital, business manage the our last amount which part is the year into we make equation how had gives our to as access liquidity think decisions of into you XXXX. us of with lot that facility, flexibility a more the ability As year new and back-half

we more giving have working of you I about opportunity pay although, to would indicating sense moment our specific on into thinking some at do the I’m and of year of projected managing you draw so then nature to facility of to inventory that And needed. need the a our like, we’re back-half us the it the it we by the the flexibilities on can’t capital, just guidance with if we’re as gives give and I down that how because how respect

William Reuter

And current a follow-up. Okay. look just I When quick extremely then at looks strong. your it liquidity,

additional for the potentially like which Or you taken enhance assets. remainder sufficient? actions, Do However, increase will liquidity the opportunities estate feel billing some be potentially other of some you’ve to looking the or recently you for securing your actions terms real current would in liquidity of liquidity throughout situation is other of year?

Felicia Williams

$X.X It’s asset strength effective. able paying our at our our Okay. includes cost but two to powers extremely at has coming for the of as up leverage are And our financing of would pleased end us fiscal we a great deal, when a you But down but somewhat of and operating fund we and the that was We the really that XXXX know, very facility. And were needs, the liquidity picture, the the fiscal liquidity and foreseeable future. are this given really totality situation, new I billion look portfolio, business XXXX. the flexibility of complicated big to with nearly say it question.

the in us back retired paying tenders. have have approximately $X.X buyback over that years, we take through it to we debt aggressively past down And a you If years, and been managing capital three and the several just almost was our public debt. past important really billion step over structure briefly, by

deal. the the as to confidence future. that highly in liquidity But portfolio to given some a say, liquidity the having needed, never good always valuable to That’s of lot capital flexible we’re we a a But liquidity have so sufficient structure remaining in $X.X position. assets nearly we I as we And part we have, thinking would think, still structure and And we fact I said really another table. use our unencumbered are us the do that, gives able of are that foreseeable modeling. have, to run billion where were of I said, today, if of assets still with XXX% we business off

William Reuter

Thanks Good so luck. much.

Felicia Williams

Thank you.

Operator

Carla go We’ll right. with Casella now to JPMorgan. All

Sarah Clark

Clark Casella. Hi, morning. for This just back go piece. estate on to anymore real the considering I’m Sarah wanting Are good real is estate all to sales? Carla you

Jeff Gennette

Let me take that.

natural $XXX point, was So anything that in talked February, XXXX. we when real don’t we, at progression that about that about above talk million what anticipate XXXX. we We has estate a been. mentioned in – real gains of level estate have at let’s And in our look in would strategy you which what

market against strategy and sure retail strategy, make that know brick-and-mortar our looking going overall is demand We’re area Code. estate the brick-and-mortar brick-and-mortar trade to sell And overall to times. estate assets obviously during We’re Zip real all of affects every national omni-channel of at real on a it how into our site entire level of a those these we right fits them? our piece value and journey the that our for how the particular normal

operate, through. the the when operate of looking reduced our then stores always and you versus in, pulling that that we’re value value – to all with and we’re look look profitable. that its of that sales at But and and particular at versus its store profitability value levels the at always that. So value to monetization remain profitability We the mindful throwing

it your won’t see than think second that. an we at going $XXX And that not quarter gain be modeling, than update $XXX from modulation higher had conversation. February to built it the the you we’re in if – that. any higher so And about our don’t But the give you we’ll million, for as from million

Sarah Clark

helpful, Great. super Thanks. ultimate. That’s

Operator

of next right. with Heather to All Balsky America. go Bank We’ll

Heather Balsky

Hi, thinking today, announced How about shift online? I going on, thank footprint with Investor at your Thanks. Day. you to you are XXX guess, the especially everything your my accelerate or the you question. taking for closures store to with

Felicia Williams

hi. Heather, yes. So,

them we too there’s we happening despite As doors we to about is are a to really expect think another close about against our cash the to At the probably what pandemic. do commit closings. and moment, those with reopening level original timeline. any XXX much to announcements, store Today, generate uncertainty have of definitive XX

all you can lists decisions. our those we – stores of are imagine, performance store and all And are closing we – our really as part of modeling of are closing watch metrics, metrics. model We can

consider as the will stores a to we So process whether many. question my probably mind, a additional that timing, still go which continue we’re of of not it’s But we Heather, to assessing. really close just in and we how of in and, will additional is provide question information, through going update analysis,

Jeff Gennette

thing as is luxury, landscape don’t all from of those kind obviously, there changes. would the done. at add, affect the we’re our calculus? been Heather, think how the to look We and what So, off-price mind in lots are making you through changes decision has way with Any of fully is well. that other said when The does landscape just Felicia that competitive I competitive

Heather Balsky

you. Thank

Operator

to go Advisory And Dana Telsey we’ll next, with Telsey right. All Group.

Dana Telsey

everyone. morning, Good

have is As performance you reopens? bricks-and-mortar there X,XXX, think Macy’s, about much employee the differently Thank bricks-and-mortar Bloomingdale’s And to in you reduction, quick then percentage? I did Macy’s, just versus business, much terms of see how the Bloomingdale’s is what and is up digital you. how in and then as And a follow-up.

Jeff Gennette

Yes.

to So same the about question, was about so Bloomingdale’s so Omar his and Bloomingdale’s. as and the quoted, with the same. it had let’s start I also percentage,

– it went aggressively we after. we was So what and very there and protected of in terms what more was similar

think trend difference, business conversation As remarkably big big when single It’s there’s in to Bloomingdale’s versus how the one difference, every category, about you has Macy’s? if mean, been similar. luxury. about it’s I the

that the on tourists And they part of do it right to have in is, a of see we’re huge you it go more that about here. And as limited country, buying have is, think would business other – because it part demand. you countries as those to of websites. that So so their access now domestic this because you that content lot luxury now buy reopens

weaker, luxury strong – what the you in its huge of across beauty outside Bloomingdale’s is are wear seeing composite store as that, is big really But the Those reopens. about is little – both other the we’re surges consistent. a business banners. So home

Dana Telsey

distancing. coming much like And gathering thinking Christmas planning? will and then the and about be social all How five about days it. we as it’s you up people Black Friday before are know are holiday before not holiday

Jeff Gennette

Yes.

to website goodness, a we So, of ambition huge friction, in we’ll way, biggest hey, we our eliminate have lot that do in a the the country, business faster thank XX and website. grow have on a but customer-centric

ours. is that about And that do, – but on gathering an now. But tell if a game And before at right when we We outlet. and as terms you so can think big everything about people going. do you does plan are days crowds? we’re trend the with table nervous of think XX about about to we very And Christmas, stores, strong I have have in traffic keep you – how concern think Friday, a we of that digital look we’re looking of at that would you so a if what mean when the it’s going the this Black what

reopening the the volume But marketing that is teams within on calendar have looking any not Friday learning piece will issues. We’re pressure working big and the with marketing merchant Black we’re our reduce our points magnet from of of biggest we’re stores lot the to a timeframe during on at. Most our stores stores. options and our days

So people Are out that there to earlier that for Friday, how does of think how jump Black the that a for earlier? kind do we going mean of are earlier way, – do pull cyber whole we us demand? demand What planful some do week opportunities calendar. even on the and in to We timeframe? in

lot And the of force so – and in we competitive a walk to it Halloween expect full after in cycle. start and

looking carefully. that we’re So at

all that. looking carefully hours We’re to on of store

season. of demand. a big mind season, going a for a about at the this holiday then pickup this to us. network store. is have safety digital fulfillment through, omni valve So we that walk comfortable the be And this satisfy you can very to how top season. weapon we’re we get us speed off, scores the our huge going big first secret not holiday But service very the how When that’s customers think obviously for on we going pickup, safety holiday to – of Curbside if for be last they’re We curbside look of business. developed and didn’t we the into have is

big. store is going with what and fulfillment do we’ll – to So be

of have store online at our it’s inventory, all being service they social So main we to your really have been a there to that’s buy where pick with if extra up door. line they or actually and wanted at right able control shipped keep something service. it distancing from We’ve pulled store that to the

even do the into we’re if most going nervous customers to we’re about they that. – building, concerns be to with the crowds come and So able protect their

in So call. and the X And we’ll work progress, for that’s you looking we’re September it. how at it’s we’re have on – but a more still

Dana Telsey

you. Thank

Operator

further at this like looks have questions It time. no we

our for over remarks. speakers turn or it to So I’d closing to like back additional any

Jeff Gennette

your Polaris to update Inc. September on for giving robust forward everybody, you, look interest Thank strategy your more and on our the call. everybody in X Macy’s, and a questions

story to our So look sharing then. forward

Felicia Williams

everyone. Thanks,

Operator

does that And thank conference. participation. for today’s We again conclude everyone their

Macy's (M) 1 Jul 202020 Q1 Earnings call transcript