Macy's (M) 17 Nov 222022 Q3 Earnings call transcript

Good day, and welcome to Macy's Inc Q3 2022 Earnings Call. Today's call is being recorded. At this time, I will now turn the call over to Pam Quintiliano. Please go ahead, ma'am.

Thank you, operator. thanks results. us and third discuss everyone, XXXX quarter morning, for to joining our Good on call CFO. me CEO; With the and Chairman Gennette, Adrian and our Mitchell, our today are Jeff they'll Jeff have time your and questions. which prepared that for Adrian we'll share remarks provide after

questions time press their of release presentation this a one the from please ask constraints, has participants Along macysinc.com. slide on website, section we earlier our in Given single-part the been Q&A, question. the that limit to our Investors posted with morning,

information Act the differ materially subject could assumptions best to Securities results in of Private performance uncertainties addition presentation this actual pandemic. detailed harbor note to benchmark the cause of Litigation expectations from A comparisons risks XXXX. and mentioned In of to and from statements in that prepared are forward-looking These today. the will the includes that Reform subject mind impacts our Commission. of are the supplementary from versus speak Also filings be Comparisons providing these to is to discussing of uncertainties and to given financial our measures. contained In non-GAAP our certain Keep results your morning Exchange remarks, data in XXXX. that forward-looking the safe Macy's. you discussion noted we'll XXXX to the statements unless the otherwise all to assist operations, provisions and we are Securities that be our factors analysis appropriate with provided where will

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

website after be X is on website. for Finally, the X our as that, will our to With is this turn A call hours replay of webcast available I will Jeff. being conclusion on and over call reminder, year. archived call a approximately the today's

Inc. at an today. and Pam. you Thanks, us time Good for thank exciting joining Macy's, It's morning, everyone,

geared morning, February product, are top for third our in working. further season, first XXXX earlier holiday solid this where teams compelling of results. bottom inventory and Our are execution strong disciplined Results and and our introduced strategy, shared results Polaris up proof that we is controls peak line the quarter drove

started, than organization. Before single that brands. confident are has one and value I like to our our their am to thank I ever getting serving would categories, channels, contributed our Every colleagues success. and occasions across our needs customer entire better of to unique base them, Thanks we

see the Our products, colleagues we across diversity country. and customers the mirror

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to Relative end luggage post-pandemic for continue billion to our tailored popular sportswear, declined call, X% rather X.X% were Customers sales rose declined X% brick-and-mortar than to These a quarter and casual digital and contributed provided home, and including $X.X to product, more guidance to dresses active, XXXX. sleepwear Third occasion-based that towards soft our declined X.X% and quarter net at sales last experiences, as declining to in-person high brick-and-mortar sales relative shopping second sportswear, rising on to and of heavily sales factors XXXX, career the categories searching pandemic skew such year. digital return year of outperformance the year. last XX%. to purchases. we're in of sales X% Digital last

strive in-person experience traffic quarter, softened, our omnichannel consistent, customer online, the transactions. makes journey. but Regardless conversion their digital a the occurring throughout still remained provide suggesting has best a there discovery is to purchase, been relatively shift ultimately of During that we Macy's while in where

in us. a to however authentically making the more per Macy's average active existing online introduction and and are our personalization basis. app choose XX-month XX% refinement app platforms, to Compared shopping, active users communicate where our spend on the live well customer, with including as shop investments of they and transaction mobile digital year. ongoing serve and per their an lifestyle That trailing whenever we of includes registered as customers to We needs rise

Turning to comps.

and and comp X% of file sales sales X.X% posted growth customer its XX-month continued comparable nameplates, sales by XX% trailing X.X%. basis, and while saw active XX%. Bluemercury owned-plus-licensed Our its on active outperform. Bluemercury file growth customer to declined Bloomingdale's comp Luxury expanded Bloomingdale's by a grew

year. achieved EPS basis, better selectively the XX% Throughout long-term X% AUR executive the well by valuable of inventories declined of well customer, owned-plus-licensed of When realized stages a and see quarter, Macy's significant Star to our our with price, tickets, full above count responded grew different XXXX X expected, $X.XX, promotions Rewards points our markdown last XX-month combined and we End-of-quarter trailing comparable owned-plus-licensed quarter On active than adjusted of And sales we to Macy's higher guidance. customer base, rising in opportunity represented mix XX% we is most gains. were revolution, and than customer which our our both of growth a sales, XXXX. for nameplates. active Although our customer X%. X% down to items. higher comp

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to these and role and to off-mall line stores are of operate XXX,XXX continue customer by Macy's and were to in-person our full-line new Market refining by celebrates by is that omnichannel way of feet ecosystem. compared immersive than roughly plays XX,XXX Macy's in customers. average trade Another experience. full that our staying a stores, market of we areas curated which February feet of XX,XXX close by offer experience introduced respective These in a discovery our outpace Market to are shopping convenience. our our and we Macy's, we square XXXX, rates Macy's. highly shopping Today, higher generally conversion square their Market acquisition X locations unique

the customers ongoing speaks the All as we individual for a As it we of no digital to taken presence, where of a focus Media together areas a predecessor. multigenerational new where we fashion private our are physical have a helping reimagination looking are than inspires Market Own the Style as testament is Louis, a Macy's the a week and brands, X/X their is in with last to away empowers, size and good these Missouri, replacement. which of can Network of arbiter opened sense Your no at our reclaiming and store mall-based that brand Macy's potential footprint, makes and others by strong product like influencer its our plus unique less evaluate example keep but full-line by our and of Market and preferences. Macy's mile platform Macy's A locations, us longer voice American initiatives to act connect and St.

the relevant so pop-up collections, our rich the top such with luxury with unparalleled way and We exclusive are emphasis with Ralph That to generation Dior as past that designers. honors next events relationships XXXth along creating. our both speak designers of Jimmy players, Macy's customers also authentic well with events anniversary by Lauren, to celebrating where collaborations brands a as remaining on are and at and our as established and bridging shops in our we our focused applies are heritage. on future an of Bloomingdale's, with series doing Choo with The

serves to our registered we full-line of fourth Old replacement our growth. the Orchard it continued comparable square Momentum at Bluemercury, Following X quarter of the location. are are XX,XXX our comp Today, nameplate. our format, we second Bloomingdale's at quarters land Chicago smaller the excited Bloomie's, owned-plus-licensed At in off-mall growth, opportunity about we as of the consecutive a square build sales area, Bloomie's. where has nameplate, and other feet, expansion XXX,XXX sales also foot luxury of opening

relationship X entrepreneurial Another million close to way commitment advance which and are communities November The colleagues address launch gaps of with S.P.U.R of funding all we Pathways program early is momentous minority-owned underrepresented growth, our multifaceted also and that provide plant. proud a we're maintaining barriers S.P.U.R -- to communities owned ongoing a will the and close purpose, designed our with among capital. of our businesses. wealth diverse evolution social Pathways and Pathways multiyear, represents up in is S.P.U.R to businesses. is people, customers, to $XXX an mission program systemic everyone ultimately of and

middle to that over an the our most warm were of current in which insight was quarter. sales, to markets the continued November, unseasonably affected. into turning like around slowdown the fourth would into trends the were and unexpected it there October, Before thinking recent In provide Adrian, I

sales Over the week, has past performance improved. our

and are holiday an they make to now about early before a of was Black the family extra as are higher support holidays it to think day, planned. budget is savings. closer drivers which impact forward of about This When They pull around taking impact and and to a are holiday nondiscretionary well-documented evaluating peaks expect there tighter and parties the trends With consumer hearing the to are will between especially spending, with year, sustainability feeling patterns until is and that anticipated X are too the beginning Trips XXXX Christmas. deplete to Christmas. mind, actions on shopping inventory. Saturday to they under last outdooring Friday, Thanksgiving weeks allocate to to we are we waiting consumers that happening. of demand how is consumption. constraints. The be our much was appropriate glut be booked, purchases, inflation We items a gatherings believe will their and will but are Cyber similar holiday and inventory there in categories. tell is we Week flushed recent on of We year, the cash. the a believe

and are in sales cognizant that We the Pressure assumes end our and The but confident vacuum. outlook sales early recent the The not and on our timing composition of the low November our amount throughout flows in promotional with XXXX holiday. persists inventory, holiday for and plan trends do marketing, assumes of and the late January. that and intensifies be trends reflects our operate consistent a end we continue. October will high competitive consumer landscape into adjustments operating to patterns of

our disciplines, this As and of health we are period along leadership operational with uncertainty, navigate financial advantages. key our experienced team

positioned the and agile and well flexible, for fourth quarter are XXXX. We

Here's why.

is inventory Our great in shape.

of taking with as we UGG, not percentage higher for allow overstocks. points brands in Ralph nameplates, Inc. brands Across that and with as can Jordan, and from includes magic holiday holiday, price additions, newness customers' and we Face including exclusive saddled chase Pandora. vendor and and With than lifestyle last-minute if in have promotions such have to a fragrances stance strength category everyone, variety Dior that Kylie materialize. and and cautious are will of strong North demand flexible unknowns. cater to given Nest at our the The This mix warrant into Friends pandemic are established in our XXXX, that believe on model XX% needs Armani, and participate have products the We cosmetics licensed Cosmetics, as We XX to and relationships outlook roughly of shoppers receipts older Macy's, points Lauren, appropriate we well it brand brands, our we a quickly and private areas an myriad of not of does newer Candle, pricing markdowns adjust

several relies our have third With an of deliver. pass the for that enthusiasm customer for details it deeper know that, I'll Adrian for temper experience, and the look does years, into us our on the not holiday However, year. holiday. for exceptional We the past we on as and to over remainder we'll a quarter

long-term in focus debt pay series and initial to creation my was down a At the billion fixed Jeff, call. talented health the strategy capitalize has return invest our Beginning while of XXXX, since our within focus I the to my and the first changing innovation and morning, our of opportunities also earnings actions good that years I been that financial to we excellence, our paramount. to the all Inc., I took brand, reasons capacity is our August and It of two health Thanks, to returning in Polaris sales interest Protecting and on financial a joined and over teams growth three profitable capital $X.X time, on team our consumer landscape. in our everyone. debt to Macy's spoke rate dedicated ladder shared additional operational shareholders. aggressive maturities. designed

ratio Disciplined control our amount the the demand the of allocation of cash the The signs well more all as As benefiting and foundation maturity attractive return available also the we governance made for in the have are and buying inventory into as including Effectively to to health now capabilities customer at flexibility to have shareholders. priority. to decisions from us it forecasting well pricing now are around inventory to margin what of continued investments from as our top leverage are imperative future. to data analytics gives every debt consumers schedule. a omnichannel profile is improved touch and aspects result, This inventory we impacts our in have both and invest point. vastly of our strengthening and business, we a laid managing liquidity inventory

decisions We a make enterprise. also have our pivotal disciplined entire across approach to quickly

Now of the let before quarter creation and remainder discussing the results our third me the value for walk year. through X outlook our levers

sales quarter, generated We decline year. versus on of X.X% sales. omnichannel an net basis is billion owned-plus-licensed X.X%. during Compared decreased prior First in the $X.X by a the

accounting XX% quarter, Macy's grew third about markets comparable XX% brand year-over-year, owned-plus-license. of the sales for omnichannel During

We have we'll store aggressive asset about been prioritize monetization. our base, to continue and rightsizing

importance the best ecosystem. continue build However, the as we we of particularly out see to omnichannel locations malls within our main

than to closures with delay full-line our closure store the of base less We year. January, our expect we announce that consistent to XX in decision store communicated last

creation second value margin. lever The is gross

to margin and in For and the decline moving casual including basis home year our prior margin, promotional seasonal gross period gross XXX warmer apparel from expectations. XXX goods. Macy's, at better soft the reflecting categories and basis The point margin quarter, decline was an markdowns clearance XX.X%, driven down was by merchandise sell increase a points in rate weather lower than

including promotions pricing pricing, location-level to Our the signs, effectiveness and of incremental benefit improve for margin Macy's, continue Inc. drive

a to the for learning the and in pricing pricing prices of driving in third cost own costs and mix mid-innings were quarter reductions work of Higher year. Partially in a at penetration are Inc. offsetting ticket and sales, machine We will more than for percentage expense Delivery last refine additional for offset X.X% competitive AUR in scale. digital greater and our of accounted per more continuing category in the delivery sophisticated relatively are prime automation markdowns tools invest that allow favorable roughly package. X shifts, impact higher improvement consistent fuel with and X% Macy's, net

smarter to service to demand demand. We is continue best about how where that get and

assets, regions to existing increase shipments, this advantage fulfillment As holiday speed, better markets mini-DC. X which serve season. will part in delivery the space square semi-automated utilize inventory relatively totaling to mini-DC low-cost network. we efforts productivity They and XX physical split and allow of and our These million an nearly as to are us our improved complements of stores continued converted our costs to reduce feet shipping be specific in have

appropriate also remaining our investments The and both greater simplifying upstream activities have making We modernizing cost all our to processes customers supply and the further technology technology keepers we're in fulfillment stores. efficiencies. made and to streamline to enhancing faster on product our while in focus driving supply our chain, downstream, chain process investments move our our

is better third X% 'XX. to and which expectations increased our than Inventory year-over-year, creation compared inventory down XX% value was lever The productivity.

XX to Inventory flat in-season XXX points. by trailing turnover in than from as capacity the brought XXXX strategically benefited fourth low SG&A were to XX.X%, have basis improved have compensation best investments lever. higher XXXX, points billion. year. XXXX basis and to to $X.X $XX talent. to A relatively our made number we We of from in products attract discipline been and was added of earlier creation when the supply to SG&A chain was improved levels to and Expense XXX due the remain increased Compared trends. percent we elevated last for XX% constraints. seasonal majority chase artificially in sales SG&A openings, colleagues job months is adjust or an of the has have value which competitive the million SG&A continue X.X% reminder we vast XXXX, since the filled. reflects net

year. During the Macy's up were from $XX of benefited generated Network, revenues million, down from $XXX quarter, which $X million million, last last from Media net SG&A also card year. revenues Credit XX%

larger consistent the in taxes, by driven accounting the portfolio bad diluted levels better-than-expected As $X.XX balances Performance with and versus After and credit than spend EPS results interest within revenues in adjusted to credit net card co-brand continued XXXX $X.XX X.X%. sales, higher-than-expected were for on these year $X.XX of XXXX. cards. generated lower a prior be percent expected, of and debt

of allocation. $XXX $XXX payable accounts flow fifth Year-to-date Year-over-year, impacted lever of October, accrued in was estate well was of cash outflows as cash the $XXX creation payable in cash through as and operating the operating free million. Lastly, generated million invested million flow we expenditures. proceeds payments. and a capital merchandise capital the liabilities by value Year-to-date, is and flow, from due merchandise outflow net real receipts timing of net from change from an inclusive of accounts to outflow inventories

met billion, strengthen omnichannel from up marketplace. investments improve $X the we capital to our to expenditures the For full in be $X.X year, billion, reflecting competitive capabilities and our position

opportunities quarterly overall a and returning our sheet share in and which enhanced prioritizing to and capital focus initiatives liquidity allocation We repurchases. health healthy to investing are they as investment-grade strategy, value maintaining order current and quickly committed maintain to our of dividend light balance and metrics, and environment, respond includes a shareholders to macroeconomic to In credit the capabilities flexibility of in is arise. scenarios capital balance through sheet variety

updated year. presentation fiscal be found through for outlook updated fourth details can walk I'll the quarter the Full within website. Next, of our our on our and guidance

through items this as has we critical think that fresh clear well believe consumers and purchase as want about we be sale quality As fourth to value. quarter, that every to earned

the the risk guidance competitive broader of Our with consumer impact softening the range and contemplates associated demand landscape.

uncertain that While adjust be we net November and are basis is into of more of promotions expected than our inventory billion to we inventory ensure October the trends to categories in do markdowns light for fourth XXXX. lower we comfortable take and to billion. XXX $X.XX drive carry no XXXX. and we In will risk than slower position, sales continue not late quarter the and demand proactively necessary $X.X Gross now forecast margin points environment, with early moving the quarter sell-throughs to

the quarter, and share For per $X.XX expect earnings we between fourth adjusted $X.XX.

For Inc the Macy's, largely full year, is unchanged. expectations our for

credit to card down of approximately approximately net as billion a of of XX%. $XX.X from X.X% percent roughly our rise sales up to of billion. sales points be $XX.X revenues XXX points of net sales approximately We basis SG&A from net net to XXX percent of as outlook Digital from XXXX. a margin sales XXXX. basis expect X.X%. Net Gross

from After income, and and $XX million. million. interest taxes, increase reflecting interest $XX $X.XX per interest we benefit prior benefit of $XX adjusted prior in increase estimating $XXX compared now up Lower lower million, of lower expense $XXX outlook $X.XX change plan of to from million of gains outstanding sale million a annual our changes income in share $XX credit million. Asset Combined, roughly these EBITDA of the card $X.XX, are and XX.X% in down expectation. to shares Adjusted plan our outlook. margin our expense to revenues, resulted earnings

future does our share repurchases liquidity, authorization. management credit outlook potential strength mid-pricing debt allow strong the fixed with the when this consider metrics associated any interest current holiday challenging. share rate and closing, repurchase flexibility, place of practices Our not our and In a impact season. investment-grade environment with of our interest operate and inventory rate from believe, to compete We we even positioned us broader to macroeconomic environment is well are along

are We to to that, processes the through With to of have talented better remarks. teams future. and relevant Jeff for some and the uncertain tools, and I'll closing it turn the manage more a the time, Macy's, this over building back data-driven committed Inc.

Adrian. Thanks,

for Although of the a our is beyond. and macroeconomic future poised environment We is growth. uncertain, Macy's, we ability are believe profitable confident this in Inc holiday in

consistent are We our shopping colleagues and strategic to an return for our for and attractive investments experience making customers, our committed a investors. provide to positive for careers rich

while leading position for And going our to a do department as will that, up questions. with open We this store. we're it bolstering modern

first Heska. take Grom our Instructions] question [Operator is from We Chuck from will Gordon

is Please go open. Your line ahead.

you Great work guys. for

or from the the the basis I quarter, fourth October guide, I perspective? of third point X-year there Back category about, I the midpoint guess, term, near Just is quarter of term, improvement, on had can. you you has are ended, into wanted of that's about factors slowdown implies then regionally at And last started. number. points Adrian, comp to the a where just negative a confirm which question week it and sales when November of near where in any a look more XXX can think, I geostack to either X% from your if the kind around

sure will of I'll Chuck, on as pieces well. category the Jeff comment some I'm and start,

fourth looking his opening of And remarks, there's about about we quarter As has looked this number think Jeff not as scenarios at only uncertainty the a trend spoke November. at we've highlighted. was we the quarter Jeff and that into of than part expected but also also the overall looking for of third the last which at early trickled weeks, couple slower the had in

period, would navigate trends mirror back we of have the refers we this as look, the QX experienced lot pre-pandemic. more uncertain the broadly, of assumes outside to of and patterns guidance that So X consumer weeks the high our holiday a that end last what shopping

As described, assumes continuation end the the October late November. guide, early the we of about low of the trend we part as think you the of in into it that saw

reflect the And guidance, we vary on. ends so when categories that what range the sure of we around think we for disciplined of end slower-moving about sell that one is very to both are thing the making on the may that the drive throughs both ends also actually based markdowns ensure we that end up

So that's a bit of it. the context around about how we're thinking

week. past categories, definitely better the responded on categories over Chuck, then, weather the And cold

just Midwest, the southern as business better clearly categories. belt of look at when you when sweaters, but those the and at fleece, sell-throughs look the Upper And better geography at boots, and look country outerwear, Northeast part got it in the got it's you well. increased and of So the you also in -- question,

we're So sticks. closely watching improvement, the and which trend trends an line see to

take our from We'll Instructions] next JPMorgan. [Operator Boss question Matthew from

open. line Your ahead. is Please go

Maybe key opportunities believe peer this your how are holiday for next areas set? you of better organization share market to to to year. XXXX, the during and that relative relative then And into driving see results you positioned Macy's is take think you just

pandemic we're department you of I I here your and off front. would little say store. question, how a would in it talk at the pre modern were I of of more headline bit buckets. X kind the characterize a I cut Matt, got But Yes, kind tell about I of most think you I'd Macy's, post kind is that that

to and on focused I headline little team allocation just when health. would the is executing and the a in would with a next I'd precision. it, X The strategy be at you second And we leverage, first Polaris very years. financial the post we're is alignment be talent much disciplined executing that no less pandemic better one we that are debt right pre strategy. we just everybody have really over capital have think say the And look materially thing

I team can reserve quarter, planning so translates one is That focus with third what really category, buying. think they're just more starts the the conservative on a a in down only inventory not really also than nice they bucket, season into big that retaining buying the control. And et brand, is cetera. they're strategic big into season. is That respond

really is shifts us more to Also chain. included data bands. are brand, modernized by a more where inventory category, also science in going We in by supply value the control have give pulled by customer

I we entry forecasting so in and our execution is sell-throughs in just that the GMROI and focus respond very our -- just And it's fifth, increased in turnover a then us our fourth manufacturing. allocation tools. diversified diversified say science port the and I disciplined to to sophisticated on had brand And pick just say with the the is is and and would development using is innings, we're -- private early We that. brand bucket pricing vision have think deploying I which strategy. of more a and just real private if this to then automation certainly help early I'd middle our innings

which see the Women's of about now of with as going coming, INC calls. which to been future I in a brands of got one the we in new content biggest have store, has we've the we're our trending that talk drivers future. right one brand, we'll lot best and pipeline of revitalized the And think as it a it's in volume

have we're as we that it's marketplace, with than What from pipeline where just just personalization. innovation overall a real were pre-pandemic, So in a of doing of just I different we with coming were we loyalty comment, XXXX. and back an think company March

and department business wherewithal I And very our The thing profitable we're in Jeff's investments look business. have point, I of and growth. the but we more modernizing We're have continue and only second sales underway, other math, focus. When focused That's so the just Matt, you stronger, agile. a a financial initiatives add, healthier team on at financially do continue much to longer-term management we as pipeline is the to other would that make in modern that we're to can the invest we're store. our to capacity the the Jeff

from from question next Evercore Omar our take Partners. Saad will We

go Please open. ahead. is line Your

follow I mix. on wanted of stores kind to e-com the up

be. shipping back do too. like? business costs guys gains of And during -- the alluded to pre-COVID as slowdown levels the and things helpful back. your But terms holiday not the keeping have out would happen? How of looked plays mix that what then above quarter so some typically? e-com e-com sure kind what of stores I discern maybe of the would fourth guys what holiday trend? has mid-October for versus that giving And does quickly, you that us that Is e-com, quarter third do year comp be you mean exactly coming didn't you I'm to think are continue You where many That in obviously, if this will that in expect of your then stores be margins quite well in kind season, quarter? lot for a the of but for stores

Omar, reverting we mix pre-pandemic we I'd where of on headline where on say that's What is within a between first were to and the omnichannel, here. omnichannel were and same focused the the the that stack digital the pandemic. off, back very during versus digital we're kind is

the look you our business penetration was when XX%. So at 'XX, in it digital of

we're our heard from it XX% initial be During the in you XXXX down it the going to calling the was pandemic, that from our range. as XX%, was And now estimation at XX%. call,

guidance, into to that similar you has a have, of We on -- been and it. of you And that the going that's you when we're kind our see every that. what embed is mapping trend in so strong any shipping for third All was across contemplated. downshifted. have where expect have our XX%. XXXX that costs performance the about digital we When of that do were we our on a see when scenario fourth quarter quarter quarter, on think we're we versus that high that modeling kind to end XXXX, the up So -- in

on higher might higher -- digital So if where model. you're is costs you have shipping that the a

costs it's you're the higher might you If lower shifting because that SG&A stores. on might have be digital model, traffic to

-- guidance in when that in feet -- is of mini inventory when of you allocation, at we're about ends million think terms it's we're that which modelling both Adrian got last models a we've So with supply our But to at doing These done when What about the look the year. how it's our GMROI lot go. it square on about looking the is you -- it. have deployed. I forward we turnover, we're about those inventory are DCs or didn't going of, chain think is of we've ways look you X what at that of that spoke way all of XX

at hitting automation get of We costs. all delivery and increase the also delivery sure package on shipping of those to that's of in got going are customer alone customer looking and to centers our we're that reducing time mitigate the closer speed mega categories great to to cost. ship expectations on our make We've

all modernized quarter. of in fourth supply kind the our applies that whatever chain digital with way to business So comes

We Oliver Chen. from will take next the question

Your line Please go ahead. open. is

Would curious consumer what about fairly has it have what forward. how in price your seeing because the is the thoughts been over-inventoried. I'm love control. promotional and also handle October seems extrapolate this risk and might other thoughts that are you're others volatile. your intensification, don't environment on that, really may consciousness to as well you folks and inventories going you Related of on like

Oliver. start, me let Yes,

the consumer. with start Let's

at October, about negativity unexpected, we kind of we the of quarter. XX I of we the the in question last of Omar's it, saw weeks was of clearly, to in what what downshift. being the weeks I of trend first happened of the had think that when the couple it as And the the course quarter, looked that as think twice

supply do not really it blood time that all consumer customer with in if the that year or the to have on for consumer you about the about it started you're been one watching last pulls where carefully is articles of to inventory okay, all lack and that where then to rate. to issues. the chain what don't see, were going we our been that counter we've if now, And on think of And So prices, conversion publicity you Christmas. supply going was it is going you best with saw the of when we and you for of have in get were and wait

happened which in coming drop now we couple was downshift through of in the retail a track was on weeks So in our last October see websites didn't of what not conversion. we traffic. We traffic a next. What saw the less or in stores,

a difference, from had XXXX. what up not previous in from was conversion but we from that so against the weeks, trend been And market were the what

-- we is carefully so was We're a X our And the think going. the what like we of we've on opportunity, that's can might peel patterns. Obviously, because where we as it October, if whatever that's last that working we're year of with supply all we to then that really when way important able at. jump that that when back, it's concern terms that to peel way depending sure that. get comprehended which kind much see we're been we'll on to the in in have versus us environment, there's the inventory, the slowdown -- there is, to where I showed say model we're guide our of that this watching and of a it back this we opportunity table fresh That's seeing always a the supply the idea off and inventory to weeks that materialize, balance through saw us it that have, if make XXXX. go that demand of in And reserves and we're category concern took back. the we that that to me probably hot wanted If and for doesn't really just this got an for the usual which being it's there's

in we're a intent our quarter, the enter be and the inventory we'll going by So what right which quarter the categories, about position brands going call. to talk bands that are expectations of 'XX, of to be value and great is the fourth on for to our in end fourth mix

know about holiday. on inventory our looking at I, Jeff's is strategy. position If And inventory up versus we're much your holiday for newness just could the actually discipline add look, pricing punchline a the only we're build just to to Jeff XXXX. point. X%, are with is question we about The couple year, I newness, that of good last season. for level things the feel Not about and XX% you excited the but very XX% position which promotions, our for and To about down inventory we're Jeff very aligned the markdown of we described

from that on surveys the value All the that indicate have demand week-to-week an we've is the be looking for the versus a And expectations value. going that fourth we we markdowns customer. progress we to driver seen know through take will We for customers necessary would as important quarter. the pricing based standpoint are the

expect can, we at good rotation, that, promotions, manage best the looking we outdate. initial looking news that product our as the be the we to about the is pricing at we to markdowns, do ticket think So available by have signs as looking our sell-throughs, at our able inventory through but to

good So we the about about we feel going our good starting are plans feel quarter, the we where quarter. and through

Ashley take We question from will Helgans next our from Jefferies.

ahead. line go Please Your open. is

sizes about marketplace curious order? just then initial learnings share and new larger units And model. can you basket per we're what's the driving the Any

about talk let's so right, All marketplace.

in as a in launched we is thing on quarter. that on the day it's continue And in We're it, couple that's scale tell without the you the have inventory it's new too fully and categories, think of brands, to we're care the early let successfully on here organism inventory where on either objective to take with but And formed customers this. the me existing didn't that every -- liability. premium customers it's the we now, products new low-risk VDF big content marketplace overall flip single way owned earlier Right a site. adding So just bringing like And a switch on for not it we I or headlines. to focused the shouldering new quantify past. sellers. lot third-party really of a to a is detail signals us introduce It's content our of really or

baskets is first size mixed inventory. basket younger units order, a and That's and one that lot either about customers. attracting of higher the is when that think or between The inventory that higher VDF it's you owned per

a about almost new specifics to coming continue we're our into this. cross-shopping more it. are sign. that is the hitting the about a of talk who's of them And balance that's you more about next excited develop objectives. we're to you Bloomingdale's detail real early give say We'll on all Too in We're have fact marketplace, on any What Macy's. customer excited year. going We're adding future marketplace calls. I'd So positive when that to

I color more. if one then, Any And just thrown

on Ashley, mute if you're

our We'll question from take next Kimberly Greenberger.

Your open. line is go Please ahead.

it short-term well. sounds to pretty ups and really you're downs the obviously, navigating us Jeff, like

a guidance towards understand have kind not in just I'm we're about providing XXXX you're lot interested trends. understanding sales of our how thinking XXXX. in sure We how So that. But today. you're big just for turn not about to you wanted feel on don't it I of We picture. eye visibility an side here

low love if the helpful. inventory how that see notable I'd call XXXX, you super talk would is be any you're summer you you thoughts. can that you could approaching well, on your Adrian, to if And that or hear visibility in spring out think And as tailwinds So horizon headwinds your maybe and buys. just through

me they're quarter that the that we do at time look to to be airline is going think fourth let predicated be all hotel how to so the this be the goes just season our some than that on -- is consumer to let We family members. customer -- important. just to that other. gifting with flights, what's important going gatherings many through balance home plentiful of their what nights family start surveys me spend of from and is and buying say is holiday going this frame. more gift-giving the is But going with this Kimberly, say This reservations, how this are important away consumers

be you there at look in deplete, bind tapped when rates of that at budgets. other, consumers quarter the their you all slowdown starting may cumulative inflation about out to and the we the that nondiscretionary will effects across a spend, savings they Now be on first our discretionary in just look is all as terms think of

So come we carefully while and base any is of quarter, 'XX, might that at the ensuring giving by are very guidance which have you supply for of the right looking not that and not we how your question, content. oversupply

However, that quarter split might be out.

carefully right and own through very reserves be So in we adjustments that ordering, pressed We're may the our obviously, this. we're thinking making first now. quarter watching our on that more think

about so have that like, And back spring/summer, we what baked come our will at fall the not February. obviously middle yet will when of all into to we sure of holiday full guidance view look better a you

add to anything So there?

context the position been we're our how within Yes, low I Jeff business, our adjusted of And the that actions just think Kimberly. with described, I really you and a about shared What previously we've low we remain longer-term I'll sales are think taking to of would couple thinking add the double-digit bit to is say important. is a committed margins. what things if and growth which to strengthen EBITDA think that single-digit competitive I earlier stated targets, that what regards Jeff about

The really be our building the So point your in experience affecting about to spoken consumer, we're of believe is that marketplace. also in growth. we capabilities, of for is and capabilities a investing sheet, consumer consumer, team, headwinds will is in marketplace balance have really management, longer-term position are to capacity slow with is the -- tailwinds stronger rate to looking that targets is think remains a will rate categories. and to look consumer. customer inflation I of rising for profitable talent we consumer, investing ahead, the us a foundation the compete we've How We To talented the initiatives. the demand those that important disciplined know well around the that the really that we new have go important as high-return headwind we interest because inventory tailwinds, in things biggest It's what's discretionary spend think around at how that's and about all much investing able relevance the the consumers earlier. important to on headwinds the a we environment? just We're in we healthy These demand? things one also still that we have strengthen on positions to in to the the we're value

us. focused think So we really and that can could be compete, how on for we're a control tailwind I what and we real

Dana We'll next take our from Telsey question from Telsey Group.

Your line open. is Please go ahead.

mean the urban you how all at suburban as in about do areas what year, to seeing from think versus tailwinds could in you it those supply next business? areas? backstage, from portfolio, what supply the chain the frame you're you're As real the broadly, different seeing then is and estate about And chain what think you areas, performance

locations, locations. you that definitely activity with best-performing the me basically We're on office avoiding definitely and when buildings. supply customers your related just start Let -- having based lot during of and particular are you to look talked with take just being previous downtown of on seeing those of those question. areas is the that of on suburban, our of the return pandemic. What versus we're some we going that the I'd at the a return urban Adrian points, have we tell X the that call, Much Dana, is chain I'll to around as kind those about our first then

that continues. So

when D.C., about go Square, Herald Square, having good Union downtown strong XXth Philadelphia, We very have State Street are at a you stores you those Street. a think year Bloomingdale's, year. All

are where they pre-pandemic. below they still well were now So during

looking the that thought not a at with to 'XX, tailwind, in where how not one was rates buildings to carefully certain in watching it lot kind we're those get back going is We that levels. of to to a back 'XX maybe is back, come out, we're exchange that's international XXXX of but come coming of there potential So tourism. and needs that

So you our XXX in quite doing already it recently think We Herald equally now that's we how When It of well. backstage would kind I it is just about in other in have It's opened mean well. characterize backstage, I stores. was flagships. that. Square. downtown doing

that So in more attracting is there's the really price versus a about it fantastic. difference adding I no customers, younger what opening an like and and Backstage customers. And is it of performance basically is that basket it mall between mall. to new the diverse, is new just of existing it's in premium one

talking the continues been XXXX everything evolution So we've about to us. backstage business dividends our since on of pay for

characterize that. it on Adrian to that's So supply how turn I'd I'll chain.

realities there for the flowing. holiday. that year, chain to season. which roll next our is think the with in are continue to But very set ready about certainly But flowing. seeing the floors, get and holiday healthier. going for year, We're goods key are us supply that X we're view goods supply is that is So on we to one the regards goods well healthier positioned as thing planning. believe our we we be We're chain, will Number this has

discipline think inventory going next to and year control. is what's critical. control for I is Inventory be for really about inventory important just really us thinking

to buy. conservatively, the that's and appropriate trends. Jeff able next be year As changing we really in changed built any way to to buying we highlighted earlier, And because into we we're reserves fundamentally the going respond

We and allocation way planning to looking have integrated all fulfilling customer. that's the a for at orders the end-to-end and sourcing very team

thing any that for thing clean inventory the as favorable season that us packaway this is year. is position We're the get planning I just is to a because next retailer. we're of other inventory to not packaway important year into a The think about think fashion planning the not in as do a we spring

bit a position markdowns this necessary aged we're into So committed that as the earlier, better we next to make to we're clear sure a the inventory fourth drive drop and to strategically, quarter and year. through going mentioned in season and margins healthy self-use any

We'll Drbul Guggenheim take from from Bob our next question Securities.

open. line Please go is Your ahead.

you expected, talk could -- card I came Adrian, was what debt credit expense. if the on factors if sort about better of us of just 'XX, address and you're expected, can into think there better you you're a color helpful. of the some the even business, just maybe you and could that if QX, more bad about but couple some more sort it around of in questions thinking I But than more give it than what expectations how would seeing, think probably into be

Yes, absolutely.

we as about is going you'll of a So think what into credit sale QX, a as see seasonal rate adjustment. card

come a have fourth of do nonloyal into lot we in system quarter. So that the our do customers

our So they proprietary of card. be on to credit variety to use tend a tenders

fourth adjustment. seasonal just So actually a the as soften rate a quarter, of sale, in is that see you'll which

in longer think the about business really the and think As we near card that the factors term, credit in term there about. we are X

debt seen seeing delinquency drove levels that more kind to card as factor bad we're time of credit prolonged lower is healthy The expected last for of around opportunities emerge. debt. have opportunities unwind year, we do evidence see remained we've first than beginning and this a bad of that payment but and is revenues What very that year period

will progressive begin back more debt. a So feel that bad on we reversion to they be do

our as credit lever is within what card side well on we higher very proprietary the at second The is healthy co-brand usage. network. within usage on we're broader usage as our And look and the just nameplate seeing the

year, imagine, you the a stimulus so market. last there's as And can of in lot

credit a card and is back. there's really, payments cash payments. So debit lot of But

pandemic so be fourth And healthy balances, that are into the project see from card we driven year-to-date, they're lot our guide. of through and people quarter, of credit the health and you that's credit a building their our really business to card, using larger as the

Gaby from Bank. Deutsche our take Carbone next We from will question

Your line is open. Please go ahead.

Congratulations on results. nice the

real you've the balance improvement sheet over your made So year. a on past

about your you if debt leverage moving and speak allocation how priorities paydown along can capital wondering with Just thinking you're ahead. to

have a strategy. We first healthy thing very we is disciplined the that most to And sheet. make allocation and follow a balance important capital sure

at of as looking inventories, to key very debt that. an controlling well is part important that, So as

into We basis. year we'll on have annual that, this coming below basis, a an an committed leverage have on Xx adjusted ratio

variety looking relates things as debt And we're committed a of it to we're at to pay very down. so And that. certainly

is though, in the highest the thing, investing long second drives our near, that is and for profitable investing which We the The high-return important shareholders over really term. initiatives return growth business. in that believe is medium

excess we're to the in in and sure So for a do form really those cash being third dividend, really able our important share to but the us investing piece initiatives. predictable of modest that make to repurchases. returning then capital dividend also is back And with shareholders.

to maturities it a now. different We the X.X right to constantly have We debt the lot looking liquidity for debt As any X relates capacity of scenarios. material paydown, at we're and do and lot don't of options have a years.

option is we're position, but in healthy already very a paydown at. look we an So debt that always

our from Citigroup. take from Paul Lejuez question We'll final for today

go line open. Your Please is ahead.

you How talked Macy's a a this there's Macy's off-mall stores some filling maybe where and little full-line stores, Macy's an in percent in Paul. formats. so for And think assortment and detail is the opportunity many seeing off-mall by Market relocate give your to Kogan have us weaker in in We're performing those maybe format? bit about you to full store do markets Market there your you relocating a by Tracy what Macy's more about maybe stores. assortments then of

performing. by start with is how we're so me far with let Market Macy's So pleased

our purposes. what It X buckets reemphasize and to has here. just so And X strategy really

as is just about that's brick-and-mortar done business is off-mall. done one our record XX% of that first the in comment in The categories overall is

And so sales a opportunity being omnichannel is being at done those we that served have when codes. what of store, digital wherever for sales looking us. And at higher you wherever in the really of ZIP concentration look an portfolio have sale up have we you a our we're really majority or when focused on. on-mall, Clearly,

is really that it customer this activity. kind of loop on with So irrefutable goes

had with we Market So by X to objectives respect Macy's.

a we've done. Mall Louis. the a that very St. was of this the balance our center presence Chesterfield in in but that and center. the it our vital digital put Chesterfield this -- that locations we or one closed already was found that have mall The Macy's proud Fort first one a particular from Atlanta, of location is all week. is part away number we to have D.C., we That where our wherein a And are first Chesterfield fill-in That's we was did of strip Dallas that your This mile from be a one a The was in seeing underserved, question. a last the we Washington, left. market, that Worth. Really we're signals. really In used was to was have Then that thriving the what longer replacement was that that's either was ZIP head codes there. no we of was location Mall. Mall,

the by we That's Macy's Louis all have in handoff worked we we colleagues. very of St. handoff the Market moved the start. closed Center, on a had nice over. opened We this So store. them great we picked the We Strip then the customers, in Chesterfield when

about brand where Bloomingdale's is The used other third which the we're not your has be where Macy's it's or question area markets, to a brand-new of either to that gets for been part how at, brand we're looking new thinking or us. market

are in on I So nation I know Macy's But in Bloomingdale think XX the only of of that side. in top the side. XX the markets XX we we're the

on that brand have markets thereabouts. then is us quite like it, to line is do XXX so to think full Macy's in about we Macy's you us. Bloomie's some XXXX. a side of those and by To that interesting into curation, the see to you're comment going that's about XX,XXX Market let's feet square call the getting something really the from is So starting And store

So expect, we're making to lots get localized of and decisions turnover things out. in brands about in we we're the bring quickly them based environment there, how put what what we able on

palate. and And a it's so open very

have to environments, in adjustments. those lots make us flexibility lots we opportunities of for of So

dogged So That's conversion. focused what we're sell-throughs very on. very team and about the is

I and we're locations strong. is format picking think quite the the

So model. work before we lots these make to being can this at looking scalable stores we opportunities need we're off-mall, imagine, done to a model But when XX% of that brick-and-mortar of you scalable. get a business get as we

for time is all That for have question-and-answer session the we today.

remarks. back the will closing Please Jeff go call I to Now over turn ahead, for sir. Gennette

Inc. Thanks a in Everybody, have brands, Macy's, and for great parade. Thanksgiving. your interest the watch

call. you today's Thank joining for

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