(Address of Principal Executive Offices, including Zip Code)

(212) ~~494-1602~~494-1621

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $.01 par value per share		M		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý☒ No ¨

☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(Section~~(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý☒ No ¨

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐

~~Large accelerated filer~~ ý Non-Accelerated Filer	~~Accelerated filer~~ o ☐	~~Non-accelerated filer~~ o ~~(Do not check if a smaller reporting company)~~ Smaller Reporting Company	~~Smaller reporting~~ ~~company~~ o ☐

Emerging ~~growth company~~ oGrowth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No ý

☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at May 28, 2022

~~Class~~		~~Outstanding at November 25, 2017~~
Common Stock, ~~$0.01~~$.01 par value per share		~~304,566,377~~ 269,732,810 shares

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MACY’S, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(millions, except per share figures)

	13 Weeks Ended
	April 30, 2022			May 1, 2021
Net sales	$	5,348		$	4,706
Credit card revenues, net		191			159

Cost of sales		(3,231	)		(2,889	)
Selling, general and administrative expenses		(1,879	)		(1,748	)
Gains on sale of real estate		42			6
Impairment, restructuring and other costs		(8	)		(19	)
Operating income		463			215
Benefit plan income, net		7			15
Interest expense		(48	)		(79	)
Losses on early retirement of debt		(31	)		(11	)
Interest income		1			0
Income before income taxes		392			140
Federal, state and local income tax expense		(106	)		(37	)
Net income	$	286		$	103
Basic earnings per share	$	1.01		$	0.33
Diluted earnings per share	$	0.98		$	0.32

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
Net sales $ 5,281
$ 5,626
$ 16,171
$ 17,263
Cost of sales (3,175 ) (3,386 ) (9,794 ) (10,370 )
Gross margin 2,106
2,240
6,377
6,893
Selling, general and administrative expenses (1,995 ) (2,112 ) (5,853 ) (6,139 )
Gains on sale of real estate 65
41
176
76
Impairments, restructuring and other costs (33 ) —
(33 ) (249 )
Settlement charges (22 ) (62 ) (73 ) (81 )
Operating income 121
107
594
500
Interest expense (76 ) (82 ) (244 ) (279 )
Net premiums on early retirement of debt —
—
(1 ) —
Interest income 2
1
7
3
Income before income taxes 47
26
356
224
Federal, state and local income tax expense (13 ) (11 ) (140 ) (85 )
Net income 34
15
216
139
Net loss attributable to noncontrolling interest 2
2
6
5
Net income attributable to Macy's, Inc. shareholders $ 36
$ 17
$ 222
$ 144
Basic earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
$ .73
$ .46
Diluted earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
$ .73
$ .46

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(millions)

	13 Weeks Ended
	April 30, 2022			May 1, 2021
Net income	$	286		$	103
Reclassifications to net income:
Amortization of net actuarial loss and prior service credit on post employment and postretirement benefit plans included in net income, before tax		5			10
Tax effect related to items of other comprehensive income		(1	)		(2	)
Total other comprehensive income, net of tax effect		4			8
Comprehensive income	$	290		$	111

~~(Unaudited)~~

~~(millions)~~

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
Net income $ 34
$ 15
$ 216
$ 139
Other comprehensive income (loss):
Actuarial gain (loss) on post employment and postretirement benefit plans, before tax 10
3
57
(74 )
Settlement charges included in net income, before tax 22
62
73
81
Amortization of net actuarial loss on post employment and postretirement benefit plans included in net income, before tax 8
9
26
26
Tax effect related to items of other comprehensive income (loss) (15 ) (29 ) (60 ) (13 )
Total other comprehensive income, net of tax effect 25
45
96
20
Comprehensive income 59
60
312
159
Comprehensive loss attributable to noncontrolling interest 2
2
6
5
Comprehensive income attributable to
Macy's, Inc. shareholders $ 61
$ 62
$ 318
$ 164

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(millions)

	April 30, 2022		January 29, 2022		May 1, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	672	$	1,712	$	1,798
Receivables		233		297		205
Merchandise inventories		4,956		4,383		4,230
Prepaid expenses and other current assets		372		366		1,007
Total Current Assets		6,233		6,758		7,240
Property and Equipment - net of accumulated depreciation and amortization of $4,671, $4,548 and $4,550		5,601		5,665		5,798
Right of Use Assets		2,736		2,808		2,853
Goodwill		828		828		828
Other Intangible Assets – net		434		435		436
Other Assets		1,140		1,096		927
Total Assets	$	16,972	$	17,590	$	18,082
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	0	$	0	$	294
Merchandise accounts payable		2,865		2,222		2,545
Accounts payable and accrued liabilities		2,456		3,086		2,616
Income taxes		222		108		63
Total Current Liabilities		5,543		5,416		5,518
Long-Term Debt		2,994		3,295		4,558
Long-Term Lease Liabilities		3,030		3,098		3,166
Deferred Income Taxes		968		983		868
Other Liabilities		1,159		1,177		1,297
Shareholders' Equity		3,278		3,621		2,675
Total Liabilities and Shareholders’ Equity	$	16,972	$	17,590	$	18,082

~~(Unaudited)~~

~~(millions)~~

October 28, 2017 January 28, 2017 October 29, 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 534
$ 1,297
$ 457
Receivables 219
522
262
Merchandise inventories 7,065
5,399
7,587
Income tax receivable —
—
60
Prepaid expenses and other current assets 432
408
454
Total Current Assets 8,250
7,626
8,820
Property and Equipment - net of accumulated depreciation and
amortization of $5,330, $4,856 and $5,625 6,742
7,017
7,149
Goodwill 3,897
3,897
3,897
Other Intangible Assets – net 491
498
499
Other Assets 835
813
909
Total Assets $ 20,215
$ 19,851
$ 21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt $ 22
$ 309
$ 938
Merchandise accounts payable 3,173
1,423
3,375
Accounts payable and accrued liabilities 3,162
3,563
2,930
Income taxes 34
352
—
Total Current Liabilities 6,391
5,647
7,243
Long-Term Debt 6,297
6,562
6,563
Deferred Income Taxes 1,553
1,443
1,548
Other Liabilities 1,750
1,877
2,129
Shareholders' Equity:
Macy's, Inc. 4,231
4,323
3,789
Noncontrolling interest (7 ) (1 ) 2
Total Shareholders’ Equity 4,224
4,322
3,791
Total Liabilities and Shareholders’ Equity $ 20,215
$ 19,851
$ 21,274

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(millions)

	Common Stock		Additional Paid-In Capital			Accumulated Equity			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance at January 29, 2022	$	3	$	517		$	5,268		$	(1,545	)	$	(622	)	$	3,621
Net income							286									286
Other comprehensive income													4			4
Common stock dividends ($0.1575 per share)							(45	)								(45	)
Stock repurchases										(600	)					(600	)
Stock-based compensation expense				13												13
Stock issued under stock plans				(54	)					53						(1	)
Balance at April 30, 2022	$	3	$	476		$	5,509		$	(2,092	)	$	(618	)	$	3,278

~~(Unaudited)~~

~~(millions)~~

39 Weeks Ended
October 28, 2017 October 29, 2016
Cash flows from operating activities:
Net income $ 216
$ 139
Adjustments to reconcile net income to net cash provided by operating activities:
Impairments, restructuring and other costs 33
249
Settlement charges 73
81
Depreciation and amortization 741
787
Stock-based compensation expense 46
56
Gains on sale of real estate (176 ) (76 )
Amortization of financing costs and premium on acquired debt (10 ) (14 )
Changes in assets and liabilities:
Decrease in receivables 274
237
Increase in merchandise inventories (1,665 ) (2,081 )
Increase in prepaid expenses and other current assets (20 ) (37 )
Increase in merchandise accounts payable 1,630
1,665
Decrease in accounts payable, accrued liabilities
and other items not separately identified (375 ) (380 )
Decrease in current income taxes (318 ) (287 )
Increase in deferred income taxes 49
45
Change in other assets and liabilities not separately identified (109 ) (76 )
Net cash provided by operating activities 389
308
Cash flows from investing activities:
Purchase of property and equipment (359 ) (451 )
Capitalized software (191 ) (230 )
Disposition of property and equipment 212
138
Other, net (8 ) 52
Net cash used by investing activities (346 ) (491 )
Cash flows from financing activities:
Debt issued —
51
Financing costs (1 ) (3 )
Debt repaid (554 ) (174 )
Dividends paid (346 ) (344 )
Increase in outstanding checks 80
193
Acquisition of treasury stock (1 ) (230 )
Issuance of common stock 3
31
Proceeds from noncontrolling interest 13
7
Net cash used by financing activities (806 ) (469 )
Net decrease in cash and cash equivalents (763 ) (652 )
Cash and cash equivalents beginning of period 1,297
1,109
Cash and cash equivalents end of period $ 534
$ 457
Supplemental cash flow information:
Interest paid $ 251
$ 279
Interest received 7
3
Income taxes paid (net of refunds received) 412
308

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (Continued)

(Unaudited)

(millions)

	Common Stock		Additional Paid-In Capital			Accumulated Equity		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
Balance at January 30, 2021	$	3	$	571		$	3,928	$	(1,161	)	$	(788	)	$	2,553
Net income							103								103
Other comprehensive income												8			8
Stock-based compensation expense				11											11
Stock issued under stock plans				(24	)				24						0
Balance at May 1, 2021	$	3	$	558		$	4,031	$	(1,137	)	$	(780	)	$	2,675

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY’S, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(millions)

	13 Weeks Ended
	April 30, 2022			May 1, 2021
Cash flows from operating activities:
Net income	$	286		$	103
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment, restructuring and other costs		8			19
Depreciation and amortization		206			224
Stock-based compensation expense		13			11
Gains on sale of real estate		(42	)		(6	)
Benefit plans		5			10
Amortization of financing costs and premium on acquired debt		2			8
Deferred income taxes		(17	)		(43	)
Changes in assets and liabilities:
Decrease in receivables		65			71
Increase in merchandise inventories		(573	)		(457	)
Increase in prepaid expenses and other current assets		(13	)		(56	)
Increase in merchandise accounts payable		639			674
Decrease in accounts payable and accrued liabilities		(424	)		(114	)
Increase in current income taxes		122			75
Change in other assets and liabilities		(29	)		(25	)
Net cash provided by operating activities		248			494
Cash flows from investing activities:
Purchase of property and equipment		(171	)		(61	)
Capitalized software		(90	)		(38	)
Disposition of property and equipment		73			8
Other, net		(6	)		17
Net cash used by investing activities		(194	)		(74	)
Cash flows from financing activities:
Debt issued		850			500
Debt issuance costs		(21	)		(9	)
Debt repaid		(1,139	)		(503	)
Debt repurchase premium and expenses		(29	)		(12	)
Dividends paid		(45	)		0
Decrease in outstanding checks		(126	)		(276	)
Acquisition of treasury stock		(584	)		0
Net cash used by financing activities		(1,094	)		(300	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(1,040	)		120
Cash, cash equivalents and restricted cash beginning of period		1,715			1,754
Cash, cash equivalents and restricted cash end of period	$	675		$	1,874
Supplemental cash flow information:
Interest paid	$	86		$	52
Interest received		1			0
Income taxes paid, net of refunds received		1			5

Note: Restricted cash of $3 million and $76 million have been included with cash and cash equivalents for the 39 weeks ended April 30, 2022 and May 1, 2021, respectively.

The accompanying notes are an integral part of these Consolidated Financial Statements.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Organization and Summary of Significant Accounting Policies

~~1. Summary of Significant Accounting Policies~~

Nature of Operations

Macy's, Inc. ~~and~~, together with its subsidiaries (the "Company"), is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and ~~children's)~~kids'), cosmetics, home furnishings and other consumer goods. The Company has stores in 43 states, the District of Columbia, Puerto Rico and Guam. As of April 30, 2022, the Company's operations ~~are~~and operating segments were conducted through ~~approximately~~ ~~860~~Macy's, ~~Macy's~~Market by Macy’s, Macy’s Backstage, Bloomingdale's, Bloomingdale's The Outlet, Bloomie’s, and ~~bluemercury stores in~~ 45 ~~states, the District of Columbia, Guam and Puerto Rico, as well as macys.com, bloomingdales.com and bluemercury.com. In addition,~~ bluemercury.

Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.

A description of the Company's significant accounting policies is included in the Company's Annual Report on Form 10-K for the fiscal year ended January ~~28, 2017~~29, 2022 (the ~~"2016~~"2021 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the ~~2016~~2021 10-K.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States ~~generally accepted accounting principles~~of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties which may result in actual amounts differing from reported amounts.

The Consolidated Financial Statements for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~April 30, 2022 and ~~October 29, 2016~~,May 1, 2021, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly, in all material respects, the consolidated financial position and results of operations of the Company.

Seasonality

Because of the seasonal nature of the retail business, the results of operations for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~April 30, 2022 and ~~October 29, 2016~~May 1, 2021 (which do not include the Christmas season) are not necessarily indicative of such results for the full fiscal year.

~~Reclassifications~~

~~Certain reclassifications were made to prior years’ amounts to conform to the classifications of such amounts in the most recent years.~~

Comprehensive Income

Total comprehensive income represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net income. For the Company, the only other components of total comprehensive income for the 13 ~~and 39~~ weeks ended ~~October 28, 2017~~April 30, 2022 and ~~October 29, 2016~~May 1, 2021 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of ~~operating expenses~~income (loss) before income taxes in the Consolidated Statements of Income. Amortization reclassifications out of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income) and are included in ~~selling, general and administrative expenses~~benefit plan income, net on the Consolidated Statements of Income. See Note ~~4, "Benefit~~5, "Retirement Plans," for further information.

~~Newly Adopted Accounting Pronouncements~~

~~The Company adopted Accounting Standards Update ("ASU") No. 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting~~, effective January 29, 2017. This standard was issued to simplify several aspects of the accounting for share-based payment awards, including the income tax consequences, financial statement classification and forfeiture considerations of such awards. Upon adoption, the Company began to recognize, on a prospective basis, all excess tax benefits and tax deficiencies as income tax benefit or expense, respectively, in its Consolidated Statements of Income. For awards that were exercised, vested or expired during the 39 weeks ended October 28, 2017, approximately $12 million of additional income tax expense associated with net tax deficiencies was recognized. Additionally, these net tax deficiencies have been classified as an operating activity

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Earnings Per Share

~~along with other income tax cash flows in the Consolidated Statements of Cash Flows. The Company has elected to adopt such presentation on a prospective basis.~~

~~2. Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

The following ~~tables set~~table sets forth the computation of basic and diluted earnings per ~~share attributable to Macy's, Inc. shareholders:~~share:

	13 Weeks Ended
	April 30, 2022						May 1, 2021
	Net Income				Shares		Net Income				Shares
	(millions, except per share data)
Net income and average number of shares outstanding	$	286				282.6	$	103				310.7
Shares to be issued under deferred compensation and other plans						1.0					0.9
	$	286				283.6	$	103				311.6
Basic earnings per share			$	1.01					$	0.33
Effect of dilutive securities:
Stock options and restricted stock units						7.3						7.0
	$	286				290.9	$	103				318.6
Diluted earnings per share			$	0.98					$	0.32

13 Weeks Ended
October 28, 2017 October 29, 2016
Net
Income Shares Net
Income Shares
(millions, except per share data)
Net income attributable to Macy's, Inc. shareholders and
average number of shares outstanding $ 36
304.6
$ 17
307.5
Shares to be issued under deferred
compensation and other plans 0.9
0.9
$ 36
305.5
$ 17
308.4
Basic earnings per share attributable to
Macy's, Inc. shareholders $ .12
$ .05

Effect of dilutive securities:
Stock options, restricted stock and restricted stock units 1.0
2.2
$ 36
306.5
$ 17
310.6
Diluted earnings per share attributable to
Macy's, Inc. shareholders $ .12
$ .05

39 Weeks Ended
October 28, 2017 October 29, 2016
Net
Income Shares Net
Income Shares
(millions, except per share data)
Net income attributable to Macy's, Inc. shareholders and
average number of shares outstanding $ 222
304.5
$ 144
308.6
Shares to be issued under deferred
compensation and other plans 0.8
0.9
$ 222
305.3
$ 144
309.5
Basic earnings per share attributable to
Macy's, Inc. shareholders $ .73
$ .46

Effect of dilutive securities:
Stock options, restricted stock and restricted stock units 1.3
2.3
$ 222
306.6
$ 144
311.8
Diluted earnings per share attributable to
Macy's, Inc. shareholders $ .73
$ .46

~~For the 13 and 39 weeks ended October 28, 2017, in~~

In addition to the stock options and restricted stock units reflected in the foregoing ~~tables,~~table, stock options to purchase ~~18.9~~12.3 and 14.7 million shares of common stock and restricted stock units relating to ~~1.2~~0.4 and 1.1 million shares of common stock were outstanding at ~~October 28, 2017~~,April 30, 2022 and May 1, 2021, respectively, but were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.

Revenue

Net sales

Revenue is recognized when customers obtain control of goods and services promised by the Company. The amount of revenue recognized is based on the amount that reflects the consideration that is expected to be received in exchange for those respective goods and services. The Company's revenue generating activities include the following:

Retail Sales

Retail sales include merchandise sales, inclusive of delivery income, licensed department income, sales of private brand goods directly to third party retailers and sales of excess inventory to third parties. Sales of merchandise are recorded at point of sale for in-store purchases or the time of shipment to the customer for digital purchases and are reported net of estimated merchandise returns and certain customer incentives. Commissions earned on sales generated by licensed departments are included as a component of total net sales and are recognized as revenue at the time merchandise is sold to customers. Service revenues (e.g., alteration and cosmetic services) are recorded at the time the customer receives the benefit of the service. The Company has elected to present sales taxes on a net basis and, as such, sales taxes are included in accounts payable and accrued liabilities until remitted to the taxing authorities.

Macy’s accounted for 86% and 87% of the Company’s net sales for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively. In addition, digital sales accounted for approximately 33% and 37% of the Company’s net sales for the 13 weeks ended April 30, 2022 and May 1, 2021, respectively.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Disaggregation of the Company's net sales by family of business for the 13 weeks ended April 30, 2022 and May 1, 2021 were as follows:

	13 Weeks Ended
Net sales by family of business	April 30, 2022		May 1, 2021
	(millions)
Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances	$	2,237	$	2,023
Women's Apparel		1,135		913
Men's and Kids'		1,086		932
Home/Other (a)		890		838
Total	$	5,348	$	4,706

~~(Unaudited)~~

(a)

Other primarily includes restaurant sales, allowance for merchandise returns adjustments and breakage income from unredeemed gift cards.

~~For~~

Merchandise Returns

The Company estimates merchandise returns using historical data and recognizes an allowance that reduces net sales and cost of sales. The liability for merchandise returns is included in accounts payable and accrued liabilities on the 13Company's Consolidated Balance Sheets and ~~39 weeks ended October~~ was $245 million, $198 million and $225 million as of April 30, 2022, January 29, ~~2016,~~2022 and May 1, 2021, respectively. Included in ~~addition~~prepaid expenses and other current assets is an asset totaling $144 million, $120 million and $136 million as of April 30, 2022, January 29, 2022 and May 1, 2021, respectively, for the recoverable cost of merchandise estimated to be returned by customers.

Gift Cards and Customer Loyalty Programs

The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold or issued, no revenue is recognized; rather, the Company records an accrued liability to customers. The liability is relieved and revenue is recognized equal to the ~~stock options~~amount redeemed at the time gift cards are redeemed for merchandise. The Company records revenue from unredeemed gift cards (breakage) in net sales on a pro-rata basis over the time period gift cards are actually redeemed. At least three years of historical data, updated annually, is used to determine actual redemption patterns.

The Company maintains customer loyalty programs in which customers earn points based on their purchases. Under the Macy’s Star Rewards loyalty program, points are earned based on customers’ spending on Macy’s private label and ~~restricted stock units reflected~~co-branded credit cards as well as non-proprietary cards and other forms of tender. The Company’s Bloomingdale’s Loyallist and bluemercury BlueRewards programs provide tender neutral points-based programs to their customers. The Company recognizes the estimated net amount of the rewards that will be earned and redeemed as a reduction to net sales at the time of the initial transaction and as tender when the points are subsequently redeemed by a customer.

The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $428 million, $481 million and $580 million as of April 30, 2022, January 29, 2022 and May 1, 2021, respectively.

Credit Card Revenues, net

In 2005, the Company entered into an arrangement with Citibank, N.A. ("Citibank") to sell the Company's private label and co-branded credit cards ("Credit Card Program"). Subsequent to this initial arrangement and associated amendments, in 2021, the Company entered into the sixth amendment to the amended and restated Credit Card Program Agreement (the "Program Agreement") with Citibank. The changes to the Credit Card Program’s financial structure are not materially different from its previous terms. As part of the Program Agreement, the Company receives payments for providing a combination of interrelated services and intellectual property to Citibank in support of the underlying Credit Card Program. Revenue based on the spending activity of the underlying accounts is recognized as the respective card purchases occur and the Company’s profit share is recognized based on the performance of the underlying portfolio. Revenue associated with the establishment of new credit accounts and assisting in the ~~foregoing tables, stock options to purchase~~ ~~15.7 million~~ ~~shares~~receipt of ~~common stock~~payments for existing accounts is recognized as such activities occur. Credit card revenues include finance charges, late fees and ~~restricted stock units relating to~~ ~~0.7 million~~ ~~shares~~other revenue generated by the Company’s Credit Card Program, net of ~~common stock were outstanding at~~ ~~October 29, 2016, but were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive or they were~~fraud losses and expenses associated with establishing new accounts.

The Program Agreement expires March 31, 2030, subject to ~~performance conditions that had not~~an additional renewal term of three years. The Program Agreement provides for, among other things, (i) the ownership by Citibank of the accounts purchased by Citibank, (ii) the ownership by Citibank of new accounts opened by the Company’s customers, (iii) the provision of credit by Citibank to the holders of the credit cards associated with the foregoing accounts, (iv) the servicing of the foregoing accounts, and (v) the allocation between Citibank and the Company of the economic benefits and burdens associated with the foregoing and other aspects of the alliance. Pursuant to the Program Agreement, the Company continues to provide certain servicing functions related to the accounts and related receivables owned by Citibank and receives compensation from Citibank for these services. The amounts earned under the Program Agreement related to the servicing functions are deemed adequate compensation and, accordingly, no servicing asset or liability has been ~~met.~~recorded on the Consolidated Balance Sheets.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

4.	Financing Activities

~~3. Financing Activities~~

The following table shows the detail of debt repayments:

	13 Weeks Ended
	April 30, 2022		May 1, 2021
	(millions)
2.875% Senior notes due 2023	$	504	$	136
3.625% Senior notes due 2024		350		150
4.375% Senior notes due 2023		161		49
6.65% Senior debentures due 2024		117		5
6.9% Senior debentures due 2032		4		0
6.7% Senior debentures due 2034		2		0
6.7% Senior debentures due 2028		1		0
3.875% Senior notes due 2022		0		156
7.6% Senior debentures due 2025		0		4
9.5% Amortizing debentures due 2021		0		2
9.75% Amortizing debentures due 2021		0		1
	$	1,139	$	503

39 Weeks Ended
October 28, 2017 October 29, 2016
(millions)
7.45% Senior debentures due 2017 $ 300
$ —
7.875% Senior debentures due 2036 —
108
6.375% Senior notes due 2037 135
—
7.45% Senior debentures due 2016 —
59
6.9% Senior debentures due 2032 72
—
6.7% Senior debentures due 2034 28
—
6.65% Senior debentures due 2024 4
—
6.9% Senior debentures due 2029 3
—
6.7% Senior debentures due 2028 3
—
7.0% Senior debentures due 2028 2
—
9.5% amortizing debentures due 2021 4
4
9.75% amortizing debentures due 2021 2
2
Capital leases and other obligations 1
1
$ 554
$ 174

~~During the 39 weeks ended October 28, 2017,~~

On March 3, 2022, Macy’s Inventory Funding LLC (the “ABL Borrower”), an indirect subsidiary of the Company, ~~repaid,~~and Macy’s Inventory Holdings LLC (the “ABL Parent”), a direct subsidiary of Macy’s and the direct parent of the ABL Borrower, entered into an amendment (“the Amendment”) to the credit agreement governing the existing $2,941 million asset-based credit facility (the “Existing ABL Credit Facility”), which was set to expire in May 2024. The Amendment provides for a new revolving credit facility of $3.0 billion, including a swingline sub-facility and a letter of credit sub-facility (the “New ABL Credit Facility”). The ABL Borrower may request increases in the size of the New ABL Credit Facility up to an additional aggregate principal amount of $750 million. The New ABL Credit Facility replaces the Existing ABL Credit Facility, with similar collateral support, but reduced interest and unused facility fees. The New ABL Credit Facility matures in March 2027.

The New ABL Credit Facility is secured on a first priority basis (subject to customary exceptions) by (i) all assets of the ABL Borrower including all such inventory and the proceeds thereof and (ii) the equity of the ABL Borrower. The ABL Parent guarantees the ABL Borrower’s obligations under the New ABL Credit Facility.

The New ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to the sum of (i) 90% of the net orderly liquidation percentage of eligible inventory, minus (ii) customary reserves. Amounts borrowed under the New ABL Credit Facility are subject to interest at ~~maturity, $300~~a rate per annum equal to, at the ABL Borrower’s option, either (i) adjusted SOFR (calculated to include a 0.10% credit adjustment spread) plus a margin of 1.25% to 1.50% or (ii) a base rate plus a margin of 0.25% to 0.50%, in each case depending on revolving line utilization. The New ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type.

The New ABL Credit Facility also requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the end of any fiscal quarter if (i) certain events of default have occurred and are continuing or (ii) Availability plus Suppressed Availability (each as defined in the New ABL Credit Facility) is less than the greater of (a) 10% of the Loan Cap (as defined in the New ABL Credit Facility) and (b) $250 million, in each case, as of the end of such fiscal quarter.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

As of April 30, 2022, the Company had $65 million of ~~7.45% senior debentures due July 2017.~~

~~During~~standby letters of credit outstanding under the ~~39 weeks ended October 28, 2017,~~ABL Credit Facility, which reduced the available borrowing capacity to $2,935 million. The Company ~~repurchased $247 million face value~~had 0 outstanding borrowings under the ABL Credit Facility as of ~~senior notes~~April 30, 2022 and ~~debentures. The debt repurchases were made in the open market for~~May 1, 2021.

On March 8, 2022, Macy’s Retail Holdings, LLC (“MRH”), a ~~total cash cost~~direct, wholly owned subsidiary of $257 million, including expenses related to the transactions. Such repurchases resulted in the recognition of expense of $1 million during the 39 weeks ended October 28, 2017 presented as net premiums on early retirement of debt on the Consolidated Statements of Income.

~~On November 27, 2017, the Company commenced~~Macy’s, Inc., completed a ~~cash~~ tender offer ~~("tender offer") to purchase up to $400~~and purchased approximately $8 million in aggregate principal amount of certain senior secured debentures (collectively, the “Second Lien Notes”). The purchased Second Lien Notes included $2 million of 6.65% Senior Secured Debentures due 2024, $1 million of 6.7% Senior Secured Debentures due 2028, $10,000 of 7.875% Senior Secured Debentures due 2030, $4 million of 6.9% Senior Secured Debentures due 2032, and $2 million of 6.7% Senior Secured Debentures due 2034. The total cash cost for the tender offer was approximately $8 million. Pursuant to the indenture governing the Second Lien Notes, the liens upon the collateral securing the Second Lien Notes that remained outstanding after the tender offer were automatically released on March 8, 2022. As of such date, such collateral no longer secures such Second Lien Notes or any obligations under the indenture with respect to such Second Lien Notes, and the right of the holders of the Second Lien Notes and such obligations to the benefits and proceeds of any such liens on the collateral terminated and were discharged automatically and unconditionally with respect to such Second Lien Notes.

On March 10, 2022, MRH issued $850 million in aggregate principal amount of senior notes in two separate tranches, one representing $425 million in aggregate principal amount of 5.875% senior notes due March 15, 2030 (the “2030 Notes”) and the other representing $425 million in aggregate principal amount of 6.125% senior notes due March 15, 2032 (the “2032 Notes”), in a private offering. Each of the 2030 Notes and 2032 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on an unsecured basis by Macy’s, Inc. Proceeds from the issuance, together with cash on hand, were used to redeem certain of MRH’s outstanding senior notes and ~~debentures,~~pay fees and expenses therewith and in connection with ~~stated interest rates ranging from 6.375% to 10.25% and maturities ranging from fiscal years 2021 to 2037. The tender offer expires on December 22, 2017, with an early tender date on December 8, 2017.~~the offering. The Company ~~expects to record the redemption premium and other costs~~recognized $31 million of losses related to ~~these repurchases as net premiums on~~the early retirement of debt on the Consolidated Statements of Income during the ~~fourth~~first quarter of ~~2017.~~2022.

During the 13 weeks ended April 30, 2022, the Company repurchased approximately 24 million shares of its common stock pursuant to existing stock purchase authorizations for a total of approximately $600 million. As of April 30, 2022, the Company had $1.4 billion of authorization remaining under its share repurchase program. The Company may continue or, from time to time, suspend repurchases of shares under its share repurchase program, depending on prevailing market conditions, alternate uses of capital and other factors.

5.	Retirement Plans

~~4. Benefit Plans~~

The Company has defined contribution plans ~~which~~that cover substantially all ~~employees~~colleagues who work 1,000 hours or more in a year. In addition, the Company has a funded defined benefit plan ("Pension Plan") and an unfunded defined benefit supplementary retirement plan ("SERP"), which provides benefits, for certain ~~employees,~~colleagues, in excess of qualified plan limitations. Effective January 1, 2012, the Pension Plan was closed to new participants, with limited exceptions, and effective January 2, 2012, the SERP was closed to new participants.

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible ~~employees~~colleagues no longer earn future pension service credits after December 31, 2013, with limited exceptions. All retirement benefits attributable to service in subsequent periods are provided through defined contribution plans.

In addition, certain retired ~~employees~~colleagues currently are provided with specified health care and life insurance benefits ("Postretirement Obligations"). Eligibility requirements for such benefits vary, but generally state that benefits are available to eligible ~~employees~~colleagues who were hired prior to a certain date and retire after a certain age with specified years of service. Certain ~~employees~~colleagues are subject to having such benefits modified or terminated.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

The defined contribution plan expense and actuarially determined components of the net periodic benefit cost (income) associated with the defined benefit plans are as follows:

	13 Weeks Ended
	April 30, 2022			May 1, 2021
	(millions)
401(k) Qualified Defined Contribution Plan	$	22		$	22
Pension Plan
Service cost	$	0		$	0
Interest cost		14			12
Expected return on assets		(31	)		(40	)
Recognition of net actuarial loss		4			8
	$	(13	)	$	(20	)
Supplementary Retirement Plan
Interest cost		4			3
Recognition of net actuarial loss		3			3
	$	7		$	6

Total Retirement Expense	$	16		$	8

13 Weeks Ended 39 Weeks Ended
October 28, 2017 October 29, 2016 October 28, 2017 October 29, 2016
(millions) (millions)
401(k) Qualified Defined Contribution Plan $ 20
$ 22
$ 65
$ 71

Non-Qualified Defined Contribution Plan $ —
$ —
$ —
$ 1

Pension Plan
Service cost $ 1
$ 1
$ 4
$ 3
Interest cost 25
27
79
83
Expected return on assets (55 ) (56 ) (168 ) (170 )
Recognition of net actuarial loss 8
7
24
22
Amortization of prior service credit —
—
—
—
$ (21 ) $ (21 ) $ (61 ) $ (62 )
Supplementary Retirement Plan
Service cost $ —
$ —
$ —
$ —
Interest cost 5
5
16
17
Recognition of net actuarial loss 2
3
6
7
Amortization of prior service cost —
—
—
—
$ 7
$ 8
$ 22
$ 24

Total Retirement Expense $ 6
$ 9
$ 26
$ 34

Postretirement Obligations
Service cost $ —
$ —
$ —
$ —
Interest cost 1
1
4
4
Recognition of net actuarial gain (2 ) (1 ) (4 ) (3 )
Amortization of prior service cost —
—
—
—
$ (1 ) $ —
$ —
$ 1

~~During the~~

13 and 39 weeks ended October 28, 2017, the Company incurred $22 million and $73 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. During the 13 and 39 weeks ended October 29, 2016, the Company also incurred $62 million and $81 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses associated with the Company's defined benefit plans and are a result of an increase in lump sum distributions associated with a voluntary separation program, organizational restructuring, and store closings, in addition to periodic distribution activity.

MACY'S, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Fair Value Measurements

~~5. Fair Value Measurements~~

The following table shows the Company's financial assets that are required to be measured at fair value on a recurring basis, by level within the hierarchy as defined by applicable accounting standards:

Level 1: Quoted prices in active markets for identical assets

Level 2: Significant observable inputs for the assets

Level 3: Significant unobservable inputs for the assets

	April 30, 2022								May 1, 2021
			Fair Value Measurements								Fair Value Measurements
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(millions)
Marketable equity and debt securities	$	35	$	35	$	0	$	0	$	82	$	38	$	44	$	0

October 28, 2017 October 29, 2016
Fair Value Measurements Fair Value Measurements
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
Total
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

Significant
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)
(millions)
Marketable equity and debt securities $ 100
$ 23
$ 77
$ —
$ 127
$ 19
$ 108
$ —

Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, certain short-term investments and other assets, short-term debt, merchandise accounts payable, accounts payable and accrued liabilities and long-term debt. With the exception of long-term debt, the carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. The fair values of long-term debt, excluding capitalized leases, are generally estimated based on quoted market prices for identical or similar instruments, and are classified as Level 2 measurements within the hierarchy as defined by applicable accounting standards.

The following table shows the estimated fair value of the Company's long-term debt:

	April 30, 2022						May 1, 2021
	Notional Amount		Carrying Amount		Fair Value		Notional Amount		Carrying Amount		Fair Value
	(millions)
Long-term debt	$	3,007	$	2,994	$	2,675	$	4,610	$	4,558	$	4,643

October 28, 2017 October 29, 2016

Notional
Amount

Carrying
Amount

Fair
Value

Notional
Amount

Carrying
Amount

Fair
Value
(millions)
Long-term debt $ 6,206
$ 6,297
$ 5,908
$ 6,459
$ 6,536
$ 6,749

~~6. Condensed Consolidating Financial Information~~

Certain debt obligations of the Company, which constitute debt obligations of Macy's Retail Holdings, Inc. ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent"), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, "Other Subsidiaries" includes all other direct subsidiaries of Parent, including Bluemercury, Inc., FDS Bank, West 34th Street Insurance Company New York, Macy's Merchandising Corporation, Macy's Merchandising Group, Inc. and its subsidiaries Macy's Merchandising Group (Hong Kong) Limited, Macy's Merchandising Group Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, and its majority-owned subsidiary Macy's China Limited. "Subsidiary Issuer" includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in "Other Subsidiaries."

Condensed Consolidating Statements of Comprehensive Income for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016, Condensed Consolidating Balance Sheets as of October 28, 2017, October 29, 2016 and January 28, 2017, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 28, 2017 and October 29, 2016 are presented on the following pages.

MACY'S, INC.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 13 Weeks Ended October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 2,077
$ 5,861
$ (2,657 ) $ 5,281
Cost of sales —
(1,391 ) (4,441 ) 2,657
(3,175 )
Gross margin —
686
1,420
—
2,106
Selling, general and administrative expenses —
(813 ) (1,182 ) —
(1,995 )
Gains on sale of real estate —
24
41
—
65
Restructuring and other costs —
(1 ) (32 ) —
(33 )
Settlement charges —
(8 ) (14 ) —
(22 )
Operating income (loss) —
(112 ) 233
—
121
Interest (expense) income, net:
External 1
(76 ) 1
—
(74 )
Intercompany —
(34 ) 34
—
—
Equity in earnings (loss) of subsidiaries 35
(61 ) —
26
—
Income (loss) before income taxes 36
(283 ) 268
26
47
Federal, state and local income
tax benefit (expense) —
59
(72 ) —
(13 )
Net income (loss) 36
(224 ) 196
26
34
Net loss attributable to noncontrolling interest —
—
2
—
2
Net income (loss) attributable to
Macy's, Inc. shareholders $ 36
$ (224 ) $ 198
$ 26
$ 36
Comprehensive income (loss) $ 61
$ (201 ) $ 212
$ (13 ) $ 59
Comprehensive loss attributable to
noncontrolling interest —
—
2
—
2
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 61
$ (201 ) $ 214
$ (13 ) $ 61

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 13 Weeks EndedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 2,376
$ 6,183
$ (2,933 ) $ 5,626
Cost of sales —
(1,577 ) (4,742 ) 2,933
(3,386 )
Gross margin —
799
1,441
—
2,240
Selling, general and administrative expenses (1 ) (950 ) (1,161 ) —
(2,112 )
Gains on sale of real estate —
41
—
—
41
Settlement charges —
(24 ) (38 ) —
(62 )
Operating income (loss) (1 ) (134 ) 242
—
107
Interest (expense) income, net:
External 1
(82 ) —
—
(81 )
Intercompany —
(51 ) 51
—
—
Equity in earnings (loss) of subsidiaries 17
(101 ) —
84
—
Income (loss) before income taxes 17
(368 ) 293
84
26
Federal, state and local income
tax benefit (expense) —
68
(79 ) —
(11 )
Net income (loss) 17
(300 ) 214
84
15
Net loss attributable to noncontrolling interest —
—
2
—
2
Net income (loss) attributable to
Macy's, Inc. shareholders $ 17
$ (300 ) $ 216
$ 84
$ 17
Comprehensive income (loss) $ 62
$ (255 ) $ 241
$ 12
$ 60
Comprehensive loss attributable to
noncontrolling interest —
—
2
—
2
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 62
$ (255 ) $ 243
$ 12
$ 62

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 39 weeks ended October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 6,319
$ 15,727
$ (5,875 ) $ 16,171
Cost of sales —
(4,126 ) (11,543 ) 5,875
(9,794 )
Gross margin —
2,193
4,184
—
6,377
Selling, general and administrative expenses (1 ) (2,430 ) (3,422 ) —
(5,853 )
Gains on sale of real estate —
116
60
—
176
Restructuring and other costs —
(1 ) (32 ) —
(33 )
Settlement charges —
(24 ) (49 ) —
(73 )
Operating income (loss) (1 ) (146 ) 741
—
594
Interest (expense) income, net:
External 4
(243 ) 2
—
(237 )
Intercompany —
(102 ) 102
—
—
Net premiums on early retirement of debt —
(1 ) —
—
(1 )
Equity in earnings (loss) of subsidiaries 220
(30 ) —
(190 ) —
Income (loss) before income taxes 223
(522 ) 845
(190 ) 356
Federal, state and local income
tax benefit (expense) (1 ) 142
(281 ) —
(140 )
Net income (loss) 222
(380 ) 564
(190 ) 216
Net loss attributable to noncontrolling interest —
—
6
—
6
Net income (loss) attributable to
Macy's, Inc. shareholders $ 222
$ (380 ) $ 570
$ (190 ) $ 222
Comprehensive income (loss) $ 318
$ (290 ) $ 627
$ (343 ) $ 312
Comprehensive loss attributable to
noncontrolling interest —
—
6
—
6
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 318
$ (290 ) $ 633
$ (343 ) $ 318

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Comprehensive Income~~

~~For the 39 weeks endedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Net sales $ —
$ 7,324
$ 16,546
$ (6,607 ) $ 17,263
Cost of sales —
(4,704 ) (12,273 ) 6,607
(10,370 )
Gross margin —
2,620
4,273
—
6,893
Selling, general and administrative expenses (2 ) (2,803 ) (3,334 ) —
(6,139 )
Gains on sale of real estate —
71
5
—
76
Impairments and other costs —
(184 ) (65 ) —
(249 )
Settlement charges —
(29 ) (52 ) —
(81 )
Operating income (loss) (2 ) (325 ) 827
—
500
Interest (expense) income, net:
External 2
(278 ) —
—
(276 )
Intercompany —
(166 ) 166
—
—
Equity in earnings (loss) of subsidiaries 144
(69 ) —
(75 ) —
Income (loss) before income taxes 144
(838 ) 993
(75 ) 224
Federal, state and local income
tax benefit (expense) —
243
(328 ) —
(85 )
Net income (loss) 144
(595 ) 665
(75 ) 139
Net loss attributable to noncontrolling interest —
—
5
—
5
Net income (loss) attributable to
Macy's, Inc. shareholders $ 144
$ (595 ) $ 670
$ (75 ) $ 144
Comprehensive income (loss) $ 164
$ (575 ) $ 677
$ (107 ) $ 159
Comprehensive loss attributable to
noncontrolling interest —
—
5
—
5
Comprehensive income (loss) attributable to
Macy's, Inc. shareholders $ 164
$ (575 ) $ 682
$ (107 ) $ 164

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of October 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 116
$ 89
$ 329
$ —
$ 534
Receivables —
67
152
—
219
Merchandise inventories —
3,218
3,847
—
7,065
Income tax receivable —
2
—
(2 ) —
Prepaid expenses and other current assets —
86
346
—
432
Total Current Assets 116
3,462
4,674
(2 ) 8,250
Property and Equipment – net —
3,184
3,558
—
6,742
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
46
445
—
491
Other Assets 1
62
772
—
835
Deferred Income Taxes 26
—
—
(26 ) —
Intercompany Receivable 1,436
—
1,971
(3,407 ) —
Investment in Subsidiaries 2,882
3,644
—
(6,526 ) —
Total Assets $ 4,461
$ 13,713
$ 12,002
$ (9,961 ) $ 20,215
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 6
$ 16
$ —
$ 22
Merchandise accounts payable —
1,339
1,834
—
3,173
Accounts payable and accrued liabilities 139
975
2,048
—
3,162
Income taxes 20
—
16
(2 ) 34
Total Current Liabilities 159
2,320
3,914
(2 ) 6,391
Long-Term Debt —
6,280
17
—
6,297
Intercompany Payable —
3,407
—
(3,407 ) —
Deferred Income Taxes —
707
872
(26 ) 1,553
Other Liabilities 71
476
1,203
—
1,750
Shareholders' Equity:
Macy's, Inc. 4,231
523
6,003
(6,526 ) 4,231
Noncontrolling Interest —
—
(7 ) —
(7 )
Total Shareholders' Equity 4,231
523
5,996
(6,526 ) 4,224
Total Liabilities and Shareholders' Equity $ 4,461
$ 13,713
$ 12,002
$ (9,961 ) $ 20,215

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of October 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 60
$ 99
$ 298
$ —
$ 457
Receivables —
74
188
—
262
Merchandise inventories —
3,621
3,966
—
7,587
Income tax receivable 99
—
—
(39 ) 60
Prepaid expenses and other current assets —
89
365
—
454
Total Current Assets 159
3,883
4,817
(39 ) 8,820
Property and Equipment – net —
3,534
3,615
—
7,149
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
47
452
—
499
Other Assets 1
153
755
—
909
Deferred Income Taxes 24
—
—
(24 ) —
Intercompany Receivable 878
—
1,876
(2,754 ) —
Investment in Subsidiaries 2,954
3,173
—
(6,127 ) —
Total Assets $ 4,016
$ 14,105
$ 12,097
$ (8,944 ) $ 21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 935
$ 3
$ —
$ 938
Merchandise accounts payable —
1,481
1,894
—
3,375
Accounts payable and accrued liabilities 164
910
1,856
—
2,930
Income taxes —
3
36
(39 ) —
Total Current Liabilities 164
3,329
3,789
(39 ) 7,243
Long-Term Debt —
6,545
18
—
6,563
Intercompany Payable —
2,754
—
(2,754 ) —
Deferred Income Taxes —
694
878
(24 ) 1,548
Other Liabilities 63
565
1,501
—
2,129
Shareholders' Equity:
Macy's, Inc. 3,789
218
5,909
(6,127 ) 3,789
Noncontrolling Interest —
—
2
—
2
Total Shareholders' Equity 3,789
218
5,911
(6,127 ) 3,791
Total Liabilities and Shareholders' Equity $ 4,016
$ 14,105
$ 12,097
$ (8,944 ) $ 21,274

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Balance Sheet~~

~~As of January 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents $ 938
$ 81
$ 278
$ —
$ 1,297
Receivables —
169
353
—
522
Merchandise inventories —
2,565
2,834
—
5,399
Prepaid expenses and other current assets —
84
324
—
408
Total Current Assets 938
2,899
3,789
—
7,626
Property and Equipment – net —
3,397
3,620
—
7,017
Goodwill —
3,315
582
—
3,897
Other Intangible Assets – net —
51
447
—
498
Other Assets —
47
766
—
813
Deferred Income Taxes 26
—
—
(26 ) —
Intercompany Receivable 375
—
2,428
(2,803 ) —
Investment in Subsidiaries 3,137
3,540
—
(6,677 ) —
Total Assets $ 4,476
$ 13,249
$ 11,632
$ (9,506 ) $ 19,851
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current Liabilities:
Short-term debt $ —
$ 306
$ 3
$ —
$ 309
Merchandise accounts payable —
590
833
—
1,423
Accounts payable and accrued liabilities 16
1,064
2,483
—
3,563
Income taxes 71
16
265
—
352
Total Current Liabilities 87
1,976
3,584
—
5,647
Long-Term Debt —
6,544
18
—
6,562
Intercompany Payable —
2,803
—
(2,803 ) —
Deferred Income Taxes —
688
781
(26 ) 1,443
Other Liabilities 66
500
1,311
—
1,877
Shareholders' Equity:
Macy's, Inc. 4,323
738
5,939
(6,677 ) 4,323
Noncontrolling Interest —
—
(1 ) —
(1 )
Total Shareholders' Equity 4,323
738
5,938
(6,677 ) 4,322
Total Liabilities and Shareholders' Equity $ 4,476
$ 13,249
$ 11,632
$ (9,506 ) $ 19,851

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Cash Flows~~

~~For the~~ ~~39 Weeks EndedOctober 28, 2017~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Cash flows from operating activities:
Net income (loss) $ 222
$ (380 ) $ 564
$ (190 ) $ 216
Restructuring and other costs —
1
32
—
33
Settlement charges —
24
49
—
73
Equity in loss (earnings) of subsidiaries (220 ) 30
—
190
—
Dividends received from subsidiaries 571
—
—
(571 ) —
Depreciation and amortization —
265
476
—
741
(Increase) decrease in working capital (52 ) 35
(633 ) —
(650 )
Other, net 8
2
(34 ) —
(24 )
Net cash provided (used) by operating activities 529
(23 ) 454
(571 ) 389
Cash flows from investing activities:
Disposition (purchase) of property and equipment and capitalized software, net —
30
(368 ) —
(338 )
Other, net —
2
(10 ) —
(8 )
Net cash provided (used) by investing activities —
32
(378 ) —
(346 )
Cash flows from financing activities:
Debt repaid —
(553 ) (1 ) —
(554 )
Dividends paid (346 ) —
(571 ) 571
(346 )
Issuance of common stock, net of common stock acquired 2
—
—
—
2
Proceeds from noncontrolling interest —
—
13
—
13
Intercompany activity, net (1,016 ) 584
432
—
—
Other, net 9
(32 ) 102
—
79
Net cash used by financing activities (1,351 ) (1 ) (25 ) 571
(806 )
Net increase (decrease) in cash and
cash equivalents (822 ) 8
51
—
(763 )
Cash and cash equivalents at beginning of period 938
81
278
—
1,297
Cash and cash equivalents at end of period $ 116
$ 89
$ 329
$ —
$ 534

~~MACY'S, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

~~Condensed Consolidating Statement of Cash Flows~~

~~For the~~ ~~39 Weeks EndedOctober 29, 2016~~

~~(millions)~~

Parent
Subsidiary
Issuer

Other
Subsidiaries

Consolidating
Adjustments
Consolidated
Cash flows from operating activities:
Net income (loss) $ 144
$ (595 ) $ 665
$ (75 ) $ 139
Impairments and other costs —
184
65
—
249
Settlement charges —
29
52
—
81
Equity in loss (earnings) of subsidiaries (144 ) 69
—
75
—
Dividends received from subsidiaries 535
575
—
(1,110 ) —
Depreciation and amortization —
298
489
—
787
Increase in working capital (59 ) (572 ) (328 ) —
(959 )
Other, net 19
(36 ) 28
—
11
Net cash provided (used) by operating activities 495
(48 ) 971
(1,110 ) 308
Cash flows from investing activities:
Purchase of property and equipment and capitalized software, net —
(23 ) (520 ) —
(543 )
Other, net —
47
5
—
52
Net cash provided (used) by investing activities —
24
(515 ) —
(491 )
Cash flows from financing activities:
Debt repaid, net of debt issued —
(122 ) (1 ) —
(123 )
Dividends paid (344 ) —
(1,110 ) 1,110
(344 )
Common stock acquired, net of
issuance of common stock (199 ) —
—
—
(199 )
Proceeds from noncontrolling interest —
—
7
—
7
Intercompany activity, net (642 ) 158
484
—
—
Other, net 9
(4 ) 185
—
190
Net cash provided (used) by
financing activities (1,176 ) 32
(435 ) 1,110
(469 )
Net increase (decrease) in cash and
cash equivalents (681 ) 8
21
—
(652 )
Cash and cash equivalents at beginning of period 741
91
277
—
1,109
Cash and cash equivalents at end of period $ 60
$ 99
$ 298
$ —
$ 457

~~MACY'S, INC.~~


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following discussion, all references to "~~third~~"first quarter of ~~2017~~"2022" and "~~third~~"first quarter of ~~2016~~"2021" are to the Company's 13-week fiscal periods ended ~~October 28, 2017~~April 30, 2022 and ~~October 29, 2016, respectively, and all references to "2017" and "2016" are to the Company's 39-week fiscal periods ended October 28, 2017 and October 29, 2016,~~May 1, 2021, respectively.

The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes included ~~elsewhere~~elsewhere in this report, as well as the financial and other information included in the ~~2016~~2021 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report (particularly in "Risk Factors" and in "Forward-Looking Statements") and in the ~~2016~~2021 10-K (particularly in "Risk Factors" and in "Forward-Looking Statements"). This discussion includes ~~non-GAAP~~Non-GAAP financial measures. For information about these measures, see the disclosure under the caption "Important Information Regarding Non-GAAP Financial Measures" ~~on pages 29 to 31.~~

Quarterly Overview

The Company is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and children's), cosmetics, home furnishings and other consumer goods. The Company operates approximately ~~860~~ stores in 45 states, the District of Columbia, Guam and Puerto Rico. As of October 28, 2017, the Company's operations were conducted through Macy's, Bloomingdale's, Bloomingdale's The Outlet, Macy's Backstage, bluemercury and Macy's China Limited. In addition, Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.

The Company has begun the implementation of its North Star strategy to transform its omnichannel business and focus on key growth areas, embrace customer centricity, and optimize value in its real estate portfolio. Inspired by the North Star, there are five points to this strategy.


1.	~~FromFamiliar to Favorite~~ includes everything the Company does to further its brand awareness and identity to its core customers. Actions include understanding and anticipating customers’ needs, strengthening the Company's fashion authority and executing initiatives around its loyalty and pricing strategies.

~~It Must Be Macy’s~~ encompasses delivering the products and experiences customers love and are exclusive to the Company. This includes styles and home fashion for every day and special occasions, from the Company's leading private brands, as well as exclusive national brands or assortments. It celebrates the Company's iconic events and includes strategies to appeal to more value-oriented customers.

~~Every Experience Matters~~, in-store and online. The Company's competitive advantage is the ability to combine the human touch in its physical stores with cutting-edge technology in its mobile applications and websites. Key to this point is the enhancement of a customer's experience~~as they explore our stores, mobile applications and websites, find their favorite styles, sizes and colors, and receive their purchases through the shopping channels they prefer.~~


4.	~~Funding our Future~~ ~~represents the decisions and actions the Company takes to identify and realize resourcesto fuel growth. This involves a focus on cost reduction and reinvestment as well as creating value from the Company's real estate portfolio.~~


5.	~~What’s New, What’s Next~~ explores and develops those innovations to turn consumer and technology trends to the Company's advantage and to drive growth. This includes exploring previously unmet customer needs and making smart investment decisions based on customer insights and analytics.

The Company has taken a number of key steps over the past couple of years to position itself to successfully implement the North Star strategy. Specifically, the Company launched a new Star Rewards loyalty program in October 2017 focused on strengthening relationships with the Company's best customers, migrating existing customers to higher spending levels and attracting new or infrequent customers. The initial launch of the new program focused initially on proprietary cardholders with additional enhancements and expansion beyond proprietary cardholders planned for the future.

In August 2016, the Company announced its intention to close approximately 100 Macy’s stores, 74 of which were closed or announced to be closed by the end of the third quarter of 2017. Further, in January 2017, the Company announced a series of actions to streamline its store portfolio, intensify cost efficiency efforts and execute its real estate strategy. In addition, the Company has reorganized the field structure that supports the remaining stores and conducted a significant restructuring of the Company's central operations to focus resources on strategic priorities and reduce expense.

~~MACY'S, INC.~~

In August 2017, the Company announced a restructuring which included the consolidation of three functions (merchandising, planning and private brands) into a single merchandising function. During the third quarter of 2017, the Company recognized $33 million of costs primarily associated with this restructuring effort as well as a restructuring within the marketing function. Additional financial and operational impacts of such restructuring actions include future annual savings of approximately $38 million, some of which may be used for reinvestment in the business, and savings of approximately $.01 per diluted share in the fourth quarter of 2017.

~~The Company’s real estate strategy is designed to create value through both monetization and redevelopment of certain assets:~~

In January 2016, the Company completed a $270 million real estate transaction to recreate Macy's Brooklyn store. The Company continues to own and operate the first four floors and lower level of its existing nine-story retail store, which is currently being reconfigured and remodeled. The remaining portion of the store and its nearby parking facility were sold to Tishman Speyer in a single sales transaction. As the sales agreement required the Company to conduct certain redevelopment activities within the store, the Company is recognizing the gain on the transaction, approximately $250 million, under the percentage of completion method of accounting over the redevelopment period. Accordingly, $166 million has been recognized to-date, of which $117 million was recognized through fiscal 2016 and $49 million has been recognized during 2017.

In fiscal 2016, the Company had property and equipment sales, primarily related to real estate, totaling $673 million in cash proceeds and recognized real estate gains of $209 million. These proceeds include the cash received from the sale of the Company's 248,000 square-foot Union Square Men’s building in San Francisco for approximately $250 million in January 2017. The Company will use part of the proceeds to consolidate the Men’s store into its main Union Square store. The Company is leasing back the Men's store property as it completes the reconfiguration of the main store. The Company is expected to recognize a gain of approximately $235 million in January 2018.

In January 2017, the Company finalized the formation of a strategic alliance with Brookfield Asset Management, a leading global alternative asset manager, to create increased value in its real estate portfolio. Under the alliance, Brookfield has an exclusive right for up to 24 months to create a "pre-development plan" for each of approximately 50 Macy’s real estate assets, with an option for Macy’s to continue to identify and add assets into the alliance. The breadth of opportunity within the portfolio ranges from the additional development on a portion of an asset (such as a Company-controlled land parcel adjacent to a store) to the complete redevelopment of an existing store. Once a "pre-development plan" is created, the Company has the option to accept the "pre-development plan" and then either contribute the asset into a joint venture for the development plan to commence or sell the asset to Brookfield. If the Company chooses to contribute the asset into a joint venture, the Company may elect to participate as a funding or non-funding partner. After development, the joint venture may sell the asset and distribute proceeds accordingly. Based on the analysis conducted to date, preliminary indications point to a likelihood that Brookfield will recommend proceeding with redevelopment on roughly two thirds of the assets subject to the alliance.

~~In February 2017, the Company sold its downtown Minneapolis store and parking facility for $59 million of proceeds and recognized a gain of approximately $47 million~~delivered solid results in the first quarter of ~~2017.~~2022 despite a challenging operating environment. The profitable first quarter results were driven by notable shift back to occasion-based apparel, in-store shopping, and continued strength in sales of luxury goods.

Certain financial highlights are as follows:

•

Comparable sales were up 12.8% on an owned basis; and up 12.4% on an owned plus licensed basis compared to the first quarter of 2021.

~~In April 2017,~~

•

Digital sales increased 2% versus the first quarter of 2021. Digital penetration was at 33% of net sales for the first quarter of 2022, a 4-percentage point decline from the first quarter of 2021.

•

Gross margin was 39.6%, compared to 38.6% in the first quarter of 2021.

•

Net credit card revenues were $191 million, up $32 million from the first quarter of 2021.

•

Selling, general and administrative ("SG&A") expense was $1.9 billion, up $131 million from the first quarter of 2021. SG&A expense as a percent of sales was 35.1%, an improvement of 200 basis points from the first quarter of 2021.

•

Net income was $286 million in the first quarter of 2022, compared $103 million in the first quarter of 2021.

•

The first quarter of 2022 had positive earnings before interest, taxes, depreciation and amortization ("EBITDA") of $676 million compared to EBITDA of $454 million during the first quarter of 2021. On an adjusted basis, EBITDA was $684 million for the first quarter of 2022, compared to $473 million during the first quarter of 2021.

•

Diluted earnings per share and adjusted diluted earnings per share were $0.98 and $1.08, respectively, during the first quarter of 2022. This compares to diluted earnings per share and adjusted diluted earnings per share of $0.32 and $0.39 for the first quarter of 2021, respectively.

•

Inventory was up 17% from the first quarter of 2021.

•

During the first quarter of 2022, the Company took the following actions to boost its liquidity and financial flexibility as well as return capital to shareholders:

◦

On March 8, 2022, the collateral securing the Company’s second lien notes was automatically released and all of the Company’s long-term debt is now unsecured.

◦

Using the proceeds from the issuance of $850 million in new unsecured notes along with cash on hand, Macy’s Inc. redeemed approximately $1.1 billion of near-term debt that was originally maturing in 2023 and 2024. The net result

MACY'S, INC.

of the issuance and redemptions was an approximately $300 million reduction to total long-term debt. As a result, the Company does not have any material debt maturities for the next five years.

◦

The Company amended its asset-based credit facility, including extending the maturity of the $3 billion facility to March 2027.

◦

The Company repurchased $600 million of shares under its newly authorized $2 billion share repurchase program, which does not have an expiration date, and paid $45 million in dividends to shareholders.

During the first quarter of 2022, the Company ~~launched a marketing effort~~continued to execute its Polaris strategy and these actions impacted its operating results for the ~~upper floors of its flagship State Street Macy's store in downtown Chicago. Development~~period, notably:

•

Win With Fashion and Style: By offering a wide assortment of categories, products and brands from off-price to luxury, the Company was able to reach a broad and diverse range of customers during the first quarter. In merchandise, strengths shifted away from pandemic-driven products such as casual, activewear, and soft home, and into occasion-based categories, such as dresses, women’s shoes, accessories and men’s tailored. This shift contributed to an increase in store foot-traffic and the Company’s balanced assortment allowed it to meet demand and capture sales. Additionally, during the first quarter of 2022, the Company launched Own Your Style, a new multiyear creative brand platform and tagline celebrating individuality and placing customers at the center of communication and Mission Every One, a social purpose platform in which Macy’s invests in its people, partners, products and programs to create a more equitable and sustainable future. Finally, the Company is in the early stages of reinventing its private brand portfolio.

•

Deliver Clear Value: The Company is leveraging data analytics and pricing tools to efficiently plan, place and price inventory, including location level pricing and point-of -sale (“POS”) pricing work. The Company’s POS pricing optimization contributed to lower promotional markdowns on regular priced goods which contributed to higher average unit retail and improved gross margin performance during the first quarter. Additionally, higher ticket prices and category mix benefited average unit retail during the quarter. These collective activities have resulted in higher average unit retail prices and gross margin performance. In addition, inventory turn for the trailing 12 months has improved by 9% over 2021.

•

Excel in Digital Shopping: While the Company experienced a deceleration in the growth of its digital channel during the first quarter, as consumers shifted back to in-store shopping, the Company continued to improve its digital offerings through continued website and app updates. Digital conversion for the quarter was 3.8%. Macy’s Media Network, an in-house media platform that enables business-to-business monetization of advertising partnerships, generated $26 million of net revenue during the first quarter of 2022, nearly double that of the first quarter of 2021. In addition, in November 2021, the Company announced its plan to launch a curated, digital marketplace. The Macy’s digital marketplace is expected to launch in the third quarter of 2022.

•

Enhance Store Experience: During the first quarter of 2022, the consumer shifted shopping channels from digital to stores as consumer comfort levels grew along with their desire to return to in-store shopping. The Company continues to invest in physical stores to support its digitally-led omnichannel business model and build new capabilities to help make the shopping experience as convenient and compelling as possible. For example, the Company invested in its customer service experience by enhancing At Your Service centers. The Company is in the process of adding 37 new Macy’s Backstage locations nationwide as well as 5 to 10 off-mall, smaller format stores in 2022, a mix of Market by Macy’s, Freestanding Backstage, Bloomie’s and Bloomingdale’s the Outlet.

•

Modernize Supply Chain: The Company has continued to update its supply chain infrastructure and network, while leveraging improved data and analytics capabilities in fulfillment strategies to meet customers' desire for speed and convenience and improving inventory placement. The Company is navigating supply chain disruptions by adjusting freight strategies, diversifying ports and working closely with international carriers and brand partners to prioritize product. The Company is expanding and relocating distribution centers to support business growth and serve the growing customer base. This includes plans to open a modern, new facility in Texas in mid-2023 which will continue to support stores in the region as well as provide online fulfillment. In addition, the Company plans to open a new 1.4 million-square-foot fulfillment center in North Carolina in 2024. The facility will be equipped with new automation technology to increase capacity and productivity to help drive profitable digital sales growth and will employ nearly 2,800 workers when fully operational.

•

Enable Transformation: The Company has continued to modernize its technology foundations to increase agility in reacting to customers and the market regardless of the channel in which customers interact. These activities are coupled with others to build out data science and analytics capabilities with a focus on areas to provide competitive differentiation. The Company

MACY'S, INC.

has focused on personalization as an important growth engine and will continue to enhance its capabilities to increase engagement across all segments. As part of the Company’s ongoing initiatives to attract and retain talent, in May 2022, the Company raised its minimum pay rate to $15 per hour and began providing a debt-free education benefit program through which U.S.-based, regular, salaried and hourly colleagues are able to pursue a range of education programs with 100% of tuition, books and fees covered.

From a nameplate perspective, Macy’s brand comparable sales were up 10.7% on an owned basis and ~~increased utilization of the upper floors are expected to drive more foot traffic to the store.~~

~~In May 2017, the Company signed a contract to sell~~up 10.1% on an additional two floors of the downtown Seattle Macy's store; four floors were sold in a similar transaction in fiscal 2015. This transaction closed in September 2017 for approximately $50 million of proceeds and the Company recognized a gain of approximately $40 million in the third quarter of 2017.

In 2017, the Company opened new Macy’s stores in Murray, UT and Los Angeles, CA as well as a Bloomingdale’s store in Kuwait under a license agreement with Al Tayer Group, LLC. The Company expects to open new Macy's and Bloomingdale's stores in Al Maryah Central in Abu Dhabi, UAE, in fiscal 2018 under a license agreement with Al Tayer Group, LLC and two additional Bloomingdale's stores in San Jose, CA and Norwalk, CT in fiscal 2019.

Both Macy's off-price business, Macy's Backstage, and its clearance strategy, Last Act, have been successful in providing unique value opportunities to both existing and new Macy's customers. The Company has rolled out Last Act to all families of business and is currently focused on opening new Macy's Backstage stores within existing Macy's store locations. In the third quarter of 2017, the Company opened 7 new Macy’s Backstage stores within existing Macy’s stores, bringing the total locations in operation to 52 (7 freestanding and 45 inside Macy's stores) as of October 28, 2017.

~~MACY'S, INC.~~

The Company is focused on accelerating the growth of its luxury beauty products and spa retailer, bluemercury, by opening additional freestanding bluemercury stores in urban and suburban markets, enhancing its online capabilities and adding bluemercury products and boutiques to Macy's stores. 8 new freestanding bluemercury locations were opened in the third quarter of 2017 and 3 additional locations are expected to open later in the fiscal year. As of October 28, 2017, the Company is operating 155 bluemercury locations (135 freestanding and 20 inside Macy's stores).

~~Results of Operations~~

~~Comparison of the~~ ~~Third Quarter of 2017~~ ~~and the~~ ~~Third Quarter of 2016~~

Third Quarter of 2017 Third Quarter of 2016
Amount % to Sales Amount % to Sales
(dollars in millions, except per share figures)
Net sales $ 5,281
$ 5,626

Decrease in sales (6.1 ) % (4.2 ) %
Decrease in comparable sales (4.0 ) % (3.3 ) %
Cost of sales (3,175 ) (60.1 ) % (3,386 ) (60.2 ) %
Gross margin 2,106
39.9
% 2,240
39.8
%
Selling, general and administrative expenses (1,995 ) (37.8 ) % (2,112 ) (37.5 ) %
Gains on sale of real estate 65
1.2
% 41
0.7
%
Restructuring and other costs (33 ) (0.6 ) % —
—
%
Settlement charges (22 ) (0.4 ) % (62 ) (1.1 ) %
Operating income 121
2.3
% 107
1.9
%
Interest expense - net (74 ) (81 )
Income before income taxes 47
26

Federal, state and local income tax expense (13 ) (11 )
Net income 34
15

Net loss attributable to noncontrolling interest 2
2

Net income attributable to Macy's, Inc. shareholders $ 36
0.7
% $ 17
0.3
%

Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ .12
$ .05

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of restructuring and other costs and settlement charges $ .23
$ .17

~~Net Sales~~

~~Net sales for the~~ ~~third quarter of 2017~~ ~~decreased $345 million or 6.1%~~owned-plus-licensed basis compared to the ~~third~~first quarter of ~~2016~~ due to fiscal year-end 2016 store closures and the decline in comparable sales, which were negatively impacted by hurricane activity during the quarter and warmer than expected fall weather. The decrease in2021. Bloomingdale’s comparable sales on an owned basis ~~for the~~ ~~third quarter of 2017~~ ~~was 4.0%~~were up 28.1% and on an owned-plus-licensed basis were up 26.9% compared to the ~~third~~first quarter of ~~2016. The decrease in~~2021. Bluemercury comparable sales were up 25.2% on an owned ~~plus~~and owned-plus licensed basis ~~for the third quarter of 2017 was 3.6%~~ compared to the ~~third~~first quarter of ~~2016. Sales during~~2021.

Results of Operations

	First Quarter of 2022						First Quarter of 2021
	Amount			% to Net Sales			Amount			% to Net Sales
	(dollars in millions, except per share figures)
Net sales	$	5,348					$	4,706
Increase in comparable sales		12.8	%					62.5	%
Credit card revenues, net		191			3.6	%		159			3.4	%
Cost of sales		(3,231	)		(60.4	)%		(2,889	)		(61.4	)%
Selling, general and administrative expenses		(1,879	)		(35.1	)%		(1,748	)		(37.1	)%
Gains on sale of real estate		42			0.8	%		6			0.1	%
Impairment, restructuring and other costs		(8	)		(0.1	)%		(19	)		(0.4	)%
Operating income		463			8.7	%		216			4.6	%

Diluted earnings per share	$	0.98					$	0.32

Supplemental Financial Measures
Gross margin (a)	$	2,117			39.6	%	$	1,817			38.6	%
Digital sales as a percentage of net sales		33	%					37	%

Supplemental Non-GAAP Financial Measures
Increase in comparable sales on an owned plus licensed basis		12.4	%					63.9	%
Adjusted diluted earnings per share	$	1.08					$	0.39
EBITDA	$	676					$	454
Adjusted EBITDA	$	684					$	473

(a)	Gross margin is defined as net sales less cost of sales.

See pages 22 to 23 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

Comparison of the First Quarter of 2022 and the First Quarter of 2021

	First Quarter of 2022			First Quarter of 2021
Net sales	$	5,348		$	4,706
Increase in comparable sales		12.8	%		62.5	%
Increase in comparable sales on an owned plus licensed basis		12.4	%		63.9	%
Digital sales as a percent of net sales		33	%		37	%

Net sales for the first quarter of 2022 improved across all three brands – Macy’s, Bloomingdale’s and bluemercury. During the quarter, ~~were strongest~~consumer shopping behavior shifted more towards occasion-based apparel, with strength in ~~fine jewelry, fragrances,~~ dresses, ~~active apparel, men's~~women’s and men’s shoes, accessories, men’s tailored ~~clothing,~~ and ~~shoes, excluding boots. Sales were weakest~~luggage. Categories such as casual, activewear and soft home, including textiles and housewares, underperformed the prior year as a result of the shift in ~~cold weather businesses including coats, boots~~consumer behavior.

MACY'S, INC.

	First Quarter of 2022			First Quarter of 2021
Credit card revenues, net	$	191		$	159
Proprietary credit card sales penetration		43.1	%		42.0	%

The increase in net credit card revenues was driven by the continuation of the strong credit health of the credit card portfolio's customers leading to lower levels of bad debt, higher credit sales and ~~winter accessories. Sales were also soft in home related businesses.~~ higher spending on the co-brand credit card.

	First Quarter of 2022			First Quarter of 2021
Cost of sales	$	(3,231	)	$	(2,889	)
As a percent to net sales		60.4	%		61.4	%
Gross margin	$	2,117		$	1,817
As a percent to net sales		39.6	%		38.6	%

The ~~Company’s digital business continued its strong growth with double digit gains~~increase in the ~~third~~gross margin rate was primarily driven by higher average unit retail driven by effective POS pricing optimization efforts driving lower promotions particularly on regular priced merchandise, higher ticket prices and category mix. Inventory was up 17% year-over-year, impacted by the downshift in consumer demand from active/casual and soft home categories to accelerated demand at occasion-based apparel, coupled with the loosening in supply chain constraints resulting in a higher percentage of receipts than expected.

	First Quarter of 2022			First Quarter of 2021
SG&A expenses	$	(1,879	)	$	(1,748	)
As a percent to net sales		35.1	%		37.1	%

SG&A expenses increased in the first quarter of ~~2017. Geographically, regional trends were relatively consistent except for hurricane impacted areas. In addition, lower international tourism sales contributed to the decline of sales in the~~ ~~third quarter of 2017~~ ~~compared to the~~ ~~third quarter of 2016~~.

~~Cost of Sales~~

~~The cost of sales rate~~2022 but decreased as a percent to net sales. The increase in SG&A expense dollars corresponds with higher net sales ~~for~~as well as the ~~third~~Company lapping a significant number of open positions in the prior year. However, the improvement in the SG&A expense rate benefited from expense leverage in conjunction with growing sales driven by disciplined expense management.

		First Quarter of 2022				First Quarter of 2021
Gains on sale of real estate		$	42			$	6

The first quarter of ~~2017~~ ~~decreased to 60.1% compared to 60.2% for~~2022 asset sale gains mainly consist of gains from the ~~third~~sale of three properties.

		First Quarter of 2022				First Quarter of 2021
Impairment, restructuring and other costs		$	(8	)		$	(19	)

Impairment, restructuring and other costs in the first quarter of ~~2016. This decrease in~~2021 primarily related to the ~~cost~~write-off of ~~sales rate as a percent to net sales was due in part to lower inventory levels at~~investment assets.

		First Quarter of 2022				First Quarter of 2021
Losses on early retirement of debt		$	(31	)		$	(11	)

In the ~~end of the quarter, including less clearance merchandise subject to liquidation. The application of the last-in,~~

~~MACY'S, INC.~~

~~first-out ("LIFO") retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales in either period.~~

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative ("SG&A") expenses for the~~ ~~third~~first quarter of ~~2017~~ ~~decreased $117 million or 5.5% from the~~ ~~third quarter~~2022, losses on early retirement of ~~2016. The SG&A rate as a percent to net sales of 37.8% was 30 basis points higher in the~~ ~~third quarter of 2017, as compared to the~~ ~~third quarter of 2016. SG&A expenses in the~~ ~~third quarter of 2017~~ ~~included reduced expenses~~debt were recognized due to the ~~year-end 2016 stores closures~~early payment of $1.1 billion senior notes and debentures. Inthe impact of restructuring activities. These reductions were partially offset by continued investments in digital growth, strategic initiatives in shoes and jewelry, and the expansion of Macy's Backstage and bluemercury. Income from credit operations was $161 million in the ~~third~~first quarter of ~~2017, a decrease~~2021, losses on early retirement of ~~$4 million compared to $165 million recognized in the~~ ~~third quarter of 2016~~ in part due to lower proprietary credit card penetration. Income from credit operations excludes costs related to new account originations and fraudulent transactions incurred on the Company’s private label credit cards.

~~Gains on Sale of Real Estate~~

~~The~~ ~~third quarter of 2017~~ included asset sale gains of $65 million, including approximately $40 million related to the downtown Seattle Macy's location and $22 million related to the Macy's Brooklyn transaction. This compares to $41 million of asset sale gains recognized in the ~~third quarter of 2016, inclusive of approximately $9 million related to the Macy's Brooklyn transaction and $32 million related to various asset sales to General Growth Properties.~~

~~Restructuring and Other Costs~~

~~Restructuring and other costs were $33 million for the~~ ~~third quarter of 2017~~ ~~and include charges associated with severance activities as well as other human resource related costs associated with organizational restructuring. No such charges~~debt were recognized ~~in the~~ ~~third quarter of 2016~~.

~~Settlement Charges~~

The third quarters of 2017 and 2016 included $22 million and $62 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses and are the result of an increase in lump sum distributions associated with store closings, a voluntary separation program and organizational restructuring, and periodic distribution activity.

~~Net Interest Expense~~

Net interest expense for the third quarter of 2017 decreased $7 million from the third quarter of 2016 due to a reduction in the Company's debt from $7.5 billion as of the end of the third quarter of 2016 to $6.3 billion as of the end of the third quarter of 2017. This reduction of approximately $1.2 billion is due to the ~~maturity and repurchase~~$500 million tender offer.

		First Quarter of 2022				First Quarter of 2021
Net interest expense		$	(47	)		$	(79	)

The decrease in net interest expense, excluding losses on early retirement of ~~certain~~debt, was primarily driven by interest savings associated with the redemption of the ~~Company's borrowings.~~Company’s $1.3 billion aggregate principal amount of 8.375% Senior Secured Notes due 2025 in August 2021.

	First Quarter of 2022			First Quarter of 2021
Effective tax rate		27.1	%		26.3	%
Federal income statutory rate		21	%		21	%

~~Effective Tax Rate~~

The ~~Company's~~ Company’s effective tax rate ~~of 27.7% for the third quarter of 2017 and 42.3% for the third quarter of 2016 differ~~varies from the federal income tax statutory rate of ~~35%, and on a comparative basis, principally because of~~21% in both periods, primarily driven by the ~~effect~~impact of state and local ~~income~~ taxes ~~including~~and the ~~settlement~~realization of ~~various~~deferred tax ~~issues and tax examinations.~~

~~Net Income Attributable to Macy's, Inc. Shareholders~~

~~Net income attributable to Macy's, Inc. shareholders for the~~ ~~third quarter of 2017~~ ~~increased $19 million compared to the~~ ~~third quarter of 2016. The~~ ~~third quarter of 2017~~ ~~included $21 million of after tax restructuring and other costs and $14 million of after tax retirement plan settlement charges, while the~~ ~~third quarter of 2016~~ ~~included $37 million of after tax retirement plan settlement charges. The~~ ~~third quarter of 2017~~ ~~also included higher gains~~assets associated with the ~~sale~~vesting and cancellation of ~~real estate as well as lower SG&A, interest expense and a lower effective tax rate. These favorable results were partially offset by lower net sales in the~~ ~~third quarter of 2017~~.

~~Diluted Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

~~Diluted earnings per share for the~~ ~~third quarter of 2017~~ ~~increased $.07 compared to the~~ ~~third quarter of 2016, reflecting higher net income. Excluding the impact of restructuring and other costs and settlement charges, diluted earnings per share for the~~ ~~third quarter of 2017~~ ~~increased $.06 or 35.3% compared to the~~ ~~third quarter of 2016~~.

certain stock-based compensation awards.

MACY'S, INC.

~~Comparison of the 39 Weeks Ended October 28, 2017 and October 29, 2016~~

2017 2016
Amount % to Sales Amount % to Sales
(dollars in millions, except per share figures)
Net sales $ 16,171
$ 17,263

Decrease in sales (6.3 ) % (5.2 ) %
Decrease in comparable sales (4.0 ) % (4.0 ) %
Cost of sales (9,794 ) (60.6 ) % (10,370 ) (60.1 ) %
Gross margin 6,377
39.4
% 6,893
39.9
%
Selling, general and administrative expenses (5,853 ) (36.1 ) % (6,139 ) (35.5 ) %
Gains on sale of real estate 176
1.1
% 76
0.4
%
Impairments, restructuring and other costs (33 ) (0.2 ) % (249 ) (1.4 ) %
Settlement charges (73 ) (0.5 ) % (81 ) (0.5 ) %
Operating income 594
3.7
% 500
2.9
%
Interest expense - net (237 ) (276 )
Net premiums on early retirement of debt (1 ) —

Income before income taxes 356
224

Federal, state and local income tax expense (140 ) (85 )
Net income 216
139

Net loss attributable to noncontrolling interest 6
5

Net income attributable to Macy's, Inc. shareholders $ 222
1.4
% $ 144
0.8
%

Diluted earnings per share attributable to
Macy's, Inc. shareholders
$ .73
$ .46

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of impairments, restructuring and other costs, settlement charges and net premiums on early retirement of debt $ .95
$ 1.11

~~Net Sales~~

Net sales for 2017 decreased $1,092 million or 6.3% compared to 2016 due to fiscal year-end 2016 store closures and the decline in comparable sales. The decrease in comparable sales on an owned basis for 2017 was 4.0% compared to 2016. The decrease in comparable sales on an owned plus licensed basis for 2017 was 3.6% compared to 2016. Sales during 2017 were strongest in active apparel, fine jewelry, fragrances, furniture/mattresses and women's shoes. Sales were weaker in housewares and tabletop. The Company’s digital business continued its strong growth at both macys.com and bloomingdales.com. Geographically, the Company’s strongest business was in the Southwest region.

~~Cost of Sales~~

The cost of sales rate as a percent to net sales for 2017 increased to 60.6% compared to 60.1% for 2016. The increase in the cost of sales rate as a percent to net sales was due in part to high year-end inventory levels as well as margin pressures in the beauty business and home related businesses. The application of the LIFO retail inventory method did not result in the recognition of any LIFO charges or credits affecting cost of sales in either period.

~~Selling, General and Administrative Expenses~~

SG&A expenses for 2017 decreased $286 million or 4.7% from 2016. The SG&A rate as a percent to net sales of 36.1% was 60 basis points higher in 2017 as compared to 2016. SG&A expenses in 2017 included reduced expenses from the year-end 2016 stores closures and the impact of restructuring activities, partially offset by investments in digital growth, strategic initiatives in shoes and jewelry, and initiatives at bluemercury and Macy's Backstage. Income from credit operations was $524 million in 2017, compared to $528 million in 2016. Income from credit operations excludes costs related to new account originations and fraudulent transactions incurred on the Company’s private label credit cards.

~~MACY'S, INC.~~

~~Gains on Sale of Real Estate~~

2017 included asset sale gains of $176 million, including $47 million related to the downtown Minneapolis property, $49 million related to the Macy's Brooklyn transaction, and $40 million related to the downtown Seattle Macy's location. This compares to $76 million of asset sale gains recognized in 2016, inclusive of approximately $24 million related to the Macy's Brooklyn transaction and $32 million related to various asset sales to General Growth Properties.

~~Impairments, Restructuring and Other Costs~~

Impairments, restructuring and other costs of $33 million for 2017 and $249 million for 2016 include charges associated with store closings and severance activities as well as other human resource related costs associated with organizational restructuring.

~~Settlement Charges~~

2017 and 2016 included $73 million and $81 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses and are the result of an increase in lump sum distributions associated with store closings, a voluntary separation program and organizational restructuring, and periodic distribution activity.

~~Net Interest Expense~~

~~Net interest expense for 2017 decreased $39 million from 2016 due to a reduction in the Company's debt as discussed previously within the quarterly review.~~

~~Net Premiums on Early Retirement of Debt~~

The Company repurchased approximately $247 million face value of senior notes and debentures in 2017. The debt repurchases were made in the open market for a total cash cost of approximately $257 million, including expenses related to the transactions. As a result of the debt repurchases, the Company recognized $1 million in expenses and fees net of premiums on acquired debt in 2017.

~~Effective Tax Rate~~

The Company's effective tax rate of 39.3% for 2017 and 37.9% for 2016 differ from the federal income tax statutory rate of 35%, and on a comparative basis, principally because of the effect of state and local income taxes, including the settlement of various tax issues and tax examinations as well as the recognition of approximately $12 million of net tax deficiencies in 2017 associated with share-based payment awards due to the adoption of ASU 2016-09, ~~Improvements to Employee Share-Based Payment Accounting. Historically, the Company had recognized such amounts as an offset to accumulated excess tax benefits previously recognized in additional paid-in capital.~~

~~Net Income Attributable to Macy's, Inc. Shareholders~~

Net income attributable to Macy's, Inc. shareholders for 2017 increased $78 million or 54.2% compared to 2016. The increase from 2017 to 2016 is primarily attributable to higher asset sale gains in 2017 as well as the fact that 2016 included $152 million of after tax impairments, restructuring and other costs compared to $21 million of after tax restructuring and other costs in 2017. These favorable changes as well as lower SG&A, retirement plan settlement charges and interest expense were partially offset by lower net sales and gross margin in 2017.

~~Diluted Earnings Per Share Attributable to Macy's, Inc. Shareholders~~

Diluted earnings per share for 2017 increased $.27 or 58.7% compared to 2016, reflecting higher net income. Excluding the impact of impairments, restructuring and other costs, settlement charges, and the net premiums on the early retirement of debt, diluted earnings per share for 2017 decreased $.16 or 14.4% compared to 2016.

~~MACY'S, INC.~~

Liquidity and Capital Resources

The Company's principal sources of liquidity are cash from operations, cash on hand and the asset-based credit facility described below. Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, lease obligations, merchandise purchase obligations, retirement plan benefits, and self-insurance reserves.

Merchandise purchase obligations represent future merchandise payables for inventory purchased from various suppliers through contractual arrangements and are expected to be funded through cash from operations.

Capital Allocation

The Company’s capital allocation goals include maintaining a healthy balance sheet and investment-grade credit metrics, followed by investing in growth initiatives and returning capital to shareholders through modest yet predictable dividends and meaningful share repurchases.

The Company ended the first quarter of 2022 with a cash and cash equivalents balance of $672 million, a decrease from $1,798 million at the end of the first quarter of 2021. The Company is party to the New ABL Credit Facility with certain financial institutions providing for a $3 billion asset-based credit facility.

	2022			2021
Net cash provided by operating activities	$	248		$	494
Net cash used by investing activities		(194	)		(74	)
Net cash used by financing activities		(1,094	)		(300	)

Operating Activities

~~Net~~

The decrease in net cash provided by operating activities was driven by the decrease in ~~2017 was~~ ~~$389 million, compared to~~ ~~$308 million~~ ~~provided in 2016, primarily~~accounts payable and accrued liabilities due to the timing of payments and a lower ~~cash outflows for merchandise inventories,~~ net of merchandise payables, resulting from lower inventory levels as of October 28, 2017 compared to October 29, 2016. These lower cash outflows offset other negative cash flow items including lower sales and higher income taxes paid in 2017.

~~Investing Activities~~

~~Net cash used by investing activities was~~ ~~$346 million~~ ~~in 2017, compared to net cash used by investing activities of~~ ~~$491 million~~ ~~in 2016. Investing activities for 2017 include purchases of property and equipment totaling~~ ~~$359 million~~ ~~and capitalized software of~~ ~~$191 million, compared to purchases of property and equipment totaling~~ ~~$451 million~~ ~~and capitalized software of~~ ~~$230 million~~ ~~in 2016. Additionally, the Company received cash of $212 million~~inflow from the ~~disposition of property and equipment in 2017, primarily related to real estate transactions, as compared to $138 million received in 2016.~~

~~Financing Activities~~

Net cash used by the Company for financing activities was $806 million for 2017, including debt payments of $554 million and payment of $346 million of cash dividends. These cash outflows were partially offset by an increase in ~~outstanding checks~~merchandise accounts payable and merchandise inventories.

Investing Activities

The Company’s first quarter of ~~$80 million. For 2017,~~2022 capital expenditures were $171 million, mainly driven by investments in its department stores as well as its technology-based initiatives, including those that support the digital business, data science initiatives and the simplification of its technology structure.

Financing Activities

Dividends

The Company paid dividends totaling $45 million in the first quarter of 2022. The Board of Directors declared regular quarterly dividend of 15.75 cents per share on the Company’s common stock, which was paid on April 1, 2022, to Macy’s shareholders of record at the close of business on March 15, 2022.

OnMay 20, 2022, the Company's Board of Directors declared a regular quarterly dividend of 15.75 cents per share on its common stock, payable July 1, 2022, to shareholders of record at the close of business on June 15, 2022. Subsequent dividends will be subject to approval of the Board of Directors, which will depend on market and other conditions.

Stock Repurchases

On February 22, 2022, the Company’s announced that its Board of Directors authorized a new $2.0 billion share repurchase program, which does not have an expiration date. During the first quarter of 2022, the Company repurchased approximately ~~$247~~24.0 million ~~face value~~shares of ~~senior notes and debentures. During~~its common stock at an average cost of $24.98 per share. As of April 30, 2022, $1.4 billion of shares remained available for repurchase. Repurchases may be made from time to time in the ~~second quarter~~open market or through privately negotiated transactions in accordance with applicable securities laws, including Rule 10b-18 under the Securities Exchange Act of ~~2017,~~1934, on terms determined by the Company.

Debt Transactions

On March 3, 2022, Macy’s Inventory Funding LLC (the “ABL Borrower”), an indirect subsidiary of the Company, ~~repaid~~and Macy’s Inventory Holdings LLC (the “ABL Parent”), a direct subsidiary of Macy’s and the direct parent of the ABL Borrower, entered into an amendment (the “Amendment”) to the credit agreement governing the existing $2.941 billion asset-based credit facility (the “Existing ABL Credit Facility”), which was set to expire in May 2024. The Amendment provides for a new revolving credit facility of $3.0 billion, including a swingline sub-facility and a letter of credit sub-facility (the “New ABL Credit Facility”). The ABL Borrower may

MACY'S, INC.

request increases in the size of the New ABL Credit Facility up to an additional aggregate principal amount of $750 million. The New ABL Credit Facility replaces the Existing ABL Credit Facility, with similar collateral support, but reduced interest and unused facility fees. The New ABL Credit Facility matures in March 2027.

The New ABL Credit Facility contains customary borrowing conditions including a borrowing base equal to the sum of (i) 90% of the net orderly liquidation percentage of eligible inventory, minus (ii) customary reserves. Amounts borrowed under the New ABL Credit Facility are subject to interest at ~~maturity $300~~a rate per annum equal to, at the ABL Borrower’s option, either (i) adjusted SOFR (calculated to include a 0.10% credit adjustment spread) plus a margin of 1.25% to 1.50% or (ii) a base rate plus a margin of 0.25% to 0.50%, in each case depending on revolving line utilization. The New ABL Credit Facility also contains customary covenants that provide for, among other things, limitations on indebtedness, liens, fundamental changes, restricted payments, cash hoarding, and prepayment of certain indebtedness as well as customary representations and warranties and events of default typical for credit facilities of this type.

As of April 30, 2022, the Company had $65 million of ~~7.45% senior debentures due July 2017.~~

~~Net cash used by~~standby letters of credit outstanding under the ABL Credit Facility, which reduced the available borrowing capacity to $2,935 million. The Company ~~for financing activities was $469 million for 2016, including payment~~had no outstanding borrowings under the ABL Credit Facility as of ~~$344 million~~April 30, 2022 and May 1, 2021.

On March 8, 2022, Macy’s Retail Holdings, LLC (“MRH”), a direct, wholly owned subsidiary of cash dividends, $230 million for the acquisition of the Company's common stock, primarily under its share repurchase program, and repayment of $174 million of debt. These outflows were partially offset by ~~$31 million~~ ~~from the issuance of common stock, primarily related to the exercise of stock options.~~

On March 10, 2022, MRH issued $850 million in aggregate principal amount of senior notes in two separate tranches, one representing $425 million in aggregate principal amount of 5.875% senior notes due March 15, 2030 (the “2030 Notes”) and the other representing $425 million in aggregate principal amount of 6.125% senior notes due March 15, 2032 (the “2032 Notes”), in a private offering. Each of the 2030 Notes and 2032 Notes are senior unsecured obligations of MRH and are unconditionally guaranteed on an unsecured basis by Macy’s, Inc. Proceeds from the issuance, together with cash on hand, were used to redeem certain of MRH’s outstanding senior notes and ~~debentures,~~pay fees and expenses therewith and in connection with ~~stated interest rates ranging from 6.375% to 10.25% and maturities ranging from fiscal years 2021 to 2037. The tender offer expires on December 22, 2017, with an early tender date on December 8, 2017.~~ the offering. The Company ~~expects to record the redemption premium and other costs~~recognized $31 million of losses related to ~~these repurchases as net premiums on~~the early retirement of debt on the Consolidated Statements of Income during the ~~fourth~~first quarter of ~~2017.~~

2022.

Contractual Obligations

As of April 30, 2022, other than the financing transactions discussed above and in Note 4 to the accompanying Consolidated Financial Statements, there were no material changes to our contractual obligations and commitments outside the ordinary course of business since January 29, 2022, as reported in the Company’s 2021 Form 10-K.

MACY'S, INC.

Guarantor Summarized Financial Information

The Company ~~is party~~had $3,007 million and $2,935 million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the “Unsecured Notes”) outstanding as of April 30, 2022 and January 29, 2022, respectively, with maturities ranging from 2023 to 2043. The Unsecured Notes constitute debt obligations of MRH ("Subsidiary Issuer"), a ~~credit agreement~~100%-owned subsidiary of Macy's, Inc. ("Parent" and together with ~~certain financial institutions providing for revolving credit borrowings~~the "Subsidiary Issuer," the "Obligor Group"), and ~~letters~~are fully and unconditionally guaranteed on a senior unsecured basis by Parent. The Unsecured Notes rank equally in right of ~~credit in an aggregate amount not to exceed $1,500 million (which may be increased to $1,750 million at the option~~payment with all of the ~~Company, subject~~Company’s existing and future senior unsecured obligations, senior to any of the Company’s future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the Company’s subsidiaries that do not guarantee the Unsecured Notes. Holders of the Company’s secured indebtedness, including the Notes and any borrowings under the ABL Credit Facility, will have a priority claim on the assets that secure such secured indebtedness; therefore, the Unsecured Notes and the related guarantee are effectively subordinated to all of the Subsidiary Issuer’s and Parent and their subsidiaries’ existing and future secured indebtedness to the ~~willingness~~extent of ~~existing or new lenders to provide commitments for~~the value of the collateral securing such ~~additional financing) outstanding at any particular time.~~ indebtedness.

The ~~agreement is set to expire May 6, 2021. As~~following tables include combined financial information of ~~October 28, 2017,~~ the ~~Company did not~~Obligor Group. Investments in subsidiaries of $8,263 million and $7,975 million as of April 30, 2022 and January 29, 2022, respectively, have ~~any borrowings or letters~~been excluded from the Summarized Balance Sheets. Equity in earnings of ~~credit outstanding under its credit facility.~~

~~The Company is party to a $1,500~~non-Guarantor subsidiaries of $504 million unsecured commercial paper program. The Company may issue and sell commercial paper in an aggregate amount outstanding at any particular time not to exceed its then-current combined borrowing availability under its bank credit agreement. As of October 28, 2017, the Company did not have any borrowings outstanding under its commercial paper program.

~~As of October 28, 2017 the Company was required to maintain a specified interest coverage ratio~~ for the ~~latest four quarters~~13-weeks ended April 30, 2022 have been excluded from the Summarized Statement of ~~no less than 3.25 and a specified leverage ratio as of and for the latest four quarters of no more than 3.75 under the credit agreement.~~Operations. The ~~Company's interest coverage ratio for the third quarter of 2017 was 7.92 and its leverage ratio at October 28, 2017 was 2.36, in each case as calculated in accordance with the credit agreement.~~

On October 27, 2017, the Company announced that the Board of Directors declared a quarterly dividend of 37.75 cents per share on its common stock, payable January 2, 2018, to Macy's shareholders of record at the close of business on December 15, 2017.

~~MACY'S, INC.~~

~~Capital Resources~~

Management believes that, with respect to the Company's current operations, cash on hand and funds from operations, together with its credit facility and other capital resources, will be sufficient to cover the Company's reasonably foreseeable working capital, capital expenditure and debt service requirements and other cash requirements in both the near term and over the longer term. The Company's ability to generate funds from operations may be affected by numerous factors, including general economic conditions and levels of consumer confidence and demand; however, the Company expects to be able to manage its working capital levels and capital expenditure amounts so as to maintain sufficient levels of liquidity. To the extent that the Company's cash balances from time to time exceed amounts that are needed to fund its immediate liquidity requirements, the Company will consider alternative uses of some or all of such excess cash. Such alternative uses may include, among others, the redemption or repurchase of debt, equity or other securities through open market purchases, privately negotiated transactions or otherwise, and the funding of pension related obligations. Depending upon its actual and anticipated sources and uses of liquidity, conditions in the capital markets and other factors, the Company will from time to time consider the issuance of debt or other securities, or other possible capital markets transactions, for the purpose of raising capital which could be used to refinance current indebtedness or for other corporate purposes, including the redemption or repurchase of debt, equity or other securities through open market purchases, privately negotiated transactions or otherwise, and the funding of pension related obligations.

The Company intends from time to time to consider additional acquisitions of, and investments in, retail businesses and other complementary assets and companies. Acquisition transactions, if any, are expected to be financed from one or morecombined financial information of the ~~following sources: cash~~Obligor Group is presented on ~~hand, cash from operations, borrowings under existing or new credit facilities~~a combined basis with intercompany balances and transactions within the ~~issuance~~Obligor Group eliminated.

Summarized Balance Sheets

	April 30, 2022		January 29, 2022
	(in millions)
ASSETS
Current Assets	$	1,053	$	1,517
Noncurrent Assets		6,717		6,784

LIABILITIES
Current Liabilities	$	1,990	$	2,243
Noncurrent Liabilities (a)		10,761		10,407

(a)	Includes net amounts due to non-Guarantor subsidiaries of $5,901 million and $4,337 million as of April 30, 2022 and January 29, 2022, respectively.

Summarized Statement of ~~long-term debt or other securities, including common stock.~~Operations

	13 Weeks Ended April 30, 2022
	(in millions)
Net Sales	$	200
Consignment commission income (a)		835
Cost of sales		(112	)
Operating loss		(228	)
Loss before income taxes (b)		(77	)
Net income		3

(a)	Income pertains to transactions with ABL Borrower, a non-Guarantor subsidiary.

(b)	Includes $232 million of dividend income from non-Guarantor subsidiaries for the 13 weeks ended April 30, 2022.

~~MACY'S, INC.~~

Outlook and Recent ~~Developments~~

Developments

On May 26, 2022, despite the uncertainty within the macroeconomic environment, the company reaffirmed its annual 2022 sales guidance and raised its earnings guidance to account for first quarter 2022 share repurchases as well as improved expectations for credit card revenue. The Company's operations are impacted by competitive pressures from department stores, off-price stores, specialty stores, mass merchandisers, online retailers and all other retail channels. The Company's operations are also impacted by general consumer spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects of weather or natural disasters and other factors over which the Company has little or no control.

In recent years, consumer spending levels have been affected to varying degrees by a number of factors, including modest economic growth, uncertainty regarding governmental spending and tax policies, unemployment levels, tightened consumer credit, an improving housing market and a fluctuating stock market. In addition, consumer spending levels of international customers are impacted by the strength of the U.S. dollar relative to foreign currencies. These factors have affected, to varying degrees, the amount of funds that consumers are willing and able to spend for discretionary purchases, including purchases of some of the merchandise offered by the Company.

All economic conditions ultimately affect the Company's overall operations. However, the effects of economic conditions can be experienced differently and at different times, in the various geographic regions in which the Company operates, in relationupdates to the ~~different types of merchandise that the Company offers for sale, or in relation to each of the Company's branded operations.~~annual 2022 guidance are below:

•

Digital sales are now expected to be approximately 35% of net sales

On November 9, 2017, the Company issued a press release to report its preliminary earnings for the third quarter of 2017 and reaffirmed its previously provided guidance for fiscal 2017. In summary, the Company expects comparable sales on an owned basis to decline between 2.2 percent and 3.3 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 3.0 percent. Total sales are expected to be down between 3.2 percent and 4.3 percent in fiscal 2017. Total sales for fiscal 2017 reflect a 53rd week, whereas comparable sales are on a 52-week basis. As previously announced in August 2017, the Company expects a 1 cent increase in adjusted earnings per diluted share due to the restructuring of the merchandising operations. The Company now expects adjusted earnings per diluted share of between $3.38 and $3.63 in fiscal 2017, excluding the impact of the anticipated settlement charges, restructuring and other costs and net premiums and fees associated with debt repurchases. Excluding the impact of the anticipated fourth quarter gain on the sale of the Union Square Men’s building in San Francisco and the anticipated settlement charges, restructuring and other costs and net premiums and fees associated with debt repurchases, adjusted earnings per diluted share of $2.91 to $3.16 are expected in fiscal 2017.

•

Net credit card revenues are now expected to be approximately 3.1% of net sales

MACY'S, INC.

•

Adjusted EBITDA as a percent of net sales is now expected to be between 11.2% and 11.7%

•

Diluted shares outstanding of approximately 283 million

•

Adjusted diluted earnings per share are now expected to be between $4.53 and $4.95

Important Information Regarding Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures provide users of the Company's financial information with additional useful information in evaluating operating performance. Management believes that providing supplemental changes in comparable sales on an owned plus licensed basis, which includes adjusting for the impact of ~~growth in~~ comparable sales of departments licensed to third parties, assists in evaluating the Company's ability to generate sales growth, whether through owned businesses or departments licensed to third parties, ~~on a comparable basis,~~ and in evaluating the impact of changes in the manner in which certain departments are operated. Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure which the company believes provides meaningful information about its operational efficiency by excluding the impact of changes in tax law and structure, debt levels and capital investment. In addition, management believes that excluding certain items from EBITDA, net income (loss) and diluted earnings (loss) per share ~~attributable to Macy's, Inc. shareholders~~ that are ~~no longer~~not associated with the Company’s core operations and that may vary substantially in frequency and magnitude from period-to-period provides useful supplemental measures that assist in evaluating the Company's ability to generate earnings and ~~leverage sales and~~ to more readily compare these metrics between past and future periods.

The ~~reconciliation~~Company does not provide reconciliations of the forward-looking non-GAAP ~~financial measure~~measures of ~~changes in comparable sales on an owned plus licensed basis~~adjusted EBITDA and adjusted diluted earnings per share to GAAP comparable sales (i.e., on an owned basis) is in the same manner as illustrated below, where the impact of growth in comparable sales of departments licensed to third parties is the only reconciling item. In addition, the Company does not provide the most directly comparable forward-looking GAAP ~~measure of diluted earnings per share attributable to Macy’s, Inc. shareholders excluding certain items~~measures because the timing and amount of excluded items ~~(e.g., impairments, restructuring and other costs, retirement plan settlement charges and net premiums on the early retirement of debt)~~ are unreasonably difficult to fully and accurately estimate.

For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could be material to future results.

Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial results prepared in accordance with GAAP. Certain of the items that may be excluded or included in non-GAAP financial measures may be significant items that could impact the Company's financial position, results of operations or cash flows and should therefore be considered in assessing the Company's actual and future financial condition and performance. Additionally, the amounts received by the Company on account of sales of departments licensed to third parties are limited to commissions received on such sales. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.

~~MACY'S, INC.~~

~~Change~~

Changes in Comparable Sales

	Comparable Sales vs. 13 Weeks Ended May 1, 2021

	Macy's, Inc.			Macy's			Bloomingdale's			bluemercury

Increase in comparable sales on an owned basis (Note 1)		12.8	%		10.7	%		28.1	%		25.2	%
Impact of departments licensed to third parties (Note 2)		(0.4	%)		(0.6	%)		(1.2	%)		0.0	%
Increase in comparable sales on an owned plus licensed basis		12.4	%		10.1	%		26.9	%		25.2	%

Notes:

The following is a tabular reconciliation of the non-GAAP financial measure of changes in comparable sales on an owned plus licensed basis, to GAAP comparable sales (i.e. on an owned basis), which the Company believes to be the most directly comparable GAAP financial measure.

Third Quarter of 2017 Third Quarter of 2016

Decrease in comparable sales on an owned basis (note 1) (4.0 )% (3.3 )%
Impact of growth in comparable sales of departments licensed to third parties (note 2) 0.4 % 0.6 %
Decrease in comparable sales on an owned plus licensed basis (3.6 )% (2.7 )%

2017 2016

Decrease in comparable sales on an owned basis (note 1) (4.0 )% (4.0 )%
Impact of growth in comparable sales of departments licensed to third parties (note 2) 0.4 % 0.5 %
Decrease in comparable sales on an owned plus licensed basis (3.6 )% (3.5 )%

~~Notes:~~

(1)

Represents the period-to-period percentage change in net sales from stores in operation ~~throughout~~during the ~~year presented~~13 weeks ended April 30, 2022 and the ~~immediately preceding year~~13 weeks ended May 1, 2021. Such calculation includes all digital sales and ~~all online sales, excluding~~excludes commissions from departments licensed to third parties. Stores impacted by a natural disaster or undergoing ~~remodeling,~~significant expansion or ~~relocation~~shrinkage remain in the comparable sales calculation unless the store, or material portion of the store, is closed for a significant period of time. Definitions and calculations of comparable sales may differ among companies in the retail industry.


(2)	Represents the impact of including the sales of departments licensed to third parties occurring in stores in operation throughout the year presented and the immediately preceding year and all online sales in the calculation of comparable sales. The Company licenses third parties to operate certain departments in its stores and online and receives commissions from

MACY'S, INC.

these third parties based on a percentage of their net sales. In its financial statements prepared in conformity with GAAP, the Company includes these commissions (rather than ~~the~~ sales of the departments licensed to third parties) in its net sales. The Company does not, however, include any amounts ~~with~~in respect toof licensed department sales (or any commissions earned on such sales) in its comparable sales in accordance with GAAP (i.e., on an owned basis). The ~~Company believes that the~~ amounts of commissions earned on sales of departments licensed to third parties are not material to its ~~results of operations~~net sales for the periods presented.

~~MACY'S, INC.~~

~~Diluted Earnings Per Share Attributable~~

Adjusted EBITDA as a Percent to ~~Macy's, Inc. Shareholders, Excluding Certain Items~~

Net Sales

The following is a tabular reconciliation of the non-GAAP financial ~~measure of diluted earnings per share attributable~~measures EBITDA, as adjusted to ~~Macy's, Inc. shareholders, excluding~~exclude certain items (“Adjusted EBITDA”), as a percent to net sales to GAAP ~~diluted earnings per share attributable~~net income as a percent to ~~Macy's, Inc., shareholders,~~net sales, which the Company believes to be the most directly comparable GAAP financial measure.

	13 Weeks Ended April 30, 2022			13 Weeks Ended May 1, 2021
	(millions, except percentages)
Net sales	$	5,348		$	4,706

Net income	$	286		$	103

Net income as a percent to net sales		5.3	%		2.2	%

Net income	$	286		$	103
Interest expense - net		47			79
Losses on early retirement of debt		31			11
Federal, state and local income tax expense		106			37
Depreciation and amortization		206			224
EBITDA	$	676		$	454
Impairment, restructuring and other costs		8			19
Adjusted EBITDA	$	684		$	473
Adjusted EBITDA as a percent to net sales		12.8	%		10.1	%

Third Quarter of 2017 Third Quarter of 2016

Diluted earnings per share attributable to Macy's, Inc. shareholders $ .12
$ .05
Add back the pre-tax impact of restructuring and other costs .11
—
Add back the pre-tax impact of settlement charges .07
.20
Deduct the income tax impact of certain items identified above (.07 ) (.08 )
Diluted earnings per share attributable to Macy's, Inc. shareholders,
excluding certain items $ .23
$ .17

2017 2016

Diluted earnings per share attributable to Macy's, Inc. shareholders $ .73
$ .46
Add back the pre-tax impact of impairments, restructuring and other costs .11
.80
Add back the pre-tax impact of settlement charges .24
.26
Add back the pre-tax impact of net premiums on the early retirement of debt (note 1) —
—
Deduct the income tax impact of certain items identified above (.13 ) (.41 )
Diluted earnings per share attributable to Macy's, Inc. shareholders,
excluding certain items $ .95
$ 1.11

~~Note:~~


~~(1)~~	~~The impact during the 39 weeks ended October 28, 2017 represents a value less than $.01 per diluted share attributable to Macy’s, Inc. shareholders.~~

~~MACY'S, INC.~~

~~New Pronouncements~~

~~In May 2014,~~

Adjusted Net Income and Adjusted Diluted Earnings Per Share

The following is a tabular reconciliation of the ~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09,~~ ~~Revenue from Contracts with Customers~~,non-GAAP financial measures of net income and diluted earnings per share, excluding certain items identified below, to GAAP net income and diluted earnings per share, which establishes principles to report useful information to financial statements users about the nature, timing and uncertainty of revenue from contracts with customers. ASU No. 2014-09 along with various related amendments comprise ASC Topic 606, ~~Revenue from Contracts with Customers~~, and provide guidance that is applicable to all contracts with customers regardless of industry-specific or transaction-specific fact patterns. The new standard and its related updates are effective for the Company beginning on February 4, 2018. On the effective date, the Company will apply the new guidance retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The Company is currently evaluating the methods of adoption and has not yet decided on the methodbelieves to be ~~applied when~~ the ~~new revenue guidance is effective.~~most directly comparable GAAP measures.

	First Quarter of 2022						First Quarter of 2021
	Net Income			Diluted Earnings Per Share			Net Income			Diluted Earnings Per Share
	(millions, except per share figures)
As reported	$	286		$	0.98		$	103		$	0.32
Impairment, restructuring and other costs		8			0.03			19			0.06
Losses on early retirement of debt		31			0.11			11			0.03
Income tax impact of certain items noted above		(10	)		(0.04	)		(7	)		(0.02	)
As adjusted to exclude certain items above	$	315		$	1.08		$	126		$	0.39

The Company currently estimates the material impacts to its consolidated financial statements to include gross presentation of its estimates for future sales returns and related recoverable assets, presenting income from credit operations as a separate component of revenue and recognizing revenue for online transactions upon shipment rather than delivery. In addition, the gains for certain real estate transactions will generally be recognized earlier than under current guidance due to consideration of the guidance in ASU No. 2017-05, ~~Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)~~ ~~and the new lease standard discussed below.~~

New Pronouncements

The Company does not expect the new guidance to materially impact the revenue recognition associated with gift card breakage as well as the accounting for its warranty arrangements, loyalty programs and other customer incentive arrangements. The Company is continuing to evaluate the impact of the new standards and the final determinations of the impact of the new guidance may differ from these initial estimates.

~~In February 2016, the FASB~~that any recently issued ~~ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, which requires lessees to recognize substantially all leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right of use ("ROU") model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard is effective for the Company on February 3, 2019, with early adoption permitted. The new standard is to be adopted utilizing a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available. The Company has not yet decided whether it will early adopt the new standard but the Company currently plans to elect the majority of the standard's available practical expedients on adoption.

The Company expects that the new lease standard will have a material impact on the Company's consolidated financial statements. While the Company is continuing to assess the effects of adoption, the Company currently believes the most significant changes relate to the recognition of new ROU assets and lease liabilities on the consolidated balance sheets for real property and personal property operating leases as well as changes to the timing of recognition of certain real estate asset sale gains in the consolidated statements of income due to application of the new sale-leaseback guidance and ASU No. 2017-05 as discussed above. The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and ROU assets upon adoption. A significant change in leasing activity between the date of this report and adoption is not expected.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation-Retirement Benefits (Topic 715)~~, which requires employers to disaggregate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest costs, expected return on plan assets, amortization of prior service cost or credits and actuarial gains and losses) separately and outside a subtotal of operating income. The income statement guidance requires application on a retrospective basis. The new standard is effective for the Company beginning in the first quarter of 2018, with early adoption permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial position, results of operations, and related disclosures. The Company plans to adopt this standard on February 4, 2018.

~~The Company does not anticipate that the adoption of any other recent~~ accounting pronouncements will have a material ~~impact~~effect on ~~the Company's~~its consolidated financial ~~position, results of operations or cash flows.~~

statements.

MACY'S, INC.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes to the Company’s market risk as described in the Company's ~~2016~~2021 10-K. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the ~~2016~~2021 10-K.


Item 4.	Controls and Procedures.

The Company's Chief Executive Officer and Chief Financial Officer have carried out, as of ~~October 28, 2017~~,April 30, 2022, with the participation of the Company's management, an evaluation of the effectiveness of the Company's disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act.~~Act of 1934 (the "Exchange Act"). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that as of ~~October 28, 2017~~April 30, 2022, the Company's disclosure controls and procedures ~~are~~were effective to provide reasonable assurance that information required to be disclosed by the Company in reports the Company files under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission (the "SEC") rules and forms, and that information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~There~~

From time to time adoption of new accounting pronouncements, major organizational restructuring and realignment occurs for which the Company reviews its internal control over financial reporting. As a result of this review, there were no changes in the Company's internal control over financial reporting that occurred during the Company's most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

MACY'S, INC.

PART II - OTHER INFORMATION


Item 1.	Legal Proceedings.

The Company and its subsidiaries are involved in various proceedings that are incidental to the normal course of their businesses. As of the date of this report, the Company does not expect that any of such proceedings will have a material adverse effect on ~~the~~the Company’s financial position or results of operations.


Item 1A.	Risk Factors.

There have been no material changes to the Risk Factors described in Part I, ~~"Item~~Item 1A."Risk Factors" in the Company's ~~2016~~2021 Form 10-K.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information regarding the ~~Company's purchases~~Company’s purchase of Common Stock during the ~~third~~first quarter of ~~2017~~2022.

	Total Number of Shares Purchased		Average Price Paid per Share ($)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (1)($)
	(thousands)				(thousands)		(millions)
January 30, 2022 – February 26, 2022		—		—		—		2,000
February 27, 2022 – April 2, 2022		17,470		24.98		17,470		1,564
April 3, 2022 – April 30, 2022		6,557		24.99		6,557		1,400
		24,027		24.98		24,027


	(1)
	~~Total~~ ~~Number~~ ~~of Shares~~ ~~Purchased~~	~~Average~~ ~~Price Paid~~ ~~per Share ($)~~	~~Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)~~	~~Maximum Dollar Value of Shares~~ On February 22, 2022, the Company announced that ~~may yet be Purchased Under the Plans or Programs (1)($)~~
	~~(thousands)~~		~~(thousands)~~	~~(millions)~~
~~July 30, 2017 – August 26, 2017~~	—	—	—	~~1,716~~
~~August 27, 2017 – September 30, 2017~~	—	—	—	~~1,716~~
~~October 1, 2017 – October 28, 2017~~	—	—	—	~~1,716~~
	—	—	—

~~___________________~~

~~(1)~~

~~Commencing in January 2000, the Company's~~its Board of Directors ~~has from time to time approved authorizations to purchase, in the aggregate, up to $18~~authorized a new $2.0 billion ~~of Common Stock as of~~ ~~October 28, 2017. All authorizations are cumulative and do~~share repurchase program, which does not have an expiration date. As of ~~October 28, 2017, $1,716 million~~April 30, 2022, $1.4 billion of ~~authorization~~shares remained ~~unused.~~available for repurchase pursuant to this authorization. The Company may continue, discontinue or resume purchases of ~~Common Stock~~common stock under ~~these~~this authorization or possible future authorizations in the open market, in privately negotiated transactions or otherwise at any time and from time to time without prior notice.

~~MACY'S, INC.~~


Item 5.	Other Information.

Forward-Looking Statements

This report and other reports, statements and information previously or subsequently filed by the Company with the SEC contain or may contain forward-looking statements. Such statements are based upon the beliefs and assumptions of, and on information available to, the management of the Company at the time such statements are made. The following are or may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995: (i) statements preceded by, followed by or that include the words "may," "will," "could," "should," "believe," "expect," "future," "potential," "anticipate," "intend," "plan," "think," "estimate" or "continue" or the negative or other variations thereof, and (ii) statements regarding matters that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties, including risks and uncertainties relating to:

•

the effects of the weather, natural disasters, outbreak of disease, and health pandemics, including the COVID-19 pandemic, on the Company’s business, including the ability to open stores, customer demand and its supply chain, as well as its consolidated results of operations, financial position and cash flows;

•

the possible invalidity of the underlying beliefs and assumptions;

competitive pressures from department and specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, and all other retail channels, including the Internet, catalogs and television;

•

the Company's ability to successfully execute against its Polaris strategy, including the ability to realize the anticipated benefits associated with the strategy;

~~the Company's ability to remain competitive and relevant as consumers' shopping behaviors migrate to other shopping channels;~~

•

the success of the Company’s operational decisions, such as product sourcing, merchandise mix and pricing, and marketing and strategic initiatives, such as growing its digital channels, expanding off-mall and modernizing its technology and supply chain infrastructures;

MACY'S, INC.

•

general consumer shopping behaviors and spending levels, including the shift of consumer spending to digital channels, the impact of changes in general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, and the costs of basic necessities and other goods;

general consumer-spending levels, including the impact of general economic conditions, consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other goods and the effects of the weather or natural disasters;

•

competitive pressures from department stores, specialty stores, general merchandise stores, manufacturers’ outlets, off-price and discount stores, and all other retail channels, including digitally-native retailers, social media and catalogs;

~~conditions to, or changes in the timing of, proposed transactions, including planned store closings, and changes in expected synergies, cost savings and non-recurring charges;~~

•

the Company’s ability to remain competitive and relevant as consumers’ shopping behaviors continue to migrate to online and other shopping channels and to maintain its brand image and reputation;

~~the success of the Company's operational decisions (e.g., product curation, marketing programs) and strategic initiatives;~~

•

possible systems failures and/or security breaches, including any security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach;

~~the cost of employee benefits as well as attracting and retaining quality employees;~~

•

the cost of colleague benefits as well as attracting and retaining quality colleagues;

~~transactions involving our~~

•

transactions and strategy involving the Company's real estate portfolio;

•

the seasonal nature of the Company's business;

~~possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions;~~

•

conditions to, or changes in the timing of, proposed transactions, and changes in expected synergies, cost savings and non-recurring charges;

possible actions taken or omitted to be taken by third parties, including customers, suppliers, business partners, competitors and legislative, regulatory, judicial and other governmental authorities and officials;

•

the potential for the incurrence of charges in connection with the impairment of tangible and intangible assets, including goodwill;

~~changes in relationships with vendors and other product and service providers;~~

•

possible changes or developments in social, economic, business, industry, market, legal, and regulatory circumstances and conditions;

~~currency, interest and exchange rates and other capital market, economic and geo-political conditions;~~

•

~~unstable political conditions, civil unrest, terrorist activities and armed conflicts;~~

•

changes in relationships with vendors and other product and service providers;

~~the possible inability of the Company's manufacturers or transporters to deliver products in a timely manner or meet the Company's quality standards;~~

•

our level of indebtedness;

~~the Company's reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional health pandemics, and regional political~~

•

currency, interest and exchange rates, inflation rates, and other capital market, economic and geo-political conditions;

~~duties, taxes, other charges and quotas on imports;~~

•

unstable political conditions, civil unrest, terrorist activities and armed conflicts;

possible systems failures and/or security breaches, including, any security breach that results in the theft, transfer or unauthorized disclosure of customer, employee or company information, or the failure to comply with various laws applicable to the Company in the event of such a breach.

•

the possible inability of the Company's manufacturers or transporters to deliver products in a timely manner or meet the Company's quality standards;

•

the Company’s reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional and global health pandemics, and regional political and economic conditions;

•

duties, taxes, other charges and quotas on imports;

•

labor shortages. and

•

the amount and timing of future dividends and share repurchases.

In addition to any risks and uncertainties specifically identified in the text surrounding such forward-looking statements, the statements in the immediately preceding sentence and the statements under captions such as "Risk Factors" in this report and in reports, statements and information filed by the Company with the SEC from time to time constitute cautionary statements identifying important factors that could cause actual amounts, results, events and circumstances to differ materially from those expressed in or implied by such forward-looking statements.

MACY'S, INC.

Item 6.

Exhibits.

4.1		Indenture, dated as of March 10, 2022, by and among Macy’s Retail Holdings, LLC, as issuer, Macy’s, Inc., as guarantor, and U.S. Bank Trust Company, National Association, as trustee, relating to Macy’s Retail Holdings, LLC’s 5.875% Senior Notes due 2030 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2022)
~~Item 6.~~	~~Exhibits.~~


4.2		Indenture, dated as of March 10, 2022, by and among Macy’s Retail Holdings, LLC, as issuer, Macy’s, Inc., as guarantor, and U.S. Bank Trust Company, National Association, as trustee, relating to Macy’s Retail Holdings, LLC’s 6.125% Senior Notes due 2032 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2022)
~~31.1~~
10.1		Third Amendment to Credit Agreement, dated as of March 3, 2022, by and among Macy’s Inventory Funding LLC, Macy’s Inventory Holdings LLC, the lenders party thereto and Bank of America, N.A., as agent, l/c issuer and swing line lender (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 3, 2022)

10.2+		2022-2024 Performance-Based Restricted Stock Unit Terms and Conditions under the 2021 Equity and Incentive Compensation Plan*

10.3		Macy’s, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed with the SEC on May 24, 2022)*

22		List of Subsidiary Guarantors

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)

31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)

32.1		Certification by Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act

32.2		Certification by Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act

101		The following financial statements from Macy's, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~October 28, 2017,~~April 30, 2022, filed on ~~December 4, 2017,~~June 6, 2022, formatted in ~~XBRL:~~iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated of Changes in Shareholders' Equity, (v) Consolidated Statements of Cash Flows, and ~~(v)~~(vi) the Notes to Consolidated Financial Statements.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*		Constitutes a compensatory plan or arrangement.
+		Portions of the exhibit have been omitted because it is both not material and is of the type the registrant treats as confidential.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MACY’S, INC.

	~~MACY’S, INC.~~
By:
	~~By:~~	/s/ ELISA D. GARCIA
			Elisa D. Garcia Executive Vice President, Chief Legal Officer and Secretary

	By:		/s/ ~~FELICIA WILLIAMS~~PAUL GRISCOM
		~~Felicia Williams~~ ~~Executive~~	Paul Griscom Senior Vice President ~~Controller~~ and ~~Enterprise Risk~~ ~~(Principal Accounting Officer)~~ Controller

Date: ~~December 4, 2017~~

June 6, 2022


(State or other jurisdiction of incorporation or organization)
~~Incorporated in Delaware~~		(I.R.S. Employer Identification No.
		~~13-3324058~~)

☐
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




	13 Weeks Ended						39 Weeks Ended
	October 28, 2017			October 29, 2016			October 28, 2017			October 29, 2016
Net sales	$	5,281		$	5,626		$	16,171		$	17,263
Cost of sales	(3,175		)	(3,386		)	(9,794		)	(10,370		)
Gross margin	2,106			2,240			6,377			6,893
Selling, general and administrative expenses	(1,995		)	(2,112		)	(5,853		)	(6,139		)
Gains on sale of real estate	65			41			176			76
Impairments, restructuring and other costs	(33		)	—			(33		)	(249		)
Settlement charges	(22		)	(62		)	(73		)	(81		)
Operating income	121			107			594			500
Interest expense	(76		)	(82		)	(244		)	(279		)
Net premiums on early retirement of debt	—			—			(1		)	—
Interest income	2			1			7			3
Income before income taxes	47			26			356			224
Federal, state and local income tax expense	(13		)	(11		)	(140		)	(85		)
Net income	34			15			216			139
Net loss attributable to noncontrolling interest	2			2			6			5
Net income attributable to Macy's, Inc. shareholders	$	36		$	17		$	222		$	144
Basic earnings per share attributable to Macy's, Inc. shareholders	$	.12		$	.05		$	.73		$	.46
Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.12		$	.05		$	.73		$	.46




	October 28, 2017			January 28, 2017			October 29, 2016
ASSETS
Current Assets:
Cash and cash equivalents	$	534		$	1,297		$	457
Receivables	219			522			262
Merchandise inventories	7,065			5,399			7,587
Income tax receivable	—			—			60
Prepaid expenses and other current assets	432			408			454
Total Current Assets	8,250			7,626			8,820
Property and Equipment - net of accumulated depreciation and amortization of $5,330, $4,856 and $5,625	6,742			7,017			7,149
Goodwill	3,897			3,897			3,897
Other Intangible Assets – net	491			498			499
Other Assets	835			813			909
Total Assets	$	20,215		$	19,851		$	21,274
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	22		$	309		$	938
Merchandise accounts payable	3,173			1,423			3,375
Accounts payable and accrued liabilities	3,162			3,563			2,930
Income taxes	34			352			—
Total Current Liabilities	6,391			5,647			7,243
Long-Term Debt	6,297			6,562			6,563
Deferred Income Taxes	1,553			1,443			1,548
Other Liabilities	1,750			1,877			2,129
Shareholders' Equity:
Macy's, Inc.	4,231			4,323			3,789
Noncontrolling interest	(7		)	(1		)	2
Total Shareholders’ Equity	4,224			4,322			3,791
Total Liabilities and Shareholders’ Equity	$	20,215		$	19,851		$	21,274



	Parent		Subsidiary Issuer			Other Subsidiaries			Consolidating Adjustments			Consolidated
Net sales	$	—	$	2,077		$	5,861		$	(2,657	)	$	5,281
Cost of sales	—		(1,391		)	(4,441		)	2,657			(3,175		)
Gross margin	—		686			1,420			—			2,106
Selling, general and administrative expenses	—		(813		)	(1,182		)	—			(1,995		)
Gains on sale of real estate	—		24			41			—			65
Restructuring and other costs	—		(1		)	(32		)	—			(33		)
Settlement charges	—		(8		)	(14		)	—			(22		)
Operating income (loss)	—		(112		)	233			—			121
Interest (expense) income, net:
External	1		(76		)	1			—			(74		)
Intercompany	—		(34		)	34			—			—
Equity in earnings (loss) of subsidiaries	35		(61		)	—			26			—
Income (loss) before income taxes	36		(283		)	268			26			47
Federal, state and local income tax benefit (expense)	—		59			(72		)	—			(13		)
Net income (loss)	36		(224		)	196			26			34
Net loss attributable to noncontrolling interest	—		—			2			—			2
Net income (loss) attributable to Macy's, Inc. shareholders	$	36	$	(224	)	$	198		$	26		$	36
Comprehensive income (loss)	$	61	$	(201	)	$	212		$	(13	)	$	59
Comprehensive loss attributable to noncontrolling interest	—		—			2			—			2
Comprehensive income (loss) attributable to Macy's, Inc. shareholders	$	61	$	(201	)	$	214		$	(13	)	$	61



	Third Quarter of 2017							Third Quarter of 2016
	Amount				% to Sales			Amount				% to Sales
	(dollars in millions, except per share figures)
Net sales	$	5,281						$	5,626
Decrease in sales	(6.1		)	%				(4.2		)	%
Decrease in comparable sales	(4.0		)	%				(3.3		)	%
Cost of sales	(3,175		)		(60.1	)	%	(3,386		)		(60.2	)	%
Gross margin	2,106				39.9		%	2,240				39.8		%
Selling, general and administrative expenses	(1,995		)		(37.8	)	%	(2,112		)		(37.5	)	%
Gains on sale of real estate	65				1.2		%	41				0.7		%
Restructuring and other costs	(33		)		(0.6	)	%	—				—		%
Settlement charges	(22		)		(0.4	)	%	(62		)		(1.1	)	%
Operating income	121				2.3		%	107				1.9		%
Interest expense - net	(74		)					(81		)
Income before income taxes	47							26
Federal, state and local income tax expense	(13		)					(11		)
Net income	34							15
Net loss attributable to noncontrolling interest	2							2
Net income attributable to Macy's, Inc. shareholders	$	36			0.7		%	$	17			0.3		%

Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.12						$	.05

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of restructuring and other costs and settlement charges	$	.23						$	.17



	2017							2016
	Amount				% to Sales			Amount				% to Sales
	(dollars in millions, except per share figures)
Net sales	$	16,171						$	17,263
Decrease in sales	(6.3		)	%				(5.2		)	%
Decrease in comparable sales	(4.0		)	%				(4.0		)	%
Cost of sales	(9,794		)		(60.6	)	%	(10,370		)		(60.1	)	%
Gross margin	6,377				39.4		%	6,893				39.9		%
Selling, general and administrative expenses	(5,853		)		(36.1	)	%	(6,139		)		(35.5	)	%
Gains on sale of real estate	176				1.1		%	76				0.4		%
Impairments, restructuring and other costs	(33		)		(0.2	)	%	(249		)		(1.4	)	%
Settlement charges	(73		)		(0.5	)	%	(81		)		(0.5	)	%
Operating income	594				3.7		%	500				2.9		%
Interest expense - net	(237		)					(276		)
Net premiums on early retirement of debt	(1		)					—
Income before income taxes	356							224
Federal, state and local income tax expense	(140		)					(85		)
Net income	216							139
Net loss attributable to noncontrolling interest	6							5
Net income attributable to Macy's, Inc. shareholders	$	222			1.4		%	$	144			0.8		%

Diluted earnings per share attributable to Macy's, Inc. shareholders	$	.73						$	.46

Diluted earnings per share attributable to Macy's, Inc. shareholders, excluding the impact of impairments, restructuring and other costs, settlement charges and net premiums on early retirement of debt	$	.95						$	1.11



	Third Quarter of 2017		Third Quarter of 2016

Decrease in comparable sales on an owned basis (note 1)	(4.0	)%	(3.3	)%
Impact of growth in comparable sales of departments licensed to third parties (note 2)	0.4	%	0.6	%
Decrease in comparable sales on an owned plus licensed basis	(3.6	)%	(2.7	)%

Delaware		13-3324058