Macy's, Inc. (M): history, ownership, mission, how it works & makes money

A Brief History of Macy's, Inc.

Macy's, Inc. has undergone significant transformations over the years, adapting to market changes and consumer preferences. As of 2024, the company remains a prominent player in the retail sector, with a focus on enhancing its operational efficiency and customer experience.

Financial Performance Overview

In the second quarter of 2024, Macy's reported net sales of $4.937 billion, a decrease of 3.8% compared to $5.130 billion in the second quarter of 2023. The decline was attributed to ongoing macroeconomic pressures, including inflation and changing consumer behavior.

Sales Performance

Macy's experienced a decrease in comparable sales of 4.0% in Q2 2024, compared to a decrease of 8.2% in Q2 2023. The decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis was also down by 3.3% compared to a decline of 7.3% in the previous year.

Cost Management

The cost of sales for the second quarter of 2024 was $2.938 billion, representing 59.5% of net sales, a decrease from 61.9% in Q2 2023. Selling, general and administrative (SG&A) expenses were $1.973 billion, or 38.7% of total revenue, slightly down from $1.980 billion (37.5% of total revenue) in the prior year.

Cash Flow and Liquidity

Macy's ended Q2 2024 with cash and cash equivalents of $646 million, an increase of $208 million from $438 million at the end of Q2 2023. The company's net cash provided by operating activities was $137 million for the first half of 2024, compared to $271 million in the same period of 2023.

Future Outlook

Looking ahead, Macy's continues to focus on improving its operational efficiency and customer engagement strategies. The company aims to leverage its digital capabilities and enhance its merchandise offerings to drive sales growth amid challenging market conditions.

As of August 3, 2024, Macy's had an aggregate principal amount of $3.007 billion in senior unsecured notes outstanding, with maturities ranging from 2025 to 2043. This indicates a robust long-term capital structure as the company navigates the evolving retail landscape.

A Who Owns Macy's, Inc. (M)

Major Shareholders

As of 2024, Macy's, Inc. has a diverse ownership structure comprising institutional investors, retail investors, and insiders. The largest shareholders include:

• Vanguard Group Inc. - 9.7% ownership
• BlackRock Inc. - 9.0% ownership
• State Street Corporation - 6.5% ownership
• Other institutional investors - approximately 50% combined ownership

Institutional Ownership

Institutional investors hold a significant portion of Macy's shares, reflecting confidence in the company's business model and potential for growth. The following table highlights the top institutional holders:

Insider Ownership

Insider ownership is also a critical aspect of Macy's, Inc. governance, with executive management and board members holding shares. As of 2024, insiders own approximately 1.5% of the company's total shares.

Stock Performance and Market Capitalization

Macy's, Inc. has seen fluctuations in its stock price amid economic pressures. As of August 2024, the stock price is approximately $19.50, with a market capitalization of approximately $5.0 billion. Here are the stock performance statistics for the year:

Recent Financial Highlights

Macy's reported a net income of $212 million for the 26 weeks ending August 3, 2024, with diluted earnings per share of $0.75. The following financial metrics provide further insight into the company's performance:

Dividends and Share Repurchase Programs

Macy's has a history of returning capital to shareholders through dividends and share repurchase programs. The current quarterly dividend is $0.1737 per share, reflecting a commitment to maintaining shareholder value.

Conclusion on Ownership Dynamics

The ownership structure of Macy's, Inc. is characterized by substantial institutional investment, a modest level of insider ownership, and active shareholder return strategies, indicating a balance between external confidence and internal governance.

Macy's, Inc. (M) Mission Statement

Overview of Mission Statement

Macy's, Inc. aims to be the premier omnichannel retailer, enriching the lives of customers while providing a seamless shopping experience through innovation, quality, and value.

Recent Strategic Initiatives

In 2024, Macy's launched several initiatives to enhance customer engagement and streamline operations, emphasizing sustainability and community involvement.

Financial Performance Metrics

Comparable Sales Performance

For the second quarter of 2024, Macy's reported a decline in comparable sales:

• Decrease in comparable sales on an owned basis: 4.0%
• Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis: 3.3%

Revenue Sources

Shareholder Returns

Macy's maintains a commitment to shareholder returns through dividends and share repurchase programs. In 2024, the company declared a quarterly dividend of $0.1737 per share.

Community and Sustainability Efforts

Macy's is dedicated to sustainability and community support, integrating eco-friendly practices into its operations and contributing to local initiatives.

Future Outlook

Looking ahead, Macy's aims to enhance its digital capabilities while focusing on customer experience and operational efficiency to drive growth.

How Macy's, Inc. (M) Works

Financial Performance Overview

Macy's, Inc. reported a net sales total of $9,783 million for the 26 weeks ended August 3, 2024, compared to $10,112 million for the same period in 2023, reflecting a decrease of $329 million, or 3.3% year-over-year. The company experienced a decrease in comparable sales of 2.6% for the 26 weeks ended August 3, 2024, compared to an 8.1% decrease in the prior year.

Sales Breakdown

The breakdown of net sales for the 13 weeks ended August 3, 2024, is as follows:

Operational Metrics

Macy's reported a gross margin of $3,899 million, or 39.9% of net sales, for the 26 weeks ended August 3, 2024, up from 39.0% in 2023. Selling, general, and administrative (SG&A) expenses were $3,884 million, or 38.5% of total revenue in 2024, compared to $3,930 million, or 37.6% in 2023.

Debt and Equity

Macy's reported long-term debt of $2,993 million as of August 3, 2024, a slight decrease from $2,998 million in the prior period. The company's total liabilities and shareholders’ equity stood at $15,833 million, down from $16,246 million as of February 3, 2024.

Cash Flow Analysis

For the 26 weeks ended August 3, 2024, Macy's reported net cash provided by operating activities of $137 million, a decrease from $271 million in the prior year. The company utilized $373 million for investing activities and $152 million for financing activities.

Market Position and Strategy

Macy's continues to focus on enhancing its e-commerce capabilities, with digital sales accounting for 29% of net sales in the most recent quarter. The company's strategic initiatives include improving fulfillment network productivity and simplifying technology to enhance customer experience and operational efficiency.

As of August 3, 2024, the company's merchandise inventories totaled $4,378 million, a slight increase from $4,129 million in the previous year.

How Macy's, Inc. (M) Makes Money

Revenue Streams

Macy's, Inc. generates revenue through various channels, primarily through retail sales, credit card revenues, and advertising via the Macy's Media Network. In the second quarter of 2024, the company reported total revenue of $5,096 million, a decrease from $5,280 million in the same period of 2023.

Net Sales Performance

Net sales are the primary driver of Macy's revenue, contributing approximately 97% of total revenue. In the second quarter of 2024, net sales totaled $4,937 million, down from $5,130 million in the same quarter of 2023. The decline in net sales was largely attributed to ongoing macroeconomic pressures, including inflation.

Gross Margin Analysis

The gross margin for Macy's in the second quarter of 2024 was $1,999 million, representing a gross margin rate of 40.5%. This was an increase from $1,954 million and a margin rate of 38.1% in the second quarter of 2023. The improvement in gross margin was due to reduced discounting and better inventory management.

Operating Income

Macy's operating income for the second quarter of 2024 was $222 million, compared to $124 million in the same period of 2023. This reflects an operating margin of 4.4% in 2024, up from 2.3% in 2023.

Costs and Expenses

During the second quarter of 2024, Macy's reported selling, general, and administrative (SG&A) expenses of $1,973 million, slightly down from $1,980 million in the second quarter of 2023. SG&A expenses represented 38.7% of total revenue in Q2 2024, compared to 37.5% in Q2 2023.

Credit Card and Media Revenues

Macy's credit card revenues contributed $242 million in the first half of 2024, a decline from $282 million in the same period of 2023. The Macy's Media Network, on the other hand, saw growth, generating $71 million in the first half of 2024, up from $59 million in 2023.

Market Trends and Comparable Sales

Comparable sales for Macy's decreased by 4.0% in Q2 2024 compared to a decrease of 8.2% in Q2 2023. This indicates a slower decline in sales performance year-over-year, suggesting some stabilization in customer spending.

Dividends and Shareholder Returns

Macy's paid dividends totaling $96 million in the first half of 2024, which is an increase from $90 million in the same period of 2023. The Board of Directors declared a quarterly dividend of 17.37 cents per share, payable on October 1, 2024.

Debt and Financial Position

As of August 3, 2024, Macy's reported long-term debt of $2,993 million and total liabilities of $15,833 million. The company maintains an asset-based credit facility of $3,000 million, with no outstanding borrowings as of the latest reporting date.