Macy's (M) 15 May 192019 Q1 Earnings call transcript

Good morning and welcome to Macy’s, Inc.

First Quarter 2019 Earnings Conference Call. Today’s hour-long conference is being recorded. I would now like to turn the call over to Mr. Mike McGuire, Head of Investor Relations. sir. ahead, go Please

Chairman Jeff prepared me Paula several Price, CEO; Good conference are and for share, to first call our outlook. results operator. us quarter after for on Jeff today open and and Paula With a XXXX year this to full it session. the CFO. up and morning, and our you, Gennette, call have remarks our thanks which everyone we'll joining XXXX on Thank discuss our question-and-answer

Given the want the limit of to with number participate, to please up. a questions constrains you time and people quick follow we who ask your one that

website, to slide figures the information macysinc.com, have call this as press our in posted our addition prepared presentation release as and Investors a the and facts remarks, some additional we performance guidance. our that In on well regarding summarizes and of operating our section

costs. the that assumptions other impairment to with per share filings the of and be available provisions uncertainties materially of forward-looking uncertainties of differ to impact diluted net that subject forward-looking a Private exclude earnings from will detailed that These all the few operations, in the Commission. statements XX-Q the website in Litigation Reform of and Keep income Securities subject mind our providing the the company's XXXX. statements and that adjusted time. Securities Harbor Safe our risks discussing that mentioned discussion could on actual cause to results is In A are today. results weeks expectations amounts filed in Form be of are we'll will and these and Act Exchange contained factors too be and at and

section others can in Investors earnings find call our and used as measures, these well on additional during the our financial of website. this You release non-GAAP as regarding information

two available hours replay one call this of for after website. be is call webcast year. As on will the and the approximately call be a reminder, following will our it conclusion A being today's there archived

Now I like Jeff. this turn to to would over

Mike, our and first Macy's we open you, results Q&A. through call. quarter will you first and for to up the Thank the welcome then Paula quarter morning, and XXXX take will and line Inc. good I earnings everyone,

As earnings in a you achieved X.X% press morning, our quarter comparable plus this sales owned per delivered sales comparable $X.XX. of on saw in another share We basis release and an increase licensed of growth. we

quarter Our in line our performance with the for was expectations.

and on to the to The first deliver track solid are our we year annual guidance. a quarter start and was top bottom line

Before our I on into tranches impact me some in business. Third give XXXX This the to were and recent were of of have that comment business get particularly increase furniture XXXX movement do you does the factored XX% view. on tariffs. meaningful Tranche I the The highlights, XX% May have dynamic XX into The on our our no on impact, guidance. from situation, but on a tariffs to high-level enacted is three let want a quarter's

not tariffs brand our guidance. However, fourth private potential partners our impact that on and annual on anticipates our of provided Tranche This when work We the Fourth potential Chinese brands. tranche and all be would with the can national and contemplated to the customers. that manufacturing impact both have of was is team this an our to will minimize If mitigated. imports, we size placed tariffs

and productively U.S. will China hopeful trade continue the the actions talks between trade and countries will that between two We are deescalate.

the me quarter. now few share the of from So a let highlights

all a on with quarter. off. and Bloomingdale's and also shops The last increased at continued Bluemercury is way benefiting growth were the proprietary our Bluemercury and saw stores beauty that the in brand In our good to XXth Its in Street penetration led from our Bloomingdale's the which quarter had flagship to our is those brand, renovations to departments, performance had were completed performed Outlet important Bluemercury.com. Lune+Aster sales strong it its to very expectation. encouraging that in of store and across be strong the MXX in investment the quarter. the drivers Macy's each the within All Macy's a see quarter board and year. strategy strong shoes, total Bloomingdale's, Macy's, ready-to-wear, brands, specialty paying overall

omnichannel ties moat a that great a is brick-and-mortar and all robust business, retailer, competitive an our As together. it e-commerce experience mobile healthy business, a

balanced all to a applying are investment support strategy We three.

first with We of we our quarter, continued customers from in XX the gives in contribution first sales shop. to the XXX saw which matter year. we for are quarter, stores. where the fleet, no of The experience, the focused this our brick-and-mortar to they significant saw Growth Macy's rest on by us improvement great XXX expand Backstage, Growth stores in led this In a the business to how confidence In treatment more locations XXX Backstage expanded stores continued stores. we stores a total XX XXXX to outperform providing a or which

in fastest-growing program our mobile Our I'm April opening at STORY of our another the e-commerce with STORY taking pleased channel. making double-digit delivered remains XX, launched customers. on from the a business response growth states and launch, to of the day. and expanded in quarter proud meaningful showed the sales agility the bang direct, early the XX big on we're same locations We with approach Macy's vendor XX this contribution, team

gives see STORY new. As outreach stores current a is STORY of Each a gallery, every theme plan unique our merchandise approach. a ongoing launch come and a engagement of our calendar that gives view at strategy and to experiences. with has a drive year exceptional Macy's Macy's part concept and at reason XX to and customers to events store a of traffic be merchandising point is and and a our XX magazine, reason has The a improve customer changes what's takes that community a retail to customers the through visit we STORY new a weeks. like refreshed new STORY robust ago. This back will acquired refresher,

store-by-store. So, and are first solid was quarter Inc. market until and while on for overall, pleased the we consistent year. sales we and growth, track won't And the satisfied Macy's be share there comparable our will for a business-by-business performance we're taking are with we get we

Our five strategic be sales of drivers comparable will the XXXX our for initiatives growth.

expect they in lift Growth As XX Growth a are reminder, XXX similar and sales. we stores a becomes

to strong performance of on-mall and Backstage we’ll the the Backstage, through expanding in another locations are maintain doors We only off-price XX in XXXX the opened America option XXXX.

better We are off-price day. at getting every

We aggressive are vendor direct. the continuing expansion of

love the customers and expanded Our assortment. brands

We assistants with our customers shop. crossed or and strategy. brands, between. who apps mobile-first $X our interacting on or also focused Bloomingdale's We in use through billion in are it's app highly are it's to anywhere but know our the XXXX, valued home sales We whether in store Macy's in

making and In destination have categories on even underway My on contribute rest five My a Stylist. better our build above top year. market Wallet, these our sales out share. initiative we categories four is are investment experience where fifth XXXX which app We as move share; of punch And to business is we we six we're growth taking each My to for these be and strategic the businesses of already expect we the initiatives, are well able the as through on return six, and market to the our Work profitability. our three of Store, and

share Looking our the will Macy's customers and taking Bloomingdale's in and brands, continuing ahead I'm at rest that growing key on to growth, XXXX, categories, into merchandising and and are we bringing confident customers base our retaining customer market squarely of focused make new by progress. we continue comparable sales the existing

business. to on with it Paula, Before I how viewing want you thoughts do I turn our we're to leave over three

First, and grow advantage will we well-established of by our Macy's is capabilities. again taking full continue omnichannel growing to

balance line happen. are opportunistic into that we of and We a we third, weather pursuing and need strong potential we the growth. make productivity topline to sight the And we growth. improvements are bottom-line, company aggressively have profitability a grow flexibility and Second, the healthy both sheet clear a to to downturn a be about know with and

take provide we're on detail more productivity improvements Paula the through will expecting. that and you the financials Now,

and you, Jeff, good Thank morning everyone.

Jeff continue initiatives. strategic we As as make to mentioned, post to year we're the our off solid comparable a start to growing and progress on sales to significant

to Additionally, we only to managing fund by continue we've growth. our flexibility maintained and profit towards eye to financial with not shareholder, these to our but discipline improve help our an and investments, cash operational return thoughtfully business our also financial

our quarter results. to first now Turning

especially owned an regions businesses, and We fine while us strength delivered strongest performance the destination women's were Active to the Our X.X% fragrances, shoes, sales, handbags men's plus to and we our dresses, performance This and delivered of be strong tailored, established our annual and expectations we basis. an continued increase performers, comparable challenge. $X.X you the in saw strong digital gave was kids We on growth. in in also skincare. We of deliver a Midwest sales jewelry, of Northeast February. continue country in on with line February. to guidance licensed pace deliver within billion puts the

Total showed quarter, customer while international transactions our fall trend, more headwind customers our to customer. fewer tourists down improvement up reflecting demand Average a spend platinum total in Our transactions. positive multiple remained with over but in it tourism the continued as the and particularly best quarter, sales, down the international units were per in us X.X% a units from sales season. X.X% to were X.X% transaction with were buy to versus

impact performance XX.X%. quarter driven through and the Our We our XXXX. as clear X.X%, Backstage comparison elevated credit quarter average million, during the generated by performance down AUR penetration in in to efforts our first receipt card retail quarter expected loyalty Star last balances, the well the higher X.X% was to revenue continued the as from saw XX challenging $XXX be and card driven Rewards a momentum of first of up to the very by mix points strong strong a to revenues the from the basis to unit finance of up and credit quarter program. in of higher related Credit charges year

primarily was The not by margin delivery quarter down the of was last driven offset expansion. rate we higher points as expense, to year margin expected. by decline XX XX.X% gross sales, basis for Our merchandise approximately

the dollars clean on inventory in recorded we margin the future. during expense SG&A SG&A is to million an expanding the call, primarily receipts in increase $XXX rate in growth. and transition driving in basis on strategic of we clear remain quarter. other that $XX Depreciation $X.X by while a of or We last As worked and expense slightly elevated, basis expected as investment last We driven and points in quarter inventory benefited merchandise rollout spring discussed are our amortization in initiatives while our level. sales the we earnings a quarter, interest The debt the year. Backstage the this lower totaled XX comparable entered from position, year committed over to prudently our are billion million our increase

last in Our the rate was resolution resolution and in tax quarter compared plan million of $XX rate, to the billion. million the $X.XX the as tax on the in asset to remains to quarter gains was $X.XX inventory year. beneficial it first compared in and respectively. adjusted EPS last of last million it was net million $X.XX years that $X.XX between difference asset of timing year, Cash while from the which timing the The $X from are our activities increase to of versus large $XX delivered year. year. Capital of But cash for income benefited respectively. about is used $XXX contemplated reflects were operating million million part We our XXXX approximately $XX effective sale tax Adjusted of last to operating spending of rate compared quarter figures note Included activity million, tax net purchases. matters. the in certain our guidance expenditures gains million is quarter's in due income was flow flows to important in investments $XXX $XXX generated $XXX strategic The sale year. represented $XXX these this

was cash We proceeds during of our dividends quarter. the to sale with $XX $XX last our which with million in compared to the year. quarter $XXX $XXX ended of We paid were Asset million line million cash, shareholders million expectation.

gain. leverage quarter our in sheet. repayments asset target our This plan debt our the minor, will cash ratio healthy we to excess be within and were further XXXX continue debt to further to Our balance excluding to when sale use reduce in strengthen

quick Future. the me give update a Before on addressing Our our expectations let year, you Funding the for of balance

our also initiatives headwinds is sales combined that with Macy's well initiative strategic will profit when help productivity to mitigating This while in work Our cost underway. supporting growth investments. time now growth return and

defined We have roadmap rollout. for are foundation continuing broader and a to a lay the

cross-functional the we Chief we be teams of as Mullet [ph], year. are have Officer, which leadership Our of confirming Supply Chain said, multi-year Dennis in quarter, will our significant be continued progress nicely. approach our the scaling of savings, half and the floor the new back communicated to Under that our last holding discussed will

stores expect opportunities the procurement are And up second within quarter. of fully forward private sourcing, stream. supply the merchandising, marketing, We work end be and our chain, it to by other on running, and we pressing label

location-based support. We will e-commerce. markdown regardless, store's customer this on more in targeted demand, very Demand markdown saw pricing six all each zones when have now to entire to zone. we And currently by We which broad better scale. zone, opposed as to drive the these store-specific and And to business for We broader For a one positive respond out way a stores. location-based pricing optimization, piloted results markdowns price to across example, demand. of across are the roll gets a test and take store reduced store-specific response And in the to And excited optimization, us beginning stores needed are zones for varies. way. better zone allow a we're broad.

So very update that's Funding a on Future. Our quick

$X.XX. our to our are to reaffirming continue now the to we and per Turning we earnings XXXX for guidance, share, to full guidance XXXX from year, expect range $X.XX

slide all per gains, from we commentary through earnings posted to $X.XX find asset share related and the website. in our you on $X. range can but walk we've guidance Excluding presentation, here, the sale details I to our expect won't

your However, few model. as items, a I update you do you of want to remind

First, based our for to ability year. quarter our we initiatives, with on combined performance, the the are in conviction solid in the comp out our just laid first sales confident deliver guided

spring. year, sales We to continue better comparable to relatively our throughout consistent than the performance slightly be with fall performance expect the

higher to out And quarter. Second, saw for slightly be continue in And sequential we improvement expect quarter. on it our our to sell-through expect year. call, And the which results slower first third, we to to we the rate begin on than moderately gross we to down see half, down is the would of in during margin be, which play in like slight half spring is second the the second earnings the inventory stated in quarter. as we the products our last

our consistent on by which delivered And above gross levels of track expectation, guidance, we year In continue our the though, with the and consistent our fall have expect closing, below last at with be for to end margin also the we original consistent to Importantly spring season. year. with results the guidance. of season, end the is are

with to our XXXX initiatives customer. continue Our resonate

initiatives up our continue enhance contribute. flexibility enthusiasm make and excited to financial we to as beginning we'll and open to value. we are and the now, XXXX colleagues, work stronger energy it and And to by even for this And I'm business ultimately shareholder Q&A. our customer both durability. enhance of together Our

from question Matthew [Operator our Instructions] ahead Boss. take We sir. will first Thank go you. now Please

Your line is on.

if potential level. And your the the that Jeff, a prices watching rising ago, How category, today to view, lead to and path the any maybe furniture best take? you're is the we versus apparel that's that state how need higher for consumer up to on just to Great. consumer maybe U.S. in start the of here? resilient year size indicators

Good Yeah. Matt. morning

of look So where at now just right healthy. kind the I consumer still

So consumer unemployment is is confidence strong. The low. still Wages are rising.

to so not had at the you timeframe strong think that up we're I perhaps going we last passed the has and January/ checks of we year, When our as tax tailwinds healthy. rebate that terms out now look us February consumers, those the had very that. issue caught in relatively in certainly as

now year interest but in overall and healthy. categories we're economy last had that still a of the I lapping, change think our we and that spring, buoyed consumer obviously in tax lot So relief last

think a talked more the I me my news, conversation opening comments just just what color the to about about address, let add recent to tariffs. we little on

The to XX% the we're week, all first XX% three XXXX, that increase from increase XX% which tariffs in effect of XX% not going the through tranches last working was furniture that third They're those. and week. tranche tariffs in really an went touched into had the by to -- category, then even last to of

mitigate of to effect, $XXX is limit that coming and and say will where over is hard those strategies the it's included, in. and do them. is don't remains the to into to And are customer at a that strategies to into impact. apparel have a that's fourth lot billion, that affect are customer categories a there think on path if going goes tranche you you and really, gets is to that put We effect one those looking – that that reaction if that I'd to brands what math accessory a the big categories We a that. all place concern so The it have it find it’s those

the consolidating our power partners have our years China. that a an we of our been our to moving of of so, there. improve at we've negotiate Private important amount you of as sourcing, to would we business. XX% scalability We buckets. so in piece out with It's months And China still and within do two It's for Brands expect, number overall of have hard couple of done working work about at being own a for that that mix and production really our about manufacturing

really at working on we're So brand with piece potential negotiations bigger closely we're our on Brands. well our very the own very impact Private work our customers. national partners. And shared our to The is with them

affected Macy's We us come mean we too able that's to on at terms and we're up feel at going It's to be going what more operate scale. than a work are our fortunately to price in comment early partners. increases, solutions like others. So for going and brand to to potential categories we be think that of with what best

going we're obviously, weeks, [ph]. next that continue. then is be very between to China that will think these and couple a tuned will I U.S. stay They'll we're hopeful the talks be trade through the deescalate, all way of that doing productive the think actions so this I and and

then by on this just the reasonable it the or more in see your realigned light you picture holiday? receipts And a I maybe your just management about think Or And to just excess uncertainty? to how Great. are into planning inventory some sales forward follow-up, more thoughts, where concentration more And is term, into be category? light we guess, of of -- of back-to-school? do in near a larger of inventory it goal should you is

we'll What comp heavy you inventory, I'd inventory and is right some when inventory up now we owned X.X%. to our first at which content total look are our our we now the our in say in right is work mitigate versus at when look But that about. current you quarter, talk spring position,

do trying anticipates is had underneath more get up We of and inventory for than have the to that receipts inventory conversations. last earlier key total periods year in-transit Our some tariff X.X%. we

Thanks lot. a Great.

to to consistent spring. margin and add only that guidance the down I gross is this gross in thing our would moderately just be margin the Jeff So with tie Matt, to to for

in We excess we receipts. clear will quarter margin the second continue as the some see spring pressure gross to

to a we quarter. slight terms gross of improvement However, margin do from in expect see pressure sequential first the

the by our teams spring up end the to are inventory the of expect be so, and this, on working year. hard And already in and continue we to the down position

Thank That’s you. helpful.

of now will Omar Saad go on We Please Evercore. question move sir. next our from ahead, to

Your is open. line

comparisons. Store. and you've taking been you wanted mobile. for technologies, what an starting quarter, acceptance Store, to those there. It's Buy ask update Maybe it's I'd and Pickup whether more to these apps you areas usage of us in help I Thank understand, in you you against through especially to Thank significantly. Online about, see and difficult mentioned obviously Ship Are investing especially the omnichannel Nice you're you. on broader appreciate the could my question. customer seeing in efforts, mobile?

Hi, Omar.

It's moneys, you technology a towards is really method So improving the this, using. and experience, customers improving look of choice our that making want mobile mobile they the best-in-class, the our and in-store spend engage lot that spending towards. is to voted we of when at definitely on a constant so anyhow they're how anywhere companion, shopping really and spending going app navigability the mobile our of so are we're through

expense buckets really we mobile. of Stylist. three Stores it So our expenditures on My mobile up as break and technology My of kind and Wallet, My look at We

is is wow, an Wallet of question, gets store. and My of BOPS more like a becoming convenience and which up picking part your So the in customers strategy our and security BOSS omnichannel piece it of really first the potent of the much is

same our we're couple shipping or direct do a for one of purchase that So takes something from they days. in it's do that they warehouses it can in it from of if vendor can day, the BOPS a or

they have Wallet, out My in the faster. much with the of opportunity and get to store So get

point So My incentives app-exclusive in-store and function Wallet is that also Rewards My with gives helping the us awards.

stylist what fall, and sales and opportunities. now colleague of second information us sales get we improving really We're we're store really experience, piece piloting My get adding without engaging give piece in is last providing really where under quarter about right scan they the doing We're is really product the mobile Stylist if app location is will the maps. call The virtual events. technology the The personalized that which in-store that. to is the opportunity they improving pay, a on helping all recommendations. collaborate customers in can a with them chat that or and out find also gives second The to Product the them being to virtually want with providing in-store is transform influencers. via follow is with It spend the style our -- for follow ability so and the stylist for board. ability piloted

to and but So is the experience of navigability, a our customer how technology to mobile big of overall improve spend is our chunk emphasis. really

Jeff shift And of digital from e-commerce the are bit you their or of the options or business have ship seeing a some home these little new piece people to traditional it consumers? available to

Yes.

have when it's you over is Pickup right at what Buy and Buy to So now Ship Store that demand. in you XX% digital Online look all Online now Store, of

of So that we digital we ago, expect that this continue grow. about now were and over started combination a to was X.X% -- and year XX% It's talking about to it a demand. when the

Service So doors. we centers of every in At built out single Your these our one

then us. Our placement, we're customers with inventory number quickly. in getting fulfillment are way everything And loving and our our more customer that. with We logic much put one it with a out interact a for to important it's doing in They the more just and viable are entrances.

us is competitor’s our fulfillment powerful. in-store So I think and very

Thank Very much you Jeff. helpful information. very

You bet.

ahead We with Bank. Deutsche sir. question Please will our Trussell Paul take from next now go

is line open. Your

Good the morning. I ask to wanted about GrowthXXX.

upgrades much to as growth? be opportunity those Curious are staffing the driving about for of XX, doors GrowthXX, first in that with the the nice And potential that. turning and also so topline or think as out the the certainly congratulations there we the comp. rest learnings XX of as what from is the And if Thank can For lastly next terms service to then performance, doors, made you. XXX fleet? first positive changes is on

Hi Paul.

on of forth. the started at all on the very the in X.X to the three third points. They're the were this is get we saw when of XXXX, with fourth us But we these talked strong. that have we really are the was place up positive so strong us start And gave momentum the now with they first add just confidence they quarter us. quarter obviously XXXX I'll put what so XXXX been And of think and what how fleet. has points, quite stores you continued and in which giving balance I So for quarter into outpacing the another look a we based are GrowthXX were up wide They what end started comp that at at you with far XXX the trending, end of XXXX. they stores. to the investments of came They that about

as stores are So we stores, XXX represent XXX And these stores GrowthXX XXXX, behave about the to do end of by the these to expect same has. Macy's of do. the brick-and-mortar the the that brand going XX% business

going to a it's meaningful make to overall So trend. brick-and-mortar we believe difference our

The particular do in management, what really evaluating, XXX would is we that categories, at when we GrowthXXX, the colleague stores, quality Within about this expect outpace to support, looking the these now the running. the we up the get do so This capital. your into growth GrowthXX distortions, we're company better up building part of we next and second continue balance of address of stores of getting question will making is goods and tranche, which about the bigger increased XXXX. isn't they just and

XXXX. And so the part that be magnet does that of and of of in our strategy, three take all have testing the tested the We message. neighborhood in more what four that stores now. formula on is looks up remaining stores two our will are stores And growth We're in which the Those tranche eight flagship. segments we right stores working of like. both we stores the outlined

the scalable stores of stores. that expect we strategy, XXXX, for with the We call a walk to out neighborhood

comments supply chain, follow-up, quick that Maybe the color. and just then on to the elaborate the little by our see for are a initiatives. future benefits expecting pricing bit a And across initiatives. that can Thank and you you more on gave few sourcing just Thanks. year-end, you you funding,

Paul. Thanks,

so And I'll take that.

fulfillment And respect especially so logic which But supply to really logic, tools our and that, and with further, even is using. chain. more Our things into advance more we're one developing Funding with to manage the developing Future, drilling already the we're inventories, of we're that doing fulfillment

So, peak logic, before, the centers, time, the the their and best we're combination already further. by our by and season, data these And partners other full and looking experience. operate supply We're replenishment to stores, at inventory distribution we chain a getting markdown vendor said fulfillment applying high-volume amount products taking a our just and and our are to of of have we analytics. and risk that or that allocating decisions DC's, really amplified quickest at step all focused of the using at And We're use a us to on product get more centers position as in capacity. I of customers of sooner. offer the initiatives, mega holiday our for inventory customers with number cost ahead to we're the the us. and getting And lowest that

to do And more And or BOSS about the use reduce do DCs? flow all so we consolidating across, the use stores, shipping how those we we're shipments of on we talked cost. stores even and How last We're call. to looking our smartly? locations, or hold

under a the work about sub-initiatives talk each So, when streams. stream. we There lot different are of work

are Future as to about potential significant. the specifics target to back the teams for to excited really be the five program our years. more come expect And work. I've three busily And the this on said as as do this Funding well of with before, program. at we're We target So, you Our we'll

and grow think profitability. to Our really business, Future, improve should you expand importantly fuel to about to so as share, Funding take customer our market the franchise, And and to the

best you, Thank luck. of

Thank you.

Stanley. ahead. question Morgan Please go to Greenberger We will of move from now Kimberly our next

is open. line Your

Hi growth. And of you've you. help us Jeff, your think profit line path I here are in can, got wondering the morning. mentioned great. profit to you QX. we today? sight Thank you commentary, last Good Where we where or into at that growth year sort I'm from see didn't if understand get of

to growth? So what's key event the in What you gets path ingredients? the that profit are

moving. line getting that -- so that consistent is, we've the growth about first growth comp store is stage Kimberly the So top store talked what comp so of

that that is gap were market end we're about points at really piece XXXX. We overall focused we two to We that down on share and market of the XXXX. we're narrowed points with the share doing X.X the to narrowing second had. what The in market

QX. it expect narrow to in We further

healthy is really a franchise. The customer third having

initiative the ago XX more through quarter loyalty Right new about have portion really program. XX. had us, in we tier. us. and of strategies loyalty in are of males taking that over the with a bronze right we customer. a the been a customers the year They of with our of ago, a year tier million spending now. neutral added a under we when the a that having franchise program play acquisition tender They're with core half bronze So, put now and we're with and We've that both now healthy We adding a very basically care love

right That delving now. really opportunity, got growing. And -- XX into really under there. our that It's we're so good and females so share we've is under is

a you'll to and have We early XX-year-old, need as handbags, to the hear her categories this like certain leverage that. store We're more XX on segment, strength and do earned fragrances We to categories department on us the but so in more that. into we really store. our focused about drive dresses career

focus the profit franchise, last a on growth. growth ours. getting is really So customer point getting right that And the is real of then

only line. really line, all that. our stage So fourth that's also what on the top been Funding the but has Our fuel about to bottom Future That's not

is of see we loyalty that increased result that merchandise headwinds to delivery our elements the and as with cover grow a of the the ability of some customers have shipping offer of to programs. free expenses, expand really margin we that one we the gross margin So that

Our how fuel to really Future the for at Paula's to what end we're get ultimately outline see to we all the of is going Funding that. growth and to And So exactly aspects. to that be we us window point should of the five-year back expect to do in earlier to you that's for you what three-year exactly going these use us year like profitability the when looks

the flat coming looks basis super trying at sales than first your quarter? plus looks growth on bigger be Thank of just a just to XXX if comp year a timing and spread guidance year. here spread to understand total but catch-up if I guidance spread It look there the future total the the growth, approximately the and is the really for total flat quarter there's then it perhaps to the difference points, you. the caused the your in I'm guidance at And helpful. between with about for Paula, comp a implied in one. maybe owned was like QX to I in That's revenue revenue in the wanted that comp, follow-up like

closings plus in XXXX. sales. to to go total the the Kimberly licensed the our course between sales, driver to XXXX the comp also new Bloomingdale's And of And comp sales sales as positive that at store That start sales as sales closed do in we of narrow and about opening we continue is expect gap impacts stores biggest expect but the not fall. stores of as And XXXX. And reminder, flat the So and of year. total will comparable spread our be XX both in larger-than-normal one XXXX a owned we then and at through stores, our the to we highlighted beginning a new you our to four stores just be flat. be and total

Thank you. helpful. Very

Haskett. ahead. Please next question go Gordon of We Grom will Chuck now from our take

Your line is open.

guys is a Backstage scale? guess Parke business? in for given talk versus And I then morning. for about source actually Can of the of does high A Backstage the its the quarter? little Good evolution the the bit growing at the the merch of you level, look margin Chuck. on This rest John about how performance

is saw Backstage in track in So we everything and on that well with performing and performing we're it's how years XXXX. previous

piece XX% it of buildings, our the lifts and the that. about one customer. look about buying about exciting our Backstage for the you across both our is XX% was have any time our third stores And at What's brought into of not really last continues. quarter by and when as comp when five look second their for are XXX year you in It's in the points. mentioned when that comp Backstage -- add up we Backstage you we the XXXX. it of just performance meaningful issue episodic So opened have call, on About the do it store of we a one-year or customers We -- a and full that store of other was the in the momentum the that at in are goes that in fourth that the cross-sell up headline we they purchases areas opportunity. that that

so it's of pretty being are noticeable a flagships, benefit across that the and our that having we're So that XXXX, of to all are gave effect stores comps excited more indiscriminate about and Backstage really nine There's just added Backstage the about that but the from and comp XX store. are the happening of add with profile. added entire far is that magnets, when what's so neighborhoods seeing the we see driving how is Backstage. We've stores the us the that stores it are store confidence of very comps types on

So we're going. keep it going to

your The other part question, Backstage. have we of

to up the third have and be running going that We quarter. is warehouse in the

our dedicated Ohio is just the first going to logistics warehouse. help of It's this. be Backstage to in this with that's going So us

early meaningful become day. day. get still learning day better every innings of of a we're We in more every the to our success We're piece it it Backstage. and every So continues at

business I balance then selling little Easter, performance And events guess switching can Day the Family about and key gears you more bit, quarter? bit recently Mother's the Great. of like talk little a the then of Friends our overall during a and versus

Yes.

cadence good that Day, our So days We way so working always for expect in is comfortable really say the a last -- but we expectation we promo the we're are do a quarter. did do in with at XXXX, be and promo we in calendar in make shape that our look met. has on that promotional at Mother's what to more all the with those that we clean how Family, the calendar first performed I them very I'd comparable been we year. Friends on to got how and we've in, lot season the did that days what relevant up we're how I'm at in XXXX. line We're looking and

Great. of luck. Thanks. Best

Please ahead. question Chen go We go will now and Company. next to Oliver from of Cowen

is line open. Your

how lifetime repeat your this of at value with customer your intersect value. the A loyalty about the well really analysis? of and are in well as doing acquisition drive data as having relative loyalty looking and you. program what collection that about thank been as to right and key learnings new Hi, we're customer metric is to retention kind What then lot may cost thoughts using you've of now lifetime as personalization thinking customer and and existing

Oliver. with start this I'll one So

to well. loyalty very Star Our continues perform Rewards program

of Our us us. and we customer can great simplicity offer more the the love that with really them. They're Platinum responses the to spending shopping frequently. we Platinum are exclusive value more customers with new had They programs, experiences and

spending a million sales XX% $X then our And platinum for XX%. getting customers about have about goal of so, And of behavior make XXXX, and we to their up up is customers and customers, the in And just would bronze that double had number quarter. have of the the tender-neutral that's under we we're first end about a at Bronze about XXXX. million

us Star very how and we're helping our customer pleased drive loyalty So with value. program, Rewards it's to

on frequently Oliver, ever I'd in of you’ve almost lot other a got customers that her. transaction quarter, offering that The based than experiences the the values that and the we're is count is point shopping was seeing in what the thing up these so And X%. that are out first more that we're

on So proxy at see or she's our We spend. We the us. our about think through look feeling continue. We the into look we brands surveys app, in how that. for often is how expect coming she's at good just site. store to that the that transaction from our count her a through that We

as more Okay. women's is apparel. Thanks. has whole and young follow-up as about as Z, And been Generation thinking category well millennials difficult women's and just a a a

Yeah.

difficult, would our in you really a of the discussion their have and because need how And you there? happen that customer re-orientate around assortments to for long-term? It’s and needs think lot the patterns younger your be view. ensuring the the habits you shopping different do to been What

Yeah.

So I with agree you.

that under where are some And and loves areas we the biggest the opportunities. Macy's Bloomingdale's female is as brand. customer of -- one the XX so have that There our

share we So when at dresses, growing that those three two you get high same look our at look at where handbags, those you you look places fragrances, type. share, with when and all were are when of customer

brands. -- what private at very that and an in opportunity she closely brand recognize our to with is We're there working spaces that Does for what own in department looking XXXX. be this segment going we our environment with environment very to Our basically there creating shop need uniquely our well does testing brands. based as our partners customers to as in what working us? we to is closely to also want we're our do on a We're customer? sportswear, so and with the need hers she's stores those area ways traditional is through So be Are store? telling we're

it's we do customer. we in what content, with environment, personalization, that terms attractive we’ve like what it's it's marketing, very we do values, created experiences do of that this it's story with what So to are

and to all from until we with angles, have it not be it. opportunity hit to trying better satisfied are we're we're a with doing here we’ve we because big share So recognize going

Thank regards. you. Best

Oliver. Thanks,

next from ahead. Guggenheim our Securities. to move of now We’ll question Bob Drbul Please go

is open. line Your

morning. that just performing brands. wondering brand versus into I Thanks. a weather had if give could the well? give how maybe us weather insight how as like you national around felt little us just wondering could I Hi. monthly private you Good also you -- your was if And of business portfolio flows thoughts impacted was and some bit is the your you

Yeah.

that had goods. your of sales. cold and There between – sales, on don't weather goods we in really that start think me and is second our the question, warm were weather it's that the Let bifurcation with part an impact and weather

that the weather goods not cold, last up year, for they inventories. weather made weather did warm because the yeah, but sell-throughs cold was as with So, we sell our of

overall our inventory I that very of think composite – is did the but change. sales, I our limited say, business, So would the impact

with So we And in elevated as in talked that unseasonable of part we wasn't our helpful receipts the fourth quarter, weather, exiting were spring the quarter. had that clearing the inventories that. fourth about

thought in through. at So gross Paula think as in inventory margin. we positive exactly that he we've quarter said, our we got well we working would so where as look X.X% we're when this and inventory are of you some But guidance comp our weather be that, locations, as spring margin second at anticipates end

we're So we we're weather and think but in, now going came we heavy season. fall to into where working right we're spring that in be and goods where through based need be prudently, on we to going

private versus brands brands? national And

yeah, offering and continues have. be so brands continues to strong continue portfolio in tandem. both be to Margins they're strong that So our we overall the complement and working to private together

Great. very much. Thank you

move now Bank We of America. go Hutchinson Please to Lorraine question ahead. from of our next will

Your open. line is

also Thanks. the delivery to margin was comment on Paula, expenses for hoping your as just in progresses. in the for like drop you margin. was quarter? sounds outlook a the Good morning. performance merchandise reason expense first big the hear delivery I It year could

Yeah.

for So first gross of that we margin the all, let achieve track guidance me year. our are comment on just to

And on merchandise call, by expectations. as delivery not again, That's down. expansion. to For offset the our was that the higher margin quarter, line in being we were basis primarily said due expenses XX points with I

So context give on you this. me look at how let some we

how one fully is we sight expansion, and delivery the line drivers which we do XXXX of in a margin So, through offset expense, to merchandise delivery get the the offset there. back of headwind of effective most of have

we'll to three as have Funding merchandise plans talked the significant And we said, and our next of optimization, will I've times, markdown a improve our like Our about to to and the will back so targets few from that margin. Future be to specific for as all localized come a Future, of updates expect we with our flow, discussed I Our Funding initiatives you these hold fulfillment And logic, five years. few which earlier,

mitigate in and we headwind, important ultimately, to strategic we grow key our be time. we how that's to So initiatives our invest how how profit going in this

was merchandise quarter expenses? so first in to And higher addition delivery margin in the down

the the in have customer was merchandise delivery shipping. degradation digital on of was business gets margin flat based margin program quarter No, first line, expense where great robust free gross increased the loyalty the the we the so that and

we increase. we to delivery been the have fully includes would not that merchandise the excess margin incur, it would've expansion similar those the clear margin, we receipts. we in XXXX, merchandise had It the saw that had when markdowns said spring trend then to expense transition offsets, And higher, markdowns the

Thank you.

We next to move Dana on Telsey from of will Please Group. question Advisory our go now ahead. Telsey

Your line is open.

line help top a margin the is Direct the are the you. if in business you or trends, seeing How think improvement the Is and you additional about with progressing you Thank about margin being SKUs see are How how to Nice Hi. on added. productivity hindrance? there? thinking Vendor And e-com it? business? that margin

Dana. Hi,

So,..

Hi.

on headline only Direct upside. this Vendor has …the

the sales. on searches. It adds increases margin box. Because And site. at adds much it. we main when it whatever have. accretive the have look The the the So, Direct pretty to addresses in expenses, failed It It increases Macy's. you basically category is -- overall, consideration you really any has don't our traffic profit. to SG&A of profit that rate Vendor of it's our customer It

the it's of it QX, from if very capital, And the case. at see increasing sales, incremental no So, penetration But our Direct. margins high because similar. we to incremental, content was add But in it. online as more for came are we it minimal ROIC about makes more home investment, of a those inventory very XX% the Vendor and that

you And know Dana … then as

And then…

am ahead. go sorry, I

go on. Okay. No, you

Yeah.

business as omnichannel know, in So, manage way. an you we our

store. offer is in we an online. of one retailer, store then pick the our So, our it can in things can order more buy They as omnichannel their And customers can when as an example up they they're goods.

e-commerce think overall omnichannel about our an business experience. that our business. enhances as And So, we overall,

the with encompassed headwinds, think as I just line such is earlier have we to e-commerce our expenses initiatives. business of and those, the a do that to sight, we're Future we mentioned delivery Funding when how to about of some within as Our respect so, going that. mitigate And

it you additional of And Okay. what And STORY. stores? to then makes early Thank in terms any you. reads expand

think Yeah what STORY. four expected. well terms is goals, with STORY we performing really I really have in We

customers was one we've of very, on to and brand. that received. very you we're strongly really hits bring about we've look the when how first And into got, the what means. The new at media the I this of the amount And, out message it STORY mean going amount thing gotten is exposures

a customers new we've the of got So that coming are lot building. in

want to would we -- piece how the second repeat customers. was see also existing visits We from

to products I XX where effort so and is making sure customers all-store XX weeks. making going got we STORY know you've new all think, every the experiences in changes to And in they the in, it. sure the discussed as building, experience and It's

narrative of the that, think kind a is paradigm, partnerships. being people benefit that to is this our partnerships. new new opening third department new the about as open Macy's And So is, door us breaking where to traditional ideas, of store

partners to the exciting have conversations from that changing. portal I'd from a that the and I just calls is in start. people stores And more a the space giving coming is these we important of STORY fashion into getting it's just has been of past. location thing we're kind it's say an terms And mug a interest to so, us And STORY new rib prime brand it's mean, door last wouldn't we're is of in nice the for it's -- had to our nice retailer about in and that really and That's new opportunity us moving. isn’t keep fun. and like our

of response So early where customer pleased yeah, in will question going we're mean, days was so the I And Dana, this, to evaluate. your we're really far. we the with but

states We us. doors XX important now, very stores XX right for have in it

going to XX We the beyond where yet and when expand we're stores, it in. haven't currently it's the decision made about

you. Thank

now will ahead. Please question Michael of Credit Binetti our next from to go move We Suisse.

Your line is open.

And guys. in it the think the mean, going forward a the item composition were this Backstage that I UPT? store think is as the about Hey, much – in different or and of for so just started same me moving growth I wasn't together business a the in would to order reminded morning. barrier, all if that that you to why few information quarter that to I bundle, to the a at do lower and fourth Can ways, incentive then as highlighting lower us higher time. this I you at per if Backstage comp forward transaction I you higher till intuitive, lower loyalty leverage of drivers transaction touched bundle do points change does section a but customer it expect be going persist? the When guess to the all one the lower on changes be we is shipping You’ve and makes sense Thanks the sales? transactions the up that is look on units that and big get a you price lower $XX with think ask free but I AUR away moving units mix. just the some for goes they so to intuitive this will be initially $XX in they that point

transactions in a let there's the three of quarter there, per retail comp. but together me of drive So say just business. to worked together and transaction these at the units assess all to look I unit sales the first average lot that dynamics positive And

of call, decrease of earlier reflects stores. in quite I that terms the seeing strong particularly that that then strong from positive X.X%, half were on our performance quarter was the unit in And our and reflects within as customer customers. the Backstage average trend first of Macy's X.X% up the transactions retail best our demand mentioned really that in and we're down continuing quarter So

versus XXX them, last them We are year. of XXX new but have of

per we're to significantly as to are compare lower units sort the iterate that against are continuing were transactions, as units will be, buying in-store And by about down our our the those receipts again, because seeing. comp, also test a was strong performance well shipping multiple AUR these And so question a very and terms Platinum to And few thresholds AUR to impacted your dynamics that's transaction, tough last then over clear but excess AUR. of helping average year. but spring work mostly our of customers what that's but spend we X.X%, continue free more, and the in at

If thanks you see the current for that. –

dynamics more the you obviously AUR, thought the come from is If change very leverage on does comp growth or going are you historically the current see that's – quarter? of If the how comps I transaction about does growth point to be every does how guess, continue to hold lower transactions built that positive. that that a if

like year are of into sales the will is you say our growth an you at positive this XXXX leverage a year Well, of us. the fact biggest terms I looking are be investment our for should that the sales consideration would in is as one you're so XXXX of in invest things as that leverage. comp we investment that you and that -- looking take comp to as our continue growing have initiatives at to consider

slower see see about the change just way us tougher, help year. just quite may we assuming any of Got run growth what be thought there's year the year, Is you a how because one comparisons no through through in change first you on it. the you. so And you quarter that we'd the was add me, tell it but it the credit year? above the get of Thank -- the think bit if revenue or outlook rest credit I'm could to I a rate for mentioned for to

Sure.

credit balances. driven is broadly and sales an its by with Our our by increase continuing bolstered been new revenue as strong accounts has in in in expectations quarter and well strong line the program loyalty Star Rewards our performance credit as

the so the prudent overall in continue and year as early year quite maintaining want guidance. it be to guidance we our to And in our we're for is

Okay. lot Thanks for a the help.

move We from will ahead. question now Paul on next our go Please of to Lejuez Citi.

Your line is open.

the Backstage. stores that to the consider one that have Hey, much don't and have there does how I all thanks get part the the point, that GrowthXXX And year of that number curious of forward we like? the between of overlap which in not might Thanks. two stores second we is end a guys. is I'm guess included fast and or of part that programs? of those look those either Backstage from stores the GrowthXXX, the what And

Hi Paul.

So balanced at well you it's really it. and interesting look when

stores that really had it have well I look stores we that flagships, with to our XXXX, rollout, started getting and one Backstage really more you Backstage it an it locations. the opportunity, weighted look look, in the at of balanced those the into stores. productivity you split -- neighborhood there We we magnet focused opportunity Macy's we to XXX we play if initially be So did every at We get to on we so may into said when initial when across neighborhoods. think really most the magnets then stores. was the how And

When we in a be segments control. of so that. all you different the tell we're three really being one I scenarios What looking that are of segmentations store the is touched one every in these at is by stores XXXX, that can in the trend add every great improving for And XX of headline added will is versus that. the its

So customers are those Backstage the far neighborhood the to market that and And have also improving get trends stores those stores stores. doing are flagship thing that got the with better in the used the and understand it, stores it, don't magnets than Backstage with same the to that and thing longer passed same it them.

you. Got

on the half plan program, this for direct direct? vendor think year. I in doubled half of last second being year you the the second vendor the On the last year of SKUs What's

at were go vendor million had the that I the XXXX. -- what was said XXXX versus and fourth another -- XXXX the going plan we that So one in part to going think vendors we of into reach to we we of end also were to SKUs program we the to direct that add we XXX in quarter as

added on in. vendors, quarter, SKUs, we brands new we're you the XXX,XXX look When So to sites at we added first we track. the XXX added

to So of we were going said end at the with we what quarter. are the do on fourth track we

What one percentage do terms? represent SKUs in million those

-- be XXXX I what has end at so we increase. That a would top it's million believe sizable is of on X.X the it's

Good luck. Got you. Thanks.

You bet. Thanks.

Walvis now from question Goldman will line Please Sachs. ahead, open. go final We is Alexandra of your take our

us question said question. well destination those believe if so share. I the well are Jeff wonder bit of on the I a working you what's two classifications are you and businesses I in there less you prepared little you businesses about for talked working four could taking the about Thanks of much which know Great. that in where have let perhaps share? destination the your remarks, were them taking taking a performing and

are six -- first really of we what I'd customer what that. So, that shoes, that so not between coming to opportunities off dresses the that's a strength with we a terms of say personalization, these have opportunities is make going for direct targeting, if leveraging that real from do the she they opportunity being So, to is and she's that us we sure the are commonality in us? okay see businesses, and that department buying there's hears store, to

taking very, of within these portfolio. the So, advantage businesses being strong very Macy's

within we rate all three doing and better at when what are we're and they what goods, with colleagues, our creating in their plan we increased management. double look in the with vendor almost the what great top all to So, with environment, XX% of these represent them have you that are balance getting them. so strength we're that's AURs -- market a they what values with -- them or our our own, partners increase have of have planned putting of strength sales six businesses And with also these of that we're doing moving the behind store, doing share and total, we're businesses we're and content,

be not look share market you -- share market if not at gaining you an holding fragrances, the of really We're and from in in can when ones maintaining we're ceding look but in beauty, two. We're that when but market trend is which share So, numbers we're skincare, the gaining see overall beauty not overall at will one color. beauty. you our we're our own --

right very So, that on now. focused we're

others are quite The doing well.

with store leverage more get something a of site. this. categories Macy's onto consider to parts fully once get into do and or It's do place how we how we them are the that other sharpen customers So, and these them

as the that does the said business contemplated your you for much within then of headwind margins? predominately affect more gross business. three impact furniture piece for on all now color just on guide? you. tariffs. upfront last of the that And And And you Thank Thanks on of tariffs how business? the perhaps tariffs, one question How that's the Great. a the the creating to is of the much firm can

quote don't would team we what of going tranches is is -- XX% exposure we I our tranche that affected by but is is. the say So, mitigating XX%, of to from that which business percent whatever third the what tariffs,

That's relatively specifically? to be through the to able a is small piece comprehends across effect we're our it the that. but of entire company. going working mitigate the So, business. our it furniture is What through how We're overall guidance working that in

So, through fully is guidance goes if to working the what it's fourth the be that implications it by really we're summer. in would the comprehended and tranche the the not big end XX% point is of

very Thanks much.

Thank you.

Please ahead, go question open. line UBS. We Sole will Jay now final is of your from take our

wanted at on you how partners? tariffs of about Thank much. sharing Great. bit branded think us just Jeff, comments a level the you with talk retailers Can to maybe more little in I ask about about so the are to tariffs. general high you you maybe just would burden a your

to are apparel increased mean, absorbing partners had the on the work of and or wholesale command that -- think some a higher when and the in and those on we a your that a retailer through that we is content that happened absolutely what demand had and Yeah. you cases happened. I a about about got you're as stay going and where prices to you've partner closely up return ticket there either are there I can changed certain we going commodities some model that with that you're price brand staple brands very not our costs. at when think combination as There

our So before. our we're working private this been work to come big we with, of through obviously, do of still through have This own so to national own through do categories, is, but different brands through obviously, many We've partners. sourcing, this work our across all amount out also that China of right because that the now. imports

having So with retail they of other partners, lots we've have been with partners. conversations our their

We sustain we if we're through of going that don't into? increase burden that believe to to believe hold it prices now we we at to can we're don't through areas haven't what play go we then do worked but be? yet we right that an going can conversation where’s what going what we work What this does increase, think and side are can does categories the sustain because when an do,

it. Got

to How a that in store, impacted situation have everything by China? the that import the in a goods because you could you on of has from The cotton are be other is, floor be goods of obviously, the have lot won't. do goods How tariff question I increase. new would won't a if will anticipate between probably on floor from lot from a that's where lot the that price interplay will of goods versus China a but China there's they cotton --

that a system that. the statement goods new Yeah, the in dealing so when stay come in Obviously we’re be also different the still similar issue now, compression brand on and in. may in tuned the came goods those right the time same with it's that are that

same and brands and the going in compression consumer that it. is at looking the across we’re So, how brand to see

working partners. the through brand that's all teams our our with right part of So are that calculation now

it. Got

so you Thank Okay. much.

bet. You

Thank you, everyone. right. All

Thanks everybody.

this gentlemen, concludes for call. and Ladies participation. Thank today's conference you your

now disconnect. may You