MACY'S, INC. For purposes of the following discussion, all references to "second quarter of 2021" and "second quarter of 2020" are to the Company's 13-week fiscal periods endedJuly 31, 2021 andAugust 1, 2020 , respectively. References to "2021"and "2020" are to the Company's 26-week fiscal periods endedJuly 31, 2021 andAugust 1, 2020 , 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 2020 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report (particularly in "Risk Factors" and in "Forward-Looking Statements") and in the 2020 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". COVID-19 Update As the COVID-19 pandemic continues through fiscal 2021, the Company continues to prioritize health and safety measures in its stores and facilities to protect the well-being of its customers and colleagues, while also focusing on prudent cash management, maintaining strong liquidity and executing its strategic initiatives. The Company continuously monitors the ongoing impacts of COVID-19, including the outbreaks of any variant strains, as well as the evolving federal, state and local ordinances and health guidelines related to the mitigation of transmission risk associated with the pandemic. The Company has taken, and continues to take, numerous steps to promote health and safety at its stores and facilities, including following federal, state and local guidelines regarding the use of masks, supporting vaccination efforts, maintaining increased safety equipment in stores, offering contactless shopping opportunities, providing company-supplied personal protection equipment and wellness checks for colleagues, continuing enhanced cleaning throughout our various locations and continuing to offer remote work plans for certain colleagues. Although the Company has experienced strong recovery in operating results during fiscal 2021 as compared to fiscal 2020, the Company continues to monitor the impact of COVID-19 on the macro economy as well as on the Company's and its vendor partners' operations. The full impact of the pandemic will continue to depend on future developments, including the continued spread and duration of the pandemic, the emergence of future variant strains of COVID-19, the availability and distribution of effective medical treatments or vaccines as well as any related federal, state or local governmental orders or restrictions. In addition, numerous uncertainties continue to surround the pandemic and its ultimate impact on the Company, including the timing and extent of any recovery in consumer traffic and spending, potential delays, interruptions and disruptions in the Company's supply chain, maintenance of temporary government stimulus programs, labor shortages and intense competition for talent, all of which are highly uncertain and cannot be predicted. Further discussion of the risks and uncertainties posed by the COVID-19 pandemic are disclosed in "Risk Factors" under Part I Item 1A of the Company's 2020 Form 10-K.
Quarterly Overview
During the second quarter of 2021, the Company continued to build on the momentum of the first quarter of 2021 and exceeded its expectations from both a sales and profit standpoint. The profitable second quarter results were driven by strong consumer behavior, disciplined cost and inventory management, and the continued execution of the Company's Polaris strategy, including investments in its digital platforms. In evaluating the performance of the second quarter of 2021, the Company considered its results against the second quarter of 2020 as well as the second quarter of 2019 given the impact of the pandemic and the closure of the Company's stores during the first and second quarters of 2020. Certain financial highlights are as follows:
• Comparable sales were up 61.2% on an owned basis; and up 62.2% on an owned
plus licensed basis compared to the second quarter of 2020. Compared to the
second quarter of 2019, comparable sales were up 5.8% on an owned basis and
up 5.9% on an owned plus licensed basis.
• Digital sales declined 6% versus the second quarter of 2020 and grew 45%
versus the second quarter of 2019. Digital penetration was at 32% of net
sales for the second quarter of 2021, a 22-percentage point decline from the
second quarter of 2020 and a 10-percentage point increase from the second
quarter of 2019.
• Gross margin was 40.6%, compared to 23.6% in the second quarter of 2020,
representing an improvement of approximately 17 percentage points. Compared
to the second quarter of 2019, gross margin was up 180 basis points.
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MACY'S, INC.
• Net credit card revenues were
quarter of 2020, and up
• Selling, general and administrative ("SG&A") expense was
of 2019, SG&A expense was down
expense as a percent of sales was 33.6%, down from 39.2% in the second
quarter of 2020 and 570 basis points lower than the second quarter of 2019.
• Net income was
2021, compared to a net loss of
second quarter of 2020 and net income of
in the second quarter of 2019. Net income adjusted for impairment,
restructuring and other costs, settlement charges, losses on early
retirement of debt and financing costs, improved from a loss of
in the second quarter of 2020 to net income of
quarter of 2021. This compares to adjusted net income of
second quarter of 2019.
• The second quarter of 2021 had positive earnings before interest, taxes,
depreciation and amortization ("EBITDA") of
negative EBITDA of
was
EBITDA was
(4.0%) of net sales, and
quarters of 2021, 2020, and 2019, respectively.
• Diluted earnings per share and adjusted diluted earnings per share werecompares to a diluted loss per share and adjusted diluted loss per share of
diluted earnings per share and adjusted diluted earnings per share of
for the second quarter of 2019.
• Inventory was up 20% from the second quarter of 2020 and down 14.5% from the
second quarter of 2019.
• The Company ended the second quarter of 2021 in a strong liquidity position
with approximately
its asset-based credit facility. The liquidity position allowed the Company
to execute on its two priorities of investing in profitable growth, while
de-levering the balance sheet. These actions included a voluntary full
redemption of
Senior Secured Notes on
In addition, this strong cash position will also allow the Company to return
capital to shareholders through the following actions approved by the
Company's Board of Directors on August 18, 2021 :
o Reinstatement of a regular quarterly dividend at 15 cents per share on
Macy's, Inc.'s common stock. The dividend is payable on October 1,
2021 to shareholders of record at the close of business on September
15, 2021 .
o Authorization of a $500 million share repurchase program.
During the second quarter of 2021, the Company continued to execute its Polaris strategy and these actions impacted its operating results for the period, notably:
• Win With Fashion and Style: By offering a wide assortment of categories,
products and brands from off-price to luxury, the Company was able to reach
a broad and diverse range of customers. In merchandise, strengths continued
in pandemic-driven products such as fragrance, fine jewelry and textiles,
but the Company also saw dormant categories improve their performance trend
compared to the first quarter of 2021, notably dresses and other
occasion-based apparel, denim and luggage. The Company has added hundreds of
new brands and categories over the past year and its flexibility in
inventories has enabled the Company to respond to new customer demands in
emerging categories. Most notably, during the second quarter the Company
launched And Now This, a new private brand targeted for the fashion-forward,
contemporary under-40 shopper demographic and on
an exclusive omnichannel partnership with Toys 'R' Us to expand its toy
business.
• Deliver Clear Value: The Company has leveraged data analytics tools to most
efficiently plan, place and price inventory, including improving and
expanding location-level pricing and strategically shifting its markdown
cadence. With these actions, higher full price sell-throughs and lower
clearance markdowns are being achieved. Along with advancing data-led
capabilities in inventory planning and merchant execution, these collective
activities resulted in higher average unit retail prices and gross margin
performance as well as faster inventory turnover.
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MACY'S, INC.
• Excel in Digital Shopping: The Company continued to improve its digital
offerings during the second quarter of 2021 and recognized the benefits from
specific actions taken in the first quarter of 2021 to attract customers
with an under-40 demographic, including the launch of a contemporary sitelet
within macys.com. During the second quarter of 2021, the Company upgraded
its search function to
machine learning to improve the customer experience by providing advanced
product recommendations real-time. These actions are expected to help
customers discover what they need or inspire them to expand their current
shopping habits.
• Enhance Store Experience: Store sales continued to improve throughout the
quarter and as compared to the first quarter of 2021, with a sequential
improvement in comparable store sales from the first quarter of
approximately 18 percentage points compared to the second quarter of
2019. By maintaining leaner inventory levels, the Company's stores haveimproved their layouts for easier navigation and to provide customers a more
streamlined shopping experience. Continuing a physical expression of its
contemporary sitelet, the Company is launching a contemporary boutique in
160 stores, specifically targeted at the under-40 demographic.
• Modernize Supply Chain: The Company has continued to update its supply chain
infrastructure and network, while leveraging improved data and analytics
capabilities in fulfillment strategies to meet customers' desire for speed
and convenience and improving inventory placement. The Company is navigating
supply chain disruptions by adjusting freight strategies and working closely
with brand partners to prioritize product.
• Enable Transformation: The Company has continued to modernize its technology
foundations to increase agility in reacting to customers and the market
regardless of the channel in which customers interact. These activities are
coupled with others to build out data science and analytics capabilities
with a focus on areas to provide competitive differentiation.
The Company saw Platinum, Gold and Silver Star Rewards customers continue to
re-engage with the Macy's brand during the second quarter of 2021, with the
average customer spend up 15% compared to the second quarter of 2019 and a five
percentage point improvement from the first quarter of 2021. The Company's
Bronze Star Rewards tier, its youngest and most diverse loyalty tier, continued
to grow by adding approximately 2.0 million members during the quarter. During
the second quarter of 2021, the Company acquired approximately 5 million new
Macy's customers, of which approximately 41% occurred through Macy's digital
channel.
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MACY'S, INC. Results of Operations
The Company's operations during the second quarter of 2020 were significantly impacted by the closure of its stores due to the COVID-19 pandemic. The Company's performance during the second quarter of 2021 showed significant improvement over the results of the prior year period as it continued to recover from the pandemic.
Comparison of the Second Quarter of 2021 and the Second Quarter of 2020
Second Quarter of 2021 Second Quarter of 2020
% to Net % to Net
Amount Sales Amount Sales
(dollars in millions, except per share figures)
Net sales $ 5,647 $ 3,559
Credit card revenues, net 197 3.5 % 168 4.7 %
Cost of sales (3,353 ) (59.4 )% (2,718 ) (76.4 )%
Selling, general and administrative
expenses (1,898 ) (33.6 )% (1,398 ) (39.2 )%
Gains on sale of real estate 6 0.1 % - 0.0 %
Impairment, restructuring and other
costs (2 ) (0.0 )% (242 ) (6.8 )%
Operating income (loss) 597 10.6 % (631 ) (17.7 )%
Benefit plan income, net 17 12
Settlement charges (81 ) (38 )
Losses on early retirement of debt (3 ) -
Interest expense, net (80 ) (69 )
Financing costs - (3 )
Income (loss) before income taxes 450 (729 )
Federal, state and local income tax
benefit (expense) (105 ) 298
Net income (loss) $ 345 $ (431 )
Diluted earnings (loss) per share $ 1.08 Supplemental Financial Measure Gross margin (a)$ 2,294 40.6 %$ 841 23.6 % Supplemental Non-GAAP Financial Measure Diluted earnings (loss) per share, excluding the impact of certain items$ 1.29 $ (0.81 )
(a) Gross margin is defined as net sales less cost of sales.
Net sales for the second quarter of 2021 increased$2.1 billion , or 58.7%, compared to the second quarter of 2020. The Company's second quarter of 2021 sales showed recovery across all three brands -Macy's ,Bloomingdale's and bluemercury. Digital sales during the second quarter of 2021 decreased 6% compared to the second quarter of 2020 and accounted for approximately 32% of net sales. The Company experienced strength across nearly all of its major merchandise categories driven by continued consumer strength, growth in the Company's digital channel and continued recovery of its stores.
Credit Card Revenues, Net
Net credit card revenues were$197 million in the second quarter of 2021, an increase of$29 million , or 17.3%, compared to$168 million recognized in the second quarter of 2020. This increase was driven by improvement in the credit card portfolio's delinquency rates and bad debt and an increase in proprietary credit card sales penetration, up approximately 60 basis points, at 41.4% in the second quarter of 2021 compared to 40.8% in the second quarter of 2020. 19 --------------------------------------------------------------------------------MACY'S, INC.
Gross Margin
Gross margin was 40.6% in the second quarter of 2021 compared to 23.6% in the second quarter of 2020. The increase in the gross margin rate in the second quarter of 2021 compared to the second quarter of 2020 was driven primarily by continued recovery of its stores, inventory productivity and the continued execution of the Polaris strategy, including pricing science initiatives such as location level pricing and point-of-sale promotion testing.
Selling, General and Administrative Expense
SG&A expense for the second quarter of 2021 increased$500 million from the second quarter of 2020 but decreased as a percentage of net sales by 560 basis points. The increase in SG&A expense dollars corresponds with higher net sales but the improvement in the SG&A expense rate reflects the expense management strategies implemented by the Company in response to the COVID-19 pandemic, execution against the Polaris strategy and a tight labor market.
Impairment, Restructuring and Other Costs
During the second quarter of 2021, the Company incurred impairment,
restructuring and other costs totaling
Settlement Charges
During the second quarter of 2021, the Company recognized a non-cash settlement charge of$81 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. During the second quarter of 2020, the Company recognized expense of$38 million 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 distributions associated with retiree distribution elections and restructuring activity. Interest Expense,Net Net interest expense, excluding losses on early retirement of debt and financing costs, was$80 million during the second quarter of 2021, compared to$69 million during the second quarter of 2020. The increase was primarily driven by interest paid with respect to the$1,300 million of secured notes issued inJune 2020 . Effective Tax Rate The Company's effective tax rate was 23.3% for the second quarter of 2021, which is slightly higher as compared to the federal income statutory tax rate of 21% driven primarily by the impact of state and local taxes.
The Company's effective tax rate of 40.9% on the pretax loss for the second quarter of 2020 reflects the impact of the carryback of net operating losses as permitted under the CARES Act.
Diluted Earnings (Loss) Per Share
Diluted earnings per share were$1.08 for the second quarter of 2021 compared to a diluted loss per share of$1.39 for the second quarter of 2020, reflecting higher net income as a result of the continued recovery from the impact of the COVID-19 pandemic. 20
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MACY'S, INC.
Comparison of the 26 Weeks Ended
2021 2020
% to Net % to Net
Amount Sales Amount Sales
(dollars in millions, except per share figures)
Net sales $ 10,353 $ 6,576
Credit card revenues, net 356 3.4 % 299 4.5 %
Cost of sales (6,242 ) (60.3 )% (5,219 ) (79.4 )%
Selling, general and administrative
expenses (3,646 ) (35.2 )% (2,995 ) (45.4 )%
Gains on sale of real estate 12 0.1 % 16 0.2 %
Impairment, restructuring and other
costs (21 ) (0.2 )% (3,426 ) (52.1 )%
Operating income (loss) 812 7.8 % (4,749 ) (72.2 )%
Benefit plan income, net 32 21
Settlement charges (81 ) (38 ) Losses on early retirement of debt (14 ) - Interest expense, net (159 ) (117 ) Financing costs - (3 ) Income (loss) before income taxes 590 (4,886 ) Federal, state and local income tax benefit (expense) (142 ) 874 Net income (loss)$ 448 $ (4,012 ) Diluted earnings (loss) per share$ 1.41
Supplemental Financial Measure Gross margin (a)$ 4,111 39.7 %$ 1,357 20.6 % Supplemental Non-GAAP Financial Measure Diluted earnings (loss) per share, excluding the impact of certain items$ 1.68 $ (2.83 )
(a) Gross margin is defined as net sales less cost of sales.
Net sales for 2021 increased$3.8 billion , or 57.4%, compared to 2020. The Company's 2021 sales showed recovery across all three brands -Macy's ,Bloomingdale's and bluemercury. Digital sales during 2021 improved 11% compared to 2020 and accounted for approximately 34% of net sales. The Company experienced strength across nearly all of its major merchandise categories driven by continued customer strength, the continued recovery of its stores as well as continued growth in its digital channel.
Credit Card Revenues, Net
Net credit card revenues were$356 million in 2021, an increase of$57 million , or 19.1%, compared to 2020. This increase was driven by improvement in the credit card portfolio's delinquency rates and bad debt, partially offset by a decrease in proprietary credit card sales penetration, down approximately 160 basis points, at 41.7% in 2021 compared to 43.3% in 2020.
Gross Margin
Gross margin was 39.7% in 2021 compared to 20.6% in 2020. The increase in the gross margin rate in 2021 compared to 2020 was driven primarily by continued recovery of its stores, inventory productivity and the execution of the Polaris strategy. Due to the impact of COVID-19 and store closures, the first quarter of 2020 included an approximate$300 million inventory write-down from markdowns on fashion merchandise.
Selling, General and Administrative Expense
SG&A expense for 2021 increased$651 million from 2020 but decreased as a percentage of net sales by 10.2 percentage points. The increase in SG&A expense dollars corresponds with higher net sales but the improvement in the SG&A expense rate reflects the expense management strategies implemented by the Company in response to the COVID-19 pandemic as well as execution against the Polaris strategy and a tight labor market. 21 --------------------------------------------------------------------------------MACY'S, INC.
Impairment, Restructuring and Other Costs
During the 26 weeks ended
During the 26 weeks ended
•
the
reporting unit.
• $80 million of impairments on long-lived tangible and right of use assetsto adjust the carrying value of certain store locations to their estimated
fair value.
Additionally, the Company recognized $194 million related to restructuring and
other costs, including severance of $154 million associated with the reduction
in force in response to the COVID-19 pandemic.
Settlement Charges
During the 26 weeks endedJuly 31, 2021 , the Company recognized a non-cash settlement charge of$81 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. During the 26 weeks endedAugust 1, 2020 , the Company recognized expense of$38 million 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 distributions associated with retiree distribution elections and restructuring activity.
Interest Expense, Net
Net interest expense, excluding losses on early retirement of debt and financing costs, was$159 million during 2021, compared to$117 million during 2020. The increase is primarily driven by interest paid with respect to the$1,300 million of secured notes issued inJune 2020 .
Effective Tax Rate
The Company's effective tax rate was 24.1% for 2021, which is slightly higher as compared to the federal income statutory tax rate of 21% driven primarily by the impact of state and local taxes. The Company's effective tax rate of 17.9% on the pretax loss for 2020 reflects the impact of net operating losses as permitted under the CARES Act offset by the impact of the non-tax deductible component of the goodwill impairment charge and additional income tax expense associated with the deferred tax remeasurement recognized during the first quarter of 2020. Additionally, the effective tax rate for 2020 was favorably impacted by the settlement or expiration of certain tax matters.
Diluted Earnings (Loss) Per Share
Diluted earnings per share were
22
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MACY'S, INC. Cash Flow, Liquidity and Capital Resources
The Company's principal sources of liquidity are cash from operations, cash on hand and the asset-based credit facility described below.
The COVID-19 outbreak and related store closure in 2020 negatively impacted the Company's liquidity in 2020. The Company proactively took steps to increase available cash on hand including, but not limited to, targeted reductions in discretionary operating expenses and capital expenditures, suspension of the Company's quarterly dividend and executing additional financing transactions during the second quarter of 2020. During 2021, the Company has seen significant improvement in its operations and combined with its strong liquidity position as ofJuly 31, 2021 , estimates that it has sufficient cash on hand and other capital resources to cover the Company's reasonably foreseeable working capital, capital expenditure and debt service and other cash requirements in both the near term and over the longer term. However, the continued uncertainty associated with the COVID-19 pandemic could have a significant impact on the Company's cash flow and liquidity and further actions may be required to improve the Company's cash position. Operating Activities Net cash provided by operating activities in 2021 was$965 million , compared to net cash used by operating activities of$7 million for 2020. The increase in operating cash flows period over period is due to significant improvement in the Company's EBITDA, offset slightly by net working capital changes, primarily driven by changes in merchandise inventories.
Investing Activities
Net cash used by investing activities was$144 million for 2021, compared to$272 million for 2020. The decrease period over period is primarily due to a reduction in capital spending compared to 2020 as a result of the Company's updated plan for capital expenditures in response to the COVID-19 pandemic and alignment with its Polaris strategy, as well as the sale of certain asset backed investments. Financing Activities Net cash used by financing activities was$360 million for 2021, driven by a decrease in outstanding checks. Net cash provided by financing activities was$950 million for 2020, driven by the issuance of$2,780 million related to a$1,500 million draw on the Company's revolving credit agreement and issuance of$1,300 million aggregate principal amount of 8.375% Senior Secured Notes due 2025 (the "2025 Notes"), partially offset by the repayment of the$1,500 million of credit agreement draw. 2020 also included$117 million of cash dividends paid, while no dividends have been paid in 2021. See below for further discussion of the Company's financing activities during 2021. OnMarch 17, 2021 ,Macy's Retail Holdings, LLC ("MRH"), a direct, wholly owned subsidiary ofMacy's, Inc. , completed an offering of$500 million in aggregate principal amount of 5.875% senior notes due 2029 (the "2029 Notes") in a private offering (the "Notes Offering"). The 2029 Notes mature onApril 1, 2029 . The 2029 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on a senior unsecured basis byMacy's, Inc. MRH used the net proceeds from the Notes Offering, together with cash on hand, to fund the tender offer discussed below. OnMarch 17, 2021 , the Company completed a tender offer in which$500 million of senior notes and debentures were tendered for early settlement and purchased by MRH onMarch 17, 2021 . The purchased senior notes and debentures included$156 million of 3.875% senior notes due 2022,$136 million of 2.875% senior notes due 2023,$49 million of 4.375% senior notes due 2023,$150 million of 3.625% senior notes due 2024,$5 million of 6.65% senior debentures due 2024, and$4 million of 7.6% senior debentures due 2025. The total cash cost for the tender offer was$17 million with the remainder funded through the net proceeds from the Notes Offering discussed above. The Company recognized$11 million of losses associated with this early retirement of debt on the Consolidated Statements of Operation during 2021. The Company is party to an asset-based credit facility ("the ABL Credit Facility") with certain financial institutions providing for a$2,941 million revolving credit facility (the "Revolving ABL Facility"), including a swingline sub-facility and a letter of credit sub- facility. The Company may request increases in the size of the Revolving ABL Facility up to an additional aggregate principal amount of$750 million . 23 --------------------------------------------------------------------------------MACY'S , INC. The ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to the sum of (a) 90% of the net orderly liquidation percentage of eligible inventory, minus (b) customary reserves. Amounts borrowed under the ABL Credit Facility are subject to interest at a rate per annum equal to, at the Company's option, either (a) adjusted LIBOR plus a margin of 2.25% to 2.50% or (b) a base rate plus a margin of 1.25% to 1.50%, in each case depending on revolving line utilization. The ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type. The ABL Credit Facility also requires (1) the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any fiscal quarter on or afterApril 30, 2021 if (a) certain events of default have occurred and are continuing or (b) Availability plus Suppressed Availability (each as defined in the ABL Credit Facility) is less than the greater of (x) 10% of the Loan Cap (as defined in the ABL Credit Facility) and (y)$250 million , in each case, as of the end of such fiscal quarter and (2) prior toApril 30, 2021 , that the Company not permit Availability plus Suppressed Availability to be lower than the greater of (x) 10% of the Loan Cap and (y)$250 million . As ofJuly 31, 2021 , no such events had occurred triggering such requirement. As ofJuly 31, 2021 , the Company had$136 million of standby letters of credit outstanding under the ABL Credit Facility, which reduces the available borrowing capacity. The borrowing capacity of the ABL Credit Facility was$2,457 million and the Company had no borrowings outstanding under the ABL Credit Facility as ofJuly 31, 2021 . Credit Ratings As ofJuly 31, 2021 , the Company's credit rating and outlook were as described in the table below. Moody's Standard & Poor's Fitch Long-term debt Ba3 B+ BB Outlook Negative Positive Negative
Subsequent to
Subsequent Event Financing Activities
OnAugust 17, 2021 , subsequent to the end of the second quarter of 2021,Macy's Inc. redeemed the entire outstanding$1.3 billion aggregate principal amount of the 2025 Notes. The redemption price was equal to 100% of the principal amount of the 2025 notes, plus accrued and unpaid interest of$19 million , plus the applicable premium due to holders of the 2025 Notes in connection with an early redemption of$138 million , plus unamortized deferred debt costs of$47 million . The total pre-tax charge of$185 million was recorded in the 13 weeks endedOctober 30, 2021 , and the$1.3 billion of 2025 Notes were classified as short-term debt as ofJuly 31, 2021 . OnAugust 19, 2021 , the Company announced that it is reinstating its regular quarterly dividend. The Board of Directors declared a regular quarterly dividend of$0.15 per share on the Company's common stock, payableOctober 1, 2021 , to shareholders of record at the close of business onSeptember 15, 2021 . Subsequent dividends will be subject to approval of the Board of Directors, which will depend on market and other conditions. OnAugust 19, 2021 , the Company also announced that its Board of Directors authorized a share repurchase program for up to$500 million ofMacy's, Inc. common stock. 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. The share repurchase program has no expiration date.
Contractual Obligations
As ofJuly 31, 2021 , other than the financing transactions discussed above and in Note 5 to the accompanying Consolidated Financial Statements, there were no material changes to our contractual obligations and commitments outside the ordinary course of business sinceJanuary 30, 2021 , as reported in the Company's 2020 Form 10-K. 24
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MACY'S, INC. Capital Resources Management believes that, with respect to the Company's current operations, its cash on hand and funds from operations, together with the ABL Credit Facility and other capital resources, will be sufficient to cover the Company's reasonably foreseeable working capital, capital expenditure and debt service requirements and other cash requirements in both the near term and over the longer term. The Company's ability to generate funds from operations may be affected by numerous factors, including the COVID-19 pandemic, general economic conditions and levels of consumer confidence and demand; however, the Company expects to be able to manage its working capital levels and capital expenditure amounts so as to maintain sufficient levels of liquidity. To the extent that the Company's cash balances from time to time exceed amounts that are needed to fund its immediate liquidity requirements, the Company will consider alternative uses of some or all of such excess cash. Such alternative uses may include, among others, the redemption or repurchase of debt, equity or other securities through open market purchases, privately negotiated transactions or otherwise, and payment of dividends. Depending upon its actual and anticipated sources and uses of liquidity, conditions in the capital markets and other factors, the Company will from time to time consider the issuance of debt or other securities, or other possible capital markets transactions, for the purpose of raising capital which could be used to refinance current indebtedness or for other corporate purposes.
Guarantor Summarized Financial Information
The Company had$3,229 million and$3,246 million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the "Unsecured Notes") outstanding as ofJuly 31, 2021 andJanuary 30, 2021 , respectively, with maturities ranging from 2022 to 2043. The Unsecured Notes constitute debt obligations of MRH ("Subsidiary Issuer"), a 100%-owned subsidiary ofMacy's, Inc. ("Parent" and together with the "Subsidiary Issuer," the "Obligor Group "), and are fully and unconditionally guaranteed on a senior unsecured basis by Parent. The Unsecured Notes rank equally in right of payment with all of the Company's existing and future senior unsecured obligations, senior to any of the Company's future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the Company's subsidiaries that do not guarantee the Unsecured Notes. Holders of the Company's secured indebtedness, including the Notes and any borrowings under the ABL Credit Facility, will have a priority claim on the assets that secure such secured indebtedness; therefore, the Unsecured Notes and the related guarantee are effectively subordinated to all of the Subsidiary Issuer's and Parent and their subsidiaries' existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The following tables include combined financial information of theObligor Group . Investments in non-Guarantor subsidiaries of$6,717 million and$6,126 million as ofJuly 31, 2021 andJanuary 30, 2021 , respectively, have been excluded from the Summarized Balance Sheets. Equity in earnings of non-Guarantor subsidiaries of$531 million and$959 million for the 13-weeks and 26-weeks endedJuly 31, 2021 , respectively, have been excluded from the Summarized Statement of Operations. The combined financial information of theObligor Group is presented on a combined basis with intercompany balances and transactions within theObligor Group eliminated.
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