UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 

ý    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended May 5, 2018

OR

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

For the transition period from    to

Commission file number: 1-13536
 
macysinclogohighres.jpg
 
Incorporated in Delaware
 
I.R.S. Employer Identification No.
 
 
13-3324058

7 West Seventh Street
Cincinnati, Ohio 45202
(513) 579-7000
and
151 West 34th Street
New York, New York 10001
(212) 494-1602

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, 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 ý
 
Accelerated filer o
 
Non-accelerated filer o (Do not check if a smaller reporting company)
 
Smaller reporting 
company  o
 
Emerging growth company  o
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 5, 2018
Common Stock, $0.01 par value per share
 
306,370,666 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
 
May 5, 2018
 
April 29, 2017
Net sales
$
5,541

 
$
5,350

Credit card revenues, net
157

 
161

 
 
 
 
Cost of sales
(3,382
)
 
(3,303
)
Selling, general and administrative expenses
(2,083
)
 
(2,057
)
Gains on sale of real estate
24

 
68

Impairment and other costs
(19
)
 

Operating income
238

 
219

Benefit plan income, net
11

 
13

Interest expense
(71
)
 
(86
)
Premiums on early retirement of debt

 
(3
)
Interest income
5

 
2

Income before income taxes
183

 
145

Federal, state and local income tax expense
(52
)
 
(68
)
Net income
131

 
77

Net loss attributable to noncontrolling interest
8

 
1

Net income attributable to Macy's, Inc. shareholders
$
139

 
$
78

Basic earnings per share attributable to Macy's, Inc. shareholders
$
.45

 
$
.26

Diluted earnings per share attributable to Macy's, Inc. shareholders
$
.45

 
$
.26


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

2


MACY’S, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

(millions)

 
 
 
 
 
13 weeks ended
 
May 5, 2018
 
April 29, 2017
Net income
$
131

 
$
77

Other comprehensive income (loss):
 
 
 
Amortization of net actuarial loss and prior service credit on post employment and postretirement benefit plans included in net income, before tax
9

 
9

Tax effect related to items of other comprehensive income (loss)
(2
)
 
(3
)
Total other comprehensive income, net of tax effect
7

 
6

Comprehensive income
138

 
83

Comprehensive loss attributable to noncontrolling interest
8

 
1

Comprehensive income attributable to
Macy's, Inc. shareholders
$
146

 
$
84


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


3


MACY’S, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

(millions)
 
 
 
 
 
 
 
 
May 5, 2018
 
February 3, 2018
 
April 29, 2017
ASSETS
 
 
 
 
 
Current Assets:
 
 
 
 
 
Cash and cash equivalents
$
1,531

 
$
1,455

 
$
1,201

Receivables
250

 
363

 
345

Merchandise inventories
5,291

 
5,178

 
5,626

Prepaid expenses and other current assets
638

 
650

 
634

Total Current Assets
7,710

 
7,646

 
7,806

Property and Equipment - net of accumulated depreciation and
amortization of $4,765, $4,610 and $5,013
6,575

 
6,672

 
6,886

Goodwill
3,908

 
3,897

 
3,897

Other Intangible Assets – net
486

 
488

 
496

Other Assets
889

 
880

 
793

Total Assets
$
19,568

 
$
19,583

 
$
19,878

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
Short-term debt
$
25

 
$
22

 
$
313

Merchandise accounts payable
2,045

 
1,590

 
2,028

Accounts payable and accrued liabilities
2,695

 
3,271

 
3,042

Income taxes
312

 
296

 
355

Total Current Liabilities
5,077

 
5,179

 
5,738

Long-Term Debt
5,857

 
5,861

 
6,412

Deferred Income Taxes
1,169

 
1,148

 
1,522

Other Liabilities
1,664

 
1,662

 
1,846

Shareholders' Equity:
 
 
 
 
 
Macy's, Inc.
5,821

 
5,745

 
4,362

Noncontrolling interest
(20
)
 
(12
)
 
(2
)
Total Shareholders’ Equity
5,801

 
5,733

 
4,360

Total Liabilities and Shareholders’ Equity
$
19,568

 
$
19,583

 
$
19,878


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


4


MACY’S, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

(millions)
 
 
 
 
 
13 weeks ended
 
May 5, 2018
 
April 29, 2017
Cash flows from operating activities:
 
 
 
Net income
$
131

 
$
77

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Impairment and other costs
19

 

Depreciation and amortization
235

 
243

Stock-based compensation expense
17

 
13

Gains on sale of real estate
(24
)
 
(68
)
Changes in assets and liabilities:
 
 
 
Decrease in receivables
105

 
170

Increase in merchandise inventories
(115
)
 
(227
)
Increase in prepaid expenses and other current assets
(20
)
 
(16
)
Increase in merchandise accounts payable
415

 
573

Decrease in accounts payable, accrued liabilities
and other items not separately identified
(444
)
 
(545
)
Increase in current income taxes
25

 
3

Increase in deferred income taxes
19

 
41

Change in other assets and liabilities not separately identified
(41
)
 
(27
)
Net cash provided by operating activities
322

 
237

Cash flows from investing activities:
 
 
 
Purchase of property and equipment
(132
)
 
(117
)
Capitalized software
(58
)
 
(60
)
Disposition of property and equipment
23

 
96

Other, net
11

 
21

Net cash used by investing activities
(156
)
 
(60
)
Cash flows from financing activities:
 
 
 
Debt repaid
(3
)
 
(152
)
Dividends paid
(116
)
 
(115
)
Decrease in outstanding checks
(10
)
 
(10
)
Acquisition of treasury stock

 
(1
)
Issuance of common stock
28

 
2

Proceeds from noncontrolling interest
2

 
3

Net cash used by financing activities
(99
)
 
(273
)
Net increase (decrease) in cash, cash equivalents and restricted cash
67

 
(96
)
Cash, cash equivalents and restricted cash beginning of period
1,513

 
1,334

Cash, cash equivalents and restricted cash end of period
$
1,580

 
$
1,238

Supplemental cash flow information:
 
 
 
Interest paid
$
65

 
$
76

Interest received
5

 
2

Income taxes paid (net of refunds received)
8

 
16

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

5


MACY’S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 

1.    Summary of Significant Accounting Policies
Nature of Operations
Macy's, Inc. and 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), cosmetics, home furnishings and other consumer goods. The Company's operations are conducted through approximately 850 Macy's, Macy's Backstage, Bloomingdale's, Bloomingdale's The Outlet, bluemercury and STORY in 44 states, the District of Columbia, Guam and Puerto Rico, as well as macys.com, bloomingdales.com and bluemercury.com. 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.
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 February 3, 2018 (the "2017 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the 2017 10-K.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles ("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 weeks ended May 5, 2018 and April 29, 2017, 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 weeks ended May 5, 2018 and April 29, 2017 (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 and adoption of new accounting standards as discussed in more detail below.
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 weeks ended May 5, 2018 and April 29, 2017 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of operating expenses 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 on the Consolidated Statements of Income. See Note 4, "Benefit Plans," for further information.
Revenue
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, 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 the time of shipment to the customer and are reported net of estimated merchandise returns and certain customer incentives. Commissions earned on sales generated by

6

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 


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.
For each of the 13 weeks ended May 5, 2018 and April 29, 2017, Macy's accounted for 88% of the Company's net sales. Disaggregation of the Company's net sales by family of business for the 13 weeks ended May 5, 2018 and April 29, 2017 were as follows:
 
13 weeks ended
Net sales by family of business
May 5, 2018
 
April 29, 2017
 
(millions)
Women's Accessories, Intimate Apparel, Shoes, Cosmetics and Fragrances
$
2,165

 
$
2,069

Women's Apparel
1,354

 
1,333

Men's and Children's
1,175

 
1,115

Home/Other (a)
847

 
833

Total
$
5,541

 
$
5,350

(a) Other primarily includes restaurant sales and breakage income from unredeemed gift cards.
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 Company's consolidated balance sheets and was $298 million, $291 million and $338 million as of May 5, 2018, February 3, 2018 and April 29, 2017, respectively. Included in Prepaid Expenses and Other Current Assets is an asset totaling $204 million, $201 million and $236 million as of May 5, 2018, February 3, 2018 and April 29, 2017, respectively, for the right to recover products from customers associated with estimated merchandise returns.
Credit Card Revenues, net
In 2005, the Company entered into an arrangement with 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 2014, the Company entered into an amended and restated Credit Card Program Agreement (the "Program Agreement") with Citibank. 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 receipt of payments for existing accounts is recognized as such activities occur. Credit card revenues include finance charges, late fees and other revenue generated by the Company’s Credit Card Program, net of fraud losses and expenses associated with establishing new accounts.
Customer Loyalty Programs
The Company maintains customer loyalty programs in which customers earn points based on their purchases. Under the Macy’s brand, points are earned based on customers’ spending on Macy’s private label and co-branded credit cards as well as non-proprietary cards during certain tender-neutral promotional events. Under the Bloomingdale’s brand, the Company offers a tender neutral points-based program. 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 customer loyalty programs is included in Accounts Payable and Accrued Liabilities on the Company's consolidated balance sheets and was $71 million, $73 million and $60 million as of May 5, 2018, February 3, 2018 and April 29, 2017, respectively.
Gift Cards
The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold, no revenue is recognized; rather, the Company records an accrued liability to customers. The liability is relieved and revenue is recognized equal to the amount redeemed at the time gift cards are redeemed for merchandise. The Company records revenue from unredeemed gift cards (breakage) in net sales in proportion 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 liability for unredeemed gift

7

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 


cards is included in Accounts Payable and Accrued Liabilities on the Company's consolidated balance sheets and was $656 million, $821 million and $651 million as of May 5, 2018, February 3, 2018 and April 29, 2017, respectively.
Newly Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which established 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 were adopted by the Company on February 4, 2018. On the effective date, the Company elected to apply the new guidance retrospectively to each prior reporting period presented which resulted in an increase to retained earnings of $72 million and $54 million at the beginning of fiscal 2018 and fiscal 2017, respectively.

Overall, the new standard did not have a material impact to the results of the Company's operations or consolidated statements of financial position, but impacted the presentation and timing of certain revenue transactions. Specifically, the changes included gross presentation of the Company's estimates for future sales returns and related recoverable assets, presenting income from credit operations, gift card breakage income, and certain loyalty program income as separate components of revenue and recognizing gift card breakage revenue over the period of redemption for gift cards associated with certain returns. The Company's evaluation of the new standards included a review of certain vendor arrangements to determine whether the Company acts as principal or agent in such arrangements and such evaluation did not result in any material changes in gross versus net presentation as a result of the adoption of the new standards.

In March 2017, the FASB issued ASU No. 2017-07, Compensation-Retirement Benefits (ASC 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 Company adopted this standard effective February 4, 2018 on a retrospective basis and has recognized its net periodic benefit costs, excluding service costs, in Benefit Plan Income, net on its consolidated statements of income.

In 2016 the FASB issued ASU No. 2016-18, Statement of Cash Flows (ASC Topic 230): Restricted Cash, and ASU No. 2016-15, Statement of Cash Flows (ASC Topic 230): Classification of Certain Cash Receipts and Cash Payments. These standards were issued to resolve numerous diversities in practice with regard to the presentation and classification of certain cash receipts and payments in the statement of cash flows. The standards were effective for the Company on February 4, 2018, and were adopted using a retrospective transition method to each period presented. As a result of these standards, the Company included its beginning-of-period restricted cash balances of $58 million and end-of-period restricted cash balances of $49 million when reconciling the consolidated statement of cash flow movement for the first quarter of 2018. Similarly, for the first quarter of 2017, the Company included its beginning-of-period restricted cash balances of $37 million and end-of-period restricted cash balances of $37 million. In addition to these changes, the Company changed the classification of $3 million of cash payments for the prepayment of debt from an operating outflow to a financing outflow for the first quarter of 2017.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for stranded tax effects in accumulated other comprehensive income resulting from H.R. 1, originally known as the “Tax Cuts and Jobs Act,” to be reclassified to retained earnings. The Company early adopted this standard during the first quarter of 2018 and, as a result, reclassified $164 million of stranded tax effects to retained earnings.









8

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



2.    Earnings Per Share Attributable to Macy's, Inc. Shareholders
The following tables set forth the computation of basic and diluted earnings per share attributable to Macy's, Inc. shareholders:

 
13 weeks ended
 
May 5, 2018
 
April 29, 2017
 
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
$
139

 
 
 
305.7

 
$
78

 
 
 
304.3

Shares to be issued under deferred
compensation and other plans
 
 
 
 
0.9

 
 
 
 
 
0.7

 
$
139

 
 
 
306.6

 
$
78

 
 
 
305.0

Basic earnings per share attributable to
Macy's, Inc. shareholders
 
 
$
.45

 
 
 
 
 
$
.26

 
 
Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
Stock options, restricted stock and restricted stock units
 
 
 
 
2.8

 
 
 
 
 
1.9

 
$
139

 
 
 
309.4

 
$
78

 
 
 
306.9

Diluted earnings per share attributable to
Macy's, Inc. shareholders
 
 
$
.45

 
 
 
 
 
$
.26

 
 

In addition to the stock options and restricted stock units reflected in the foregoing tables, stock options to purchase 15.7 million shares of common stock and restricted stock units relating to 2.5 million shares of common stock were outstanding at May 5, 2018, 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.

In addition to the stock options and restricted stock units reflected in the foregoing tables, stock options to purchase 16.2 million shares of common stock and restricted stock units relating to 1.6 million shares of common stock were outstanding at April 29, 2017, 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.

3.    Financing Activities
The following table shows the detail of debt repayments:
 
 
13 weeks ended
 
May 5, 2018
 
April 29, 2017
 
(millions)
6.375% Senior notes due 2037
$

 
$
135

6.7% Senior debentures due 2034

 
11

9.5% amortizing debentures due 2021
2

 
2

9.75% amortizing debentures due 2021
1

 
1

 
$
3

 
$
149


During the 13 weeks ended April 29, 2017, the Company repurchased $146 million face value of senior notes and debentures. The debt repurchases were made in the open market for a total cost of $149 million, including expenses related to the transactions. Such repurchases resulted in the recognition of additional interest expense of $3 million during the 13 weeks ended April 29, 2017. This additional interest expense is presented as premium on early retirement of debt on the consolidated statements of income.


9

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



4.    Benefit Plans
The Company has defined contribution plans which cover substantially all employees 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, 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.
In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible employees 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 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 who were hired prior to a certain date and retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated.
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
 
May 5, 2018
 
April 29, 2017
 
(millions)
401(k) Qualified Defined Contribution Plan
$
23

 
$
21

 
 
 
 
Non-Qualified Defined Contribution Plan
$

 
$

 
 
 
 
Pension Plan
 
 
 
Service cost
$
2

 
$
1

Interest cost
26

 
27

Expected return on assets
(53
)
 
(56
)
Recognition of net actuarial loss
8

 
8

Amortization of prior service credit

 

 
$
(17
)
 
$
(20
)
Supplementary Retirement Plan
 
 
 
Service cost
$

 
$

Interest cost
6

 
6

Recognition of net actuarial loss
2

 
2

Amortization of prior service cost

 

 
$
8

 
$
8

 
 
 
 
Total Retirement Expense
$
14

 
$
9

 
 
 
 
Postretirement Obligations
 
 
 
Service cost
$

 
$

Interest cost
1

 
1

Recognition of net actuarial gain
(1
)
 
(1
)
Amortization of prior service credit

 

 
$

 
$


10

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 


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:
 
 
May 5, 2018
 
April 29, 2017
 
 
 
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
$
96

 
$
25

 
$
71

 
$

 
$
90

 
$
21

 
$
69

 
$


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, excluding capital leases and other obligations:
 
 
May 5, 2018
 
April 29, 2017
 
Notional
Amount
 
Carrying
Amount
 
Fair
Value
 
Notional
Amount
 
Carrying
Amount
 
Fair
Value
 
(millions)
Long-term debt
$
5,803

 
$
5,832

 
$
5,621

 
$
6,310

 
$
6,385

 
$
6,251


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 weeks ended May 5, 2018 and April 29, 2017, Condensed Consolidating Balance Sheets as of May 5, 2018, April 29, 2017 and February 3, 2018, and the related Condensed Consolidating Statements of Cash Flows for the 13 weeks ended May 5, 2018 and April 29, 2017 are presented on the following pages.

11

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Statement of Comprehensive Income
For the 13 weeks ended May 5, 2018
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Net sales
$

 
$
2,008

 
$
5,363

 
$
(1,830
)
 
$
5,541

Credit card revenues (expense), net

 
(6
)
 
163

 

 
157

 
 
 
 
 
 
 
 
 
 
Cost of sales

 
(1,320
)
 
(3,892
)
 
1,830

 
(3,382
)
Selling, general and administrative expenses

 
(828
)
 
(1,255
)
 

 
(2,083
)
Gains on sale of real estate

 
23

 
1

 

 
24

Impairment and other costs

 

 
(19
)
 

 
(19
)
Operating income (loss)

 
(123
)
 
361

 

 
238

Benefit plan income, net

 
4

 
7

 

 
11

Interest (expense) income, net:
 
 
 
 
 
 
 
 
 
External
4

 
(71
)
 
1

 

 
(66
)
Intercompany

 
(18
)
 
18

 

 

Equity in earnings of subsidiaries
136

 
102

 

 
(238
)
 

Income (loss) before income taxes
140

 
(106
)
 
387

 
(238
)
 
183

Federal, state and local income
tax benefit (expense)
(1
)
 
37

 
(88
)
 

 
(52
)
Net income (loss)
139

 
(69
)
 
299

 
(238
)
 
131

Net loss attributable to noncontrolling interest

 

 
8

 

 
8

Net income (loss) attributable to
Macy's, Inc. shareholders
$
139

 
$
(69
)
 
$
307

 
$
(238
)
 
$
139

Comprehensive income (loss)
$
146

 
$
(63
)
 
$
303

 
$
(248
)
 
$
138

Comprehensive loss attributable to
noncontrolling interest

 

 
8

 

 
8

Comprehensive income (loss) attributable to
Macy's, Inc. shareholders
$
146

 
$
(63
)
 
$
311

 
$
(248
)
 
$
146


12

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Statement of Comprehensive Income
For the 13 weeks ended April 29, 2017
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Net sales
$

 
$
2,064

 
$
5,130

 
$
(1,844
)
 
$
5,350

Credit card revenues (expense), net

 
(6
)
 
167

 

 
161

 
 
 
 
 
 
 
 
 
 
Cost of sales

 
(1,386
)
 
(3,761
)
 
1,844

 
(3,303
)
Selling, general and administrative expenses
(1
)
 
(767
)
 
(1,289
)
 

 
(2,057
)
Gains on sale of real estate

 
65

 
3

 

 
68

Operating income (loss)
(1
)
 
(30
)
 
250

 

 
219

Benefit plan income, net

 
5

 
8

 

 
13

Interest (expense) income, net:
 
 
 
 
 
 
 
 
 
External
1

 
(85
)
 

 

 
(84
)
Intercompany

 
(34
)
 
34

 

 

Premiums on early retirement of debt

 
(3
)
 

 

 
(3
)
Equity in earnings of subsidiaries
78

 
1

 

 
(79
)
 

Income (loss) before income taxes
78

 
(146
)
 
292

 
(79
)
 
145

Federal, state and local income
tax benefit (expense)

 
26

 
(94
)
 

 
(68
)
Net income (loss)
78

 
(120
)
 
198

 
(79
)
 
77

Net loss attributable to noncontrolling interest

 

 
1

 

 
1

Net income (loss) attributable to
Macy's, Inc. shareholders
$
78

 
$
(120
)
 
$
199

 
$
(79
)
 
$
78

Comprehensive income (loss)
$
84

 
$
(114
)
 
$
202

 
$
(89
)
 
$
83

Comprehensive loss attributable to
noncontrolling interest

 

 
1

 

 
1

Comprehensive income (loss) attributable to
Macy's, Inc. shareholders
$
84

 
$
(114
)
 
$
203

 
$
(89
)
 
$
84




13

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Balance Sheet
As of May 5, 2018
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
ASSETS:
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,070

 
$
79

 
$
382

 
$

 
$
1,531

Receivables

 
48

 
202

 

 
250

Merchandise inventories

 
2,283

 
3,008

 

 
5,291

Prepaid expenses and other current assets

 
150

 
488

 

 
638

Total Current Assets
1,070

 
2,560

 
4,080

 

 
7,710

Property and Equipment – net

 
3,298

 
3,277

 

 
6,575

Goodwill

 
3,326

 
582

 

 
3,908

Other Intangible Assets – net

 
43

 
443

 

 
486

Other Assets
1

 
96

 
792

 

 
889

Deferred Income Taxes
5

 

 

 
(5
)
 

Intercompany Receivable
1,156

 

 
2,113

 
(3,269
)
 

Investment in Subsidiaries
3,975

 
4,232

 

 
(8,207
)
 

Total Assets
$
6,207

 
$
13,555

 
$
11,287

 
$
(11,481
)
 
$
19,568

LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
6

 
$
19

 
$

 
$
25

Merchandise accounts payable

 
896

 
1,149

 

 
2,045

Accounts payable and accrued liabilities
109

 
784

 
1,802

 

 
2,695

Income taxes
253

 
35

 
24

 

 
312

Total Current Liabilities
362

 
1,721

 
2,994

 

 
5,077

Long-Term Debt

 
5,841

 
16

 

 
5,857

Intercompany Payable

 
3,269

 

 
(3,269
)
 

Deferred Income Taxes

 
570

 
604

 
(5
)
 
1,169

Other Liabilities
24

 
416

 
1,224

 

 
1,664

Shareholders' Equity:
 
 
 
 
 
 
 
 
 
Macy's, Inc.
5,821

 
1,738

 
6,469

 
(8,207
)
 
5,821

Noncontrolling Interest

 

 
(20
)
 

 
(20
)
Total Shareholders' Equity
5,821

 
1,738

 
6,449

 
(8,207
)
 
5,801

Total Liabilities and Shareholders' Equity
$
6,207

 
$
13,555

 
$
11,287

 
$
(11,481
)
 
$
19,568








14

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Balance Sheet
As of April 29, 2017
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
ASSETS:
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
779

 
$
99

 
$
323

 
$

 
$
1,201

Receivables

 
118

 
227

 

 
345

Merchandise inventories

 
2,560

 
3,066

 

 
5,626

Prepaid expenses and other current assets

 
150

 
484

 

 
634

Total Current Assets
779

 
2,927

 
4,100

 

 
7,806

Property and Equipment – net

 
3,479

 
3,407

 

 
6,886

Goodwill

 
3,315

 
582

 

 
3,897

Other Intangible Assets – net

 
49

 
447

 

 
496

Other Assets

 
45

 
748

 

 
793

Deferred Income Taxes
24

 

 

 
(24
)
 

Intercompany Receivable
902

 

 
2,092

 
(2,994
)
 

Investment in Subsidiaries
3,063

 
3,598

 

 
(6,661
)
 

Total Assets
$
4,768

 
$
13,413

 
$
11,376

 
$
(9,679
)
 
$
19,878

LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
306

 
$
7

 
$

 
$
313

Merchandise accounts payable

 
841

 
1,187

 

 
2,028

Accounts payable and accrued liabilities
22

 
962

 
2,058

 

 
3,042

Income taxes
317

 
6

 
32

 

 
355

Total Current Liabilities
339

 
2,115

 
3,284

 

 
5,738

Long-Term Debt

 
6,395

 
17

 

 
6,412

Intercompany Payable

 
2,994

 

 
(2,994
)
 

Deferred Income Taxes

 
733

 
813

 
(24
)
 
1,522

Other Liabilities
67

 
498

 
1,281

 

 
1,846

Shareholders' Equity:
 
 
 
 
 
 
 
 
 
Macy's, Inc.
4,362

 
678

 
5,983

 
(6,661
)
 
4,362

Noncontrolling Interest

 

 
(2
)
 

 
(2
)
Total Shareholders' Equity
4,362

 
678

 
5,981

 
(6,661
)
 
4,360

Total Liabilities and Shareholders' Equity
$
4,768

 
$
13,413

 
$
11,376

 
$
(9,679
)
 
$
19,878







15

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Balance Sheet
As of February 3, 2018
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
ASSETS:
 
 
 
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,109

 
$
58

 
$
288

 
$

 
$
1,455

Receivables

 
85

 
278

 

 
363

Merchandise inventories

 
2,344

 
2,834

 

 
5,178

Prepaid expenses and other current assets

 
165

 
485

 

 
650

Total Current Assets
1,109

 
2,652

 
3,885

 

 
7,646

Property and Equipment – net

 
3,349

 
3,323

 

 
6,672

Goodwill

 
3,315

 
582

 

 
3,897

Other Intangible Assets – net

 
44

 
444

 

 
488

Other Assets
1

 
89

 
790

 

 
880

Deferred Income Taxes
11

 

 

 
(11
)
 

Intercompany Receivable
884

 

 
2,388

 
(3,272
)
 

Investment in Subsidiaries
4,032

 
4,126

 

 
(8,158
)
 

Total Assets
$
6,037

 
$
13,575

 
$
11,412

 
$
(11,441
)
 
$
19,583

LIABILITIES AND SHAREHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
Current Liabilities:
 
 
 
 
 
 
 
 
 
Short-term debt
$

 
$
6

 
$
16

 
$

 
$
22

Merchandise accounts payable

 
653

 
937

 

 
1,590

Accounts payable and accrued liabilities
159

 
980

 
2,132

 

 
3,271

Income taxes
113

 
30

 
153

 

 
296

Total Current Liabilities
272

 
1,669

 
3,238

 

 
5,179

Long-Term Debt

 
5,844

 
17

 

 
5,861

Intercompany Payable

 
3,272

 

 
(3,272
)
 

Deferred Income Taxes

 
559

 
600

 
(11
)
 
1,148

Other Liabilities
20

 
430

 
1,212

 

 
1,662

Shareholders' Equity:
 
 
 
 
 
 
 
 
 
Macy's, Inc.
5,745

 
1,801

 
6,357

 
(8,158
)
 
5,745

Noncontrolling Interest

 

 
(12
)
 

 
(12
)
Total Shareholders' Equity
5,745

 
1,801

 
6,345

 
(8,158
)
 
5,733

Total Liabilities and Shareholders' Equity
$
6,037

 
$
13,575

 
$
11,412

 
$
(11,441
)
 
$
19,583



16

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Statement of Cash Flows
For the 13 weeks ended May 5, 2018
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
139

 
$
(69
)
 
$
299

 
$
(238
)
 
$
131

Impairment and other costs

 

 
19

 

 
19

Equity in earnings of subsidiaries
(136
)
 
(102
)
 

 
238

 

Dividends received from subsidiaries
200

 

 

 
(200
)
 

Depreciation and amortization

 
82

 
153

 

 
235

Gains on sale of real estate

 
(23
)
 
(1
)
 

 
(24
)
Changes in assets, liabilities and other items not separately identified
150

 
175

 
(364
)
 

 
(39
)
Net cash provided by operating activities
353

 
63

 
106

 
(200
)
 
322

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchase of property and equipment and capitalized software, net of dispositions

 
(50
)
 
(117
)
 

 
(167
)
Other, net

 
(10
)
 
21

 

 
11

Net cash used by investing activities

 
(60
)
 
(96
)
 

 
(156
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Debt repaid

 
(3
)
 

 

 
(3
)
Dividends paid
(116
)
 

 
(200
)
 
200

 
(116
)
Issuance of common stock, net of common stock acquired
28

 

 

 

 
28

Proceeds from noncontrolling interest

 

 
2

 

 
2

Intercompany activity, net
(254
)
 
(10
)
 
264

 

 

Other, net
(50
)
 
23

 
17

 

 
(10
)
Net cash provided (used) by financing activities
(392
)
 
10

 
83

 
200

 
(99
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(39
)
 
13

 
93

 

 
67

Cash, cash equivalents and restricted cash at beginning of period
1,109

 
79

 
325

 

 
1,513

Cash, cash equivalents and restricted cash at end of period
$
1,070

 
$
92

 
$
418

 
$

 
$
1,580








17

MACY'S, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)
 



Condensed Consolidating Statement of Cash Flows
For the 13 weeks ended April 29, 2017
(millions)
 
 
Parent
 
Subsidiary
Issuer
 
Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss)
$
78

 
$
(120
)
 
$
198

 
$
(79
)
 
$
77

Equity in earnings of subsidiaries
(78
)
 
(1
)
 

 
79

 

Dividends received from subsidiaries
211

 

 

 
(211
)
 

Depreciation and amortization

 
89

 
154

 

 
243

Gains on sale of real estate

 
(65
)
 
(3
)
 

 
(68
)
Changes in assets, liabilities and other items not separately identified
251

 
241

 
(507
)
 

 
(15
)
Net cash provided (used) by operating activities
462

 
144

 
(158
)
 
(211
)
 
237

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchase of property and equipment and capitalized software, net of dispositions

 
58

 
(139
)
 

 
(81
)
Other, net

 

 
21

 

 
21

Net cash provided (used) by investing activities

 
58

 
(118
)
 

 
(60
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Debt repaid

 
(152
)
 

 

 
(152
)
Dividends paid
(115
)
 

 
(211
)
 
211

 
(115
)
Issuance of common stock, net of common stock acquired
1

 

 

 

 
1

Proceeds from noncontrolling interest

 

 
3

 

 
3

Intercompany activity, net
(515
)
 
(1
)
 
516

 

 

Other, net
8

 
(31
)
 
13

 

 
(10
)
Net cash provided (used) by
financing activities
(621
)
 
(184
)
 
321

 
211

 
(273
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(159
)
 
18

 
45

 

 
(96
)
Cash, cash equivalents and restricted cash at beginning of period
938

 
81

 
315

 

 
1,334

Cash, cash equivalents and restricted cash at end of period
$
779

 
$
99

 
$
360

 
$

 
$
1,238




18


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 "first quarter of 2018" and "first quarter of 2017" are to the Company's 13-week fiscal periods ended May 5, 2018 and April 29, 2017, respectively.
The following discussion should be read in conjunction with the Consolidated Financial Statements and the related notes included elsewhere in this report, as well as the financial and other information included in the 2017 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 "Forward-Looking Statements") and in the 2017 10-K (particularly in "Risk Factors" and in "Forward-Looking Statements"). This discussion includes non-GAAP financial measures. For information about these measures, see the disclosure under the caption "Important Information Regarding Non-GAAP Financial Measures" on pages 24 to 26.
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 850 stores in 44 states, the District of Columbia, Guam and Puerto Rico. As of May 5, 2018, the Company's operations were conducted through Macy's, Bloomingdale's, Bloomingdale's The Outlet, Macy's Backstage, bluemercury and STORY.
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.
During the first quarter of 2018, the Company continued to implement its North Star strategy whose points involve strengthening of the Company's brand, delivery of a meaningful and unique shopping experience, embracing customer centricity, identifying and realizing financial resources to fuel growth, and innovative transformation of the Company's omnichannel business. Specifically, the Company executed on a number of underlying initiatives during the quarter:
The Company added a tender-neutral option to the Macy's Star Rewards loyalty program to facilitate brand engagement, increase retention and provide rewards to its customers regardless of payment choice.
As part of the expansion of Backstage, Macy's off-price business, the Company opened 18 new Backstage locations within existing Macy’s stores. This expansion brings the total Backstage locations to 70 (7 freestanding and 63 inside Macy's stores) as of May 5, 2018. The Company expects to open approximately 40 more locations inside Macy's stores in the second quarter of 2018 and approximately 100 in total during fiscal 2018.
To enable the growth of its vendor direct program (i.e., e-commerce merchandise purchased from the Company's digital applications and websites and shipped directly from the respective vendor), the Company has partnered with CommerceHub to significantly increase the available online merchandise assortment (i.e., create an endless aisle) in select departments throughout the rest of fiscal 2018.
The Company's focus and development on product, presentation, process, promotion and people has begun at its Growth50 locations. The Growth50 locations represent a mix of 50 stores of varying size and geography where the Company is accelerating the implementation of numerous successful store initiatives tested in 2017, including facilities upgrades, merchandising strategies and localized marketing plans. Such activities are expected to be complete before the commencement of the 2018 holiday shopping season.
Throughout fiscal 2018, more options will be provided to customers for pick-up, delivery and checkout at Macy's, including the expansion of Buy Online Pickup in Store, Buy Online Ship to Store, At Your Service counters and mobile checkout.
During the first quarter of 2018, Bloomingdale's achieved strong performance and benefited from improved international tourism. Bloomingdale's also opened its newly remodeled shoe floor at the flagship 59th Street location in New York City. There are more than 100 shoe brands, 17 that are new to Bloomingdale's and 34 that are exclusive, occupying more than 25,000 selling square feet within the location.
In addition to the above, 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. 2 new freestanding bluemercury locations were opened in the first quarter of 2018 and 23 additional locations are expected to open later in the fiscal year. As of May 5, 2018, the Company is operating 159 bluemercury locations (139 freestanding and 20 inside Macy's stores).

19


MACY'S, INC.

During the first quarter of 2018, the Company acquired STORY, a concept store in New York City that reinvents itself every few weeks to attract new customers and retain existing ones. In connection with this acquisition, Rachel Shechtman, STORY's founder and Chief Executive Officer, joined Macy's as its Brand Experience Officer to, among other things, enhance the shopping environment for Macy's in-store customers.
The Company has come to a mutual agreement to end the joint venture with Fung Retailing Limited. Macy’s will remain active on Alibaba’s e-commerce platform TMall, as well as social media channels. The Macy’s e-commerce team in San Francisco will manage the ongoing China business with operational support from Fung Omni in Shanghai.

Results of Operations
Comparison of the First Quarter of 2018 and the First Quarter of 2017
 
 
First Quarter of 2018
 
 
First Quarter of 2017
 
 
 
 
Amount
 
% to Sales
 
 
Amount
 
% to Sales
 
 
 
 
(dollars in millions, except per share figures)
Net sales
 
$
5,541

 
 
 
 
$
5,350

 
 
 
 
Increase (decrease) in comparable sales
 
3.9