Macy : Earnings Release Q2 2021

Macy's, Inc. Reports Second Quarter 2021 Results, Raises Guidance

and Announces Plan to Return Capital to Shareholders

Comparable sales up 61.2% on an owned basis and up 62.2% on an owned-plus-licensed basis

versus 2020; up 5.8% and up 5.9%, respectively, versus 2019

Diluted EPS of $1.08 and Adjusted diluted EPS of $1.29

Raises full-year and back-half guidance on both the top and bottom lines

Reinstates dividend and authorizes share repurchase program

Performance reflects continued execution of Polaris strategy coupled with the macroeconomic

recovery

NEW YORK-August 19, 2021-- Macy's, Inc. (NYSE: M) today reported results for the second quarter of 2021, raised guidance for fiscal 2021 and announced plans to return capital to shareholders.

"Second quarter results were strong across all three nameplates and surpassed our expectations. Our momentum in the first quarter accelerated in the second quarter as we successfully reengaged core customers and attracted new, younger customers with new brands and categories," said Jeff Gennette, chairman and chief executive officer of Macy's, Inc. "Through the Macy's, Inc. portfolio and our omnichannel approach, we provide a compelling, seamless integration between physical stores and digital shopping to most effectively meet the needs of our customers."

"The Polaris strategy is working. We have meaningfully improved the fundamentals and overall health of our business, and we are well underway building a stronger Macy's, Inc. for the future," Gennette continued.

Enhancing Shareholder Value

Macy's, Inc. ended the second quarter with approximately $2.1 billion in cash, allowing the company to execute on its two priorities of investing in profitable growth, while de-levering the balance sheet. The strong cash position will also allow the company to return capital to shareholders through the following actions:

• The company is reinstating its regular quarterly dividend at 15 cents per share on Macy's, Inc.'s common stock, resulting in an annual return of cash to shareholders of nearly $200 million.
  o The dividend is payable on October 1, to shareholders of record at the close of business on September 15.
• The company's board of directors has authorized a $500 million share repurchase program.
• Additionally, as previously announced, the company voluntarily repaid $1.3 billion in Senior Secured Notes on August 17, 2021. With this action, Macy's, Inc. now expects to exceed its target leverage ratio and achieve a ratio of no more than 2.5x by the end of fiscal 2021.

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"While there is still uncertainty due to the ongoing pandemic, the increased traction of the Polaris strategy and our strong performance in the second quarter gives us the confidence to materially increase full-year guidance. We are also increasing our long-term Adjusted EBITDA margin target to remain in the low- double digits beginning next year. We are now well positioned to strengthen our business, enhance our long-term financial stability and return capital to our shareholders," said Adrian Mitchell, chief financial officer of Macy's, Inc.

Second Quarter Highlights

In addition to prior year comparisons, Macy's, Inc. is providing comparisons to 2019 to benchmark its performance given the impact of the pandemic last year.

• Diluted earnings per share of $1.08 and Adjusted diluted earnings per share of $1.29 both exceeded expectations for the quarter.
• • This compares to a diluted loss per share of $(1.39) and an Adjusted diluted loss per share of $(0.81) in second quarter 2020.
  • This compares to diluted earnings per share and Adjusted diluted earnings per share of $0.28 in second quarter 2019.
• Comparable sales up 61.2% on an owned basis and up 62.2% on an owned plus licensed basis versus 2020.
• • Comparable sales up 5.8% on an owned basis and up 5.9% on an owned plus licensed basis versus 2019.
  • Trend improvement of approximately 16 percentage points compared to the first quarter of 2021.
• As macroeconomic trends shifted to more normal levels, the company saw strength across merchandise categories.
• • Pandemic impacted categories, including denim, luggage, dresses and other occasion- based apparel, came back strong.
  • Categories that were solid throughout the pandemic, such as fragrance, fine jewelry and textiles, continued to perform well.
• Digital sales declined 6% versus second quarter 2020 and grew 45% versus second quarter 2019.
• • Digital penetration was 32% of net sales, a 22-percentage point decline from second quarter 2020, but a 10-percentage point improvement over second quarter 2019.
  • Decline in digital sales compared to the prior year driven by shift of omnichannel customers to stores, which are now fully open.
• The company brought approximately 5 million new customers into the Macy's brand, a 30% increase compared to second quarter 2019.
• • 41% of new customers came through the digital channel in second quarter 2021.
• The company saw Platinum, Gold and Silver customers in its Star Rewards Loyalty program re- engage, with the average customer spend up 15% compared to second quarter 2019 and a 5- percentage point trend improvement from first quarter 2021.
• • The company's Bronze segment, its youngest and most diverse loyalty tier continued to grow, adding approximately 2 million members.

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• Gross margin for the quarter was 40.6%, up from 23.6% in second quarter 2020 and up 180 basis points from second quarter 2019.
• • Improvement as a result of merchandise margin was largely due to accelerated momentum in pricing, promotion and inventory initiatives driven by the Polaris strategy.
  • Delivery expense as a percent of net sales decreased approximately 310 basis points from the second quarter of 2020 and increased 170 basis points from second quarter 2019, due to the respective changes in penetration of digital sales.
• Inventory was down 14.5% from second quarter 2019.
• • Driven by market dynamics and the company's execution of its Polaris strategy.
• Selling, general and administrative ("SG&A") expense of $1.9 billion, a $279 million improvement from second quarter 2019.
• • SG&A as a percent of sales was 33.6%, an improvement of 570 basis points from second quarter 2019.
  • The permanent Polaris SG&A expense savings, disciplined expense management and improved productivity, along with a tight labor market, contributed to the second quarter SG&A performance.
• Net credit card revenue of $197 million, up $21 million from second quarter 2019.
• • Represented 3.5% of sales, 120 basis points lower than second quarter 2020 and 30 basis points better than second quarter 2019.

Revised Full-Year 2021 Guidance

The company is raising its full-year 2021 guidance.

	Revised Guidance 2021	Prior Guidance 2021
Net sales	$23.55B - $23.95B	$21.73B - $22.23B
Adjusted diluted earnings per	$3.41 - $3.75	$1.71 - $2.12
share
Adjusted EBITDA as a percent	11% - 11.5%	9% - 9.5%
of sales

A full overview of the company's guidance can be found in the second quarter 2021 earnings presentation at www.macysinc.com/investors.

Conference Call and Webcasts

A webcast of Macy's, Inc.'s call with analysts and investors to report its second quarter 2021 sales and earnings will be held today (August 19, 2021) at 8:00 a.m. ET. Macy's, Inc.'s webcast, along with the associated presentation, is accessible to the media and general public via the company's website at www.macysinc.com/investors. Analysts and investors may call in on 1-800-458-4121, passcode 1495500. A replay of the conference call and slides can be accessed on the website or by calling 1-888-203-1112 (same passcode) 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/pressroom.

The company will also present at the Goldman Sachs Annual Global Retailing Conference at 7:30 a.m. ET on Thursday, September 9, 2021. Media and investors may access a live audio webcast of the presentation at www.macysinc.com/investors. A replay of the webcast will also be available on the company's website.

Important Information Regarding Financial Measures

Please see the final pages of this news release for important information regarding the calculation of the company's non-GAAP financial measures.

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About Macy's, Inc.

Macy's, Inc. (NYSE: M) is one of the nation's premier omnichannel retailers. Headquartered in New York

City, the company comprises three retail brands: Macy's, Bloomingdale's and Bluemercury. With a robust e-commerce business, rich mobile experience and a national stores footprint, our customers can shop the way they live - anytime and through any channel. For more information, visit macysinc.com.

Forward-Looking Statements

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy's management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including the effects of the COVID-19 pandemic on Macy's customer demand and supply chain, as well as its consolidated results of operation, financial position and cash flows, Macy's ability to successfully implement its Polaris strategy, including the ability to realize the anticipated benefits within the expected time frame or at all, conditions to, or changes in the timing of proposed real estate and other transactions, prevailing interest rates and non-recurring charges, the effect of potential changes to trade policies, store closings, competitive pressures from specialty stores, general merchandise stores, off-price and discount stores, manufacturers' outlets, the Internet and catalogs and general consumer spending levels, including the impact of the availability and level of consumer debt, possible systems failures and/or security breaches, the potential for the incurrence of charges in connection with the impairment of intangible assets, including goodwill, Macy's reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional or global health pandemics, and regional political and economic conditions, the effect of weather, the amount and timing of future dividends and share repurchases and other factors identified in documents filed by the company with the Securities and Exchange Commission, including under the captions "Forward-Looking Statements" and "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended January 30, 2021 and Quarterly Report on Form 10-Q for the quarterly period ended May 1, 2021. Macy's disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Media - Blair Rosenberg [e-mail]

Investors - Mike McGuire [e-mail]

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MACY'S, INC.

Consolidated Statements of Operations (Unaudited) (Note 1)

(All amounts in millions except percentages and per share figures)

Net sales	$
Credit card revenues, net
Cost of sales
Selling, general and administrative expenses
Gains on sale of real estate
Impairment, restructuring and other costs (Note 2)
Operating income (loss)
Benefit plan income, net
Settlement charges
Interest expense, net
Losses on early retirement of debt
Financing costs
Income (loss) before income taxes
Federal, state and local income tax benefit (expense)
(Note 3)
Net income (loss)	$
Basic earnings (loss) per share	$
Diluted earnings (loss) per share	$
Average common shares:
Basic
Diluted
End of period common shares outstanding
Supplemental Financial Measures:
Gross Margin (Note 4)	$
Depreciation and amortization expense	$

13 Weeks Ended		13 Weeks Ended
July 31, 2021		August 1, 2020
	% to				% to
$	Net sales		$		Net sales
5,647			$	3,559
197	3.5 %			168	4.7%
(3,353)	(59.4 %)			(2,718)	(76.4%)
(1,898)	(33.6 %)			(1,398)	(39.2%)
6	0.1 %			-	0.0%
(2)	(0.0 %)			(242)	(6.8%)
597	10.6 %			(631)	(17.7%)
17				12
(81)				(38)
(80)				(69)
(3)				-
-				(3)
450				(729)
(105)				298
345			$	(431)
1.11			$	(1.39)
1.08			$	(1.39)
312.4				311.2
318.6				311.2
312.5				310.2
2,294	40.6 %		$	841	23.6%
220			$	235