Macy's Reports Results for Fourth Quarter & Fiscal Year 2024

March 6, 2025  by Karen Parrish in Business Strategy, Industry   

Highlights
— Achieved fourth quarter GAAP diluted earnings per share of $1.21; Adjusted diluted earnings per share of $1.80 exceeded the company’s prior guidance range.
— Macy’s, Inc. reported fourth quarter comparable sales down 1.1% on an owned basis; achieved its best owned-plus-licensed-plus-marketplace comparable sales since the first quarter of 2022, up 0.2%.
— Macy’s First 50 locations delivered fourth consecutive quarter of comparable sales growth, up 0.8% on an owned basis and up 1.2% on an owned-plus-licensed basis.
— Bloomingdale’s reported owned comparable sales growth of 4.8% and its highest fourth quarter owned-plus-licensed-plus-marketplace comparable sales growth of 6.5%.
— Bluemercury reported 16th consecutive quarter of comparable sales growth, up 6.2%.
— Ended the year with $1.3 billion of cash on the balance sheet, up $272 million from last year and generated nearly $1.3 billion of operating cash flow and $679 million of free cash flow.
— Announced intent to resume share buybacks under the remaining $1.4 billion share repurchase authorization, market conditions permitting.

“As we close out the first year of the Bold New Chapter strategy, investments in the customer experience enabled us to achieve our highest comparable sales of the year, our best performance in 11 quarters,” said Tony Spring, chairman and chief executive officer of Macy’s, Inc. “At Macy’s, our First 50 locations delivered four quarters of increased sales, while our luxury nameplates, Bloomingdale’s and Bluemercury, achieved accelerated annual sales growth. As we enter the second year of our strategy, we plan to scale initiatives that are resonating with our customers to drive long-term profitable growth and further unlock shareholder value.”

Adrian Mitchell, Macy’s, Inc. chief operating officer and chief financial officer added, “Building on our momentum, we continue to elevate the customer experience, deliver operational excellence and make prudent capital investments. We remain committed to generating healthy free cash flow and returning capital to shareholders through share buybacks and predictable quarterly dividends.”

Fourth Quarter 2024 Results¹ (comparisons are to the fourth quarter 2023)
Macy’s, Inc. net sales decreased 4.3% to $7.8 billion, with comparable sales down 1.1% on an owned basis and up 0.2% on an owned-plus-licensed-plus-marketplace basis. Comparable owned-plus-licensed-plus-marketplace sales growth at Macy’s First 50 locations, Macy’s digital channel, Bloomingdale’s, and Bluemercury was offset primarily by weakness in Macy’s non-First 50 and non-go-forward locations.

Macy’s, Inc. go-forward business² comparable sales were down 0.7% on an owned basis and up 0.6% on an owned-plus-licensed-plus-marketplace basis. By nameplate:

— Macy’s net sales were down 5.3%, with comparable sales down 1.9% on an owned basis and down 0.9% on an owned-plus-licensed-plus-marketplace basis. Macy’s go-forward business²comparable sales were down 1.6% on an owned basis and down 0.5% on an owned-plus-licensed-plus-marketplace basis.
- First 50 locations comparable sales were up 0.8% on an owned basis and up 1.2% on an owned-plus-licensed basis.
— Bloomingdale’s net sales were up 2.0%, with comparable sales up 4.8% on an owned basis and up 6.5% on an owned-plus-licensed-plus-marketplace basis.
— Bluemercury net sales were up 2.4% and comparable sales were up 6.2% on an owned basis.

Other revenue of $239 million decreased $16 million, or 6.3%. Within Other revenue:

— Credit card revenues, net decreased $20 million, or 10.3%, to $175 million, primarily due to lower year-over-year profit share, inclusive of higher net credit losses.
— Macy’s Media Network revenue, net rose $4 million, or 6.7%, to $64 million, reflecting continued growth in number of advertisers and campaign counts.

Gross margin rate³ of 35.7% decreased 80 basis points. The change relative to the prior year gross margin rate was impacted by Macy’s nameplate’s conversion to cost accounting. Separate from cost accounting, merchandise margin benefited from favorable year-over-year shortage trends which were offset by product mix.

Selling, general and administrative (“SG&A”) expense of $2.4 billion decreased $23 million. The decrease in SG&A expense reflects a disciplined approach to non-customer facing costs while focusing on investments that will drive future sales. As a percent of total revenue, SG&A expense increased 100 basis points to 29.7% due to lower total revenue.

Asset sale gains of $41 million were flat. Fourth quarter 2024 asset sale gains primarily relate to the monetization of non-go-forward locations associated with the company’s Bold New Chapter strategy.

GAAP diluted earnings per share (“EPS”) was $1.21 and Adjusted diluted EPS was $1.80, compared to GAAP diluted loss per share of $0.47 and Adjusted diluted EPS of $2.24, respectively, in the fourth quarter of 2023.

Fiscal Year 2024 Results¹ (comparisons are to fiscal year 2023)
Macy’s, Inc. net sales decreased 3.5% to $22.3 billion, with comparable sales down 2.0% on an owned basis and down 0.9% on an owned-plus-licensed-plus-marketplace basis. Comparable owned-plus-licensed-plus-marketplace sales growth at Macy’s First 50 locations, Bloomingdale’s, and Bluemercury was offset primarily by weakness in Macy’s non-First 50 locations and digital channel.

Macy’s, Inc. go-forward business² comparable sales were down 1.7% on an owned basis and down 0.6% on an owned-plus-licensed-plus-marketplace basis. By nameplate:

— Macy’s net sales were down 4.2%, with comparable sales down 2.6% on an owned basis and down 1.6% on an owned-plus-licensed-plus-marketplace basis. Macy’s go-forward business²comparable sales were down 2.4% on an owned basis and down 1.3% on an owned-plus-licensed-plus-marketplace basis.
- First 50 locations comparable sales were up 1.6% on an owned basis and up 1.8% on an owned-plus-licensed basis.
— Bloomingdale’s net sales were up 1.0%, with comparable sales up 1.7% on an owned basis and up 2.5% on an owned-plus-licensed-plus-marketplace basis.
— Bluemercury net sales were up 2.8% and comparable sales were up 4.0% on an owned basis.

— Other revenue of $713 million decreased $61 million, or 7.9%. Within Other revenue:

— Credit card revenues, net decreased $82 million, or 13.2%, to $537 million, primarily driven by higher net credit losses year-over-year.
— Macy’s Media Network revenue, net rose $21 million, or 13.5%, to $176 million, reflecting growth in number of advertisers and campaign counts year-over-year.

Gross margin rate³ of 38.4% was flat. Merchandise margin declined 10 basis points. The change relative to the prior year gross margin rate was impacted by Macy’s nameplate’s conversion to cost accounting. Additionally, current year merchandise margin was negatively impacted by product mix. These factors were partially offset by favorable shortage and liquidations. The decline in merchandise margin was offset by efficiencies in the company’s fulfillment network and lower shipped sales volume.

SG&A expense of $8.3 billion decreased $45 million. The decline in SG&A expense reflected the company’s continued cost controls while focusing on customer-facing investments that will drive future sales. As a percent of total revenue, SG&A expense increased 110 basis points to 36.2% due to lower total revenue.

Asset sale gains of $144 million were $83 million higher. As part of its Bold New Chapter strategy, in fiscal year 2024, the company removed 64 non-go-forward Macy’s locations which contributed to current year asset sale gains.

GAAP diluted EPS was $2.07 and Adjusted diluted EPS was $2.64, compared to GAAP diluted EPS of $0.16 and Adjusted diluted EPS of $3.28 in fiscal year 2023.

Balance Sheet and Liquidity
Merchandise inventories³ increased 2.5% year-over-year. The conversion to cost accounting is estimated to account for roughly half of the increase from the prior year, with the remainder reflecting the timing of spring receipts. The company believes the composition and level of inventories is well-positioned heading into fiscal year 2025.

The company ended fiscal year 2024 with cash and cash equivalents of $1.3 billion. As of the end of fiscal 2024, under its asset-based credit facility, borrowing availability was $2.5 billion, which considers reductions due to letters of credit and inventory levels impacting the borrowing base.

As of the end of fiscal year 2024, total debt was $2.8 billion, with no outstanding short-term borrowings under the company’s asset-based credit facility and no material long-term debt maturities until 2027.

2025 Guidance

The company is providing its annual fiscal year 2025 guidance. The company believes that Macy’s, Inc. go-forward business comparable owned-plus-licensed-plus-marketplace sales and Core Adjusted EBITDA on a dollar and percent of total revenue basis, defined as Adjusted EBITDA excluding asset sale gains, are the best proxy to measure fundamental improvements during the company’s stabilization and pursuit of profitable growth. The full outlook for 2025 can be found in the presentation posted to www.macysinc.com/investors. For Macy’s, Inc. the company expects:

Conference Call and Webcasts
A replay of the conference call will be available on the company’s website or by calling 1-877-660-6853, using passcode 13751434 about two hours after the conclusion of the call. Additional information on Macy’s, Inc., including past news releases, is available at www.macysinc.com/newsroom.