On August 21, 2024, Macy's Inc (M, Financial) released its 8-K filing reporting financial results for the second quarter of 2024. Founded in 1858 and based in New York City, Macy's operates about 500 stores under the Macy's nameplate, nearly 60 stores under the Bloomingdale's and Bloomie's nameplates, and 159 freestanding Bluemercury specialty beauty stores. Macy's also operates e-commerce sites and licenses Bloomingdale's stores in the United Arab Emirates and Kuwait. Women's apparel, accessories, shoes, cosmetics, and fragrances composed 62% of Macy's 2023 sales.
Performance Overview
Macy's Inc (M, Financial) reported diluted earnings per share (EPS) of $0.53 and adjusted diluted EPS of $0.53, significantly exceeding the analyst estimate of $0.28. This compares favorably to the diluted loss per share of $(0.08) and adjusted diluted EPS of $0.26 in the second quarter of 2023. However, net sales decreased by 3.8% to $4.9 billion, falling short of the estimated $5,118.45 million.
Key Financial Achievements
Despite the challenging consumer environment, Macy's Inc (M, Financial) achieved a gross margin rate of 40.5%, an increase of 240 basis points from the previous year. This improvement was driven by lower year-over-year discounting, favorable shortage due to asset protection efforts, and a shift to cost accounting. Additionally, the company reported gains on the sale of real estate amounting to $36 million, a significant increase from $4 million in the same period last year.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $4.9 billion | $5.1 billion |
| Gross Margin | 40.5% | 38.1% |
| SG&A Expense | $2.0 billion | $2.0 billion |
| Operating Income | $222 million | $124 million |
| Net Income | $150 million | $(22) million |
Balance Sheet and Cash Flow
As of August 3, 2024, Macy's Inc (M, Financial) reported total assets of $15.8 billion, with cash and cash equivalents amounting to $646 million. Merchandise inventories increased by 6.0% to $4.4 billion, reflecting higher-than-expected inventory levels due to second-quarter sales results and strategic investments for the second half of 2024. The company also reported a decrease in total liabilities to $15.8 billion from $16.2 billion in February 2024.
Challenges and Strategic Initiatives
Macy's Inc (M, Financial) faced a 4.0% decline in comparable sales on an owned basis and a 3.3% decline on an owned-plus-licensed-plus-marketplace basis. The company attributed these declines to a more discriminating consumer and a heightened promotional environment. However, Macy's First 50 locations achieved their second consecutive quarter of positive comparable sales, indicating early traction of the company's "Bold New Chapter" strategy.
"During the second quarter, we delivered strong earnings performance in a challenging consumer environment," said Tony Spring, chairman and chief executive officer of Macy's, Inc. "Our colleagues executed with discipline, supporting gross margin expansion and effective expense control throughout the organization."
Updated Annual Guidance
Macy's Inc (M, Financial) updated its annual outlook to reflect ongoing consumer uncertainty and a promotional environment. The company now expects net sales to range between $22.1 billion and $22.4 billion, down from the previous guidance of $22.3 billion to $22.9 billion. The adjusted diluted EPS outlook remains unchanged at $2.55 to $2.90.
For more detailed financial information, readers can access the full 8-K filing.
Explore the complete 8-K earnings release (here) from Macy's Inc for further details.
