Industry Overview - The retail sector has undergone significant digital transformation accelerated by the COVID-19 pandemic, shifting from supply-driven models to data-driven strategies focused on personalized offerings [2] - US retail sales increased for the third consecutive month in August, indicating continued consumer spending despite challenges such as higher prices and a cooling job market [3][4] - Retail purchases rose by 0.6% from the previous month, with a notable 0.7% increase when excluding autos, driven by strong performance in online retail, clothing, and sporting goods [4] Investment Opportunities - The retail industry has reached a point of relative stability, making it an attractive option for investors looking for opportunities linked to rising consumer demand [5] - Retail companies distributed $34.6 billion in dividends in 2024, a significant increase from $18.1 billion in 2018, highlighting the sector's strong track record of rewarding shareholders [5] Company Highlights - **Macy's, Inc. (NYSE:M)**: - Operates under Macy's, Bloomingdale's, and Bluemercury, focusing on clothing, accessories, and home essentials through approximately 680 stores and online channels [10] - Has been upgrading stores and expanding its online marketplace, with a current quarterly dividend of $0.1824 per share and a dividend yield of 4.32% as of September 22 [12] - **American Eagle Outfitters, Inc. (NYSE:AEO)**: - Specializes in casual clothing for teens and young adults, operating 1,185 stores and expanding globally through franchises [13] - Recently declared a quarterly dividend of $0.125 per share, maintaining regular payments for the last two decades, with a dividend yield of 2.79% as of September 22 [15] - **Best Buy Co., Inc. (NYSE:BBY)**: - A multinational retailer in consumer electronics, reporting revenue of nearly $9.44 billion in Q2 2025, reflecting a 1.6% year-over-year increase in comparable sales [17] - Offers a quarterly dividend of $0.95 per share, with a dividend yield of 5.25% as of September 22, and has increased dividends for 12 consecutive years [18]

Financial Data and Key Metrics Changes - Fourth quarter net sales were approximately $7.8 billion, down from $8.1 billion last year, in line with guidance [43] - Total enterprise comps increased by 0.2%, the highest quarterly results since Q1 2022 [43] - Adjusted EPS for the fourth quarter was $1.80, above guidance, primarily due to better-than-expected SG&A and credit card revenues [15][50] - Free cash flow grew by 71% to $679 million, including $283 million from asset monetization [12][51] - Year-end inventories increased by 2.5% year-over-year, with half of the increase attributed to the conversion to cost accounting [47] Business Line Data and Key Metrics Changes - Macy's net sales decreased by 5.3%, with comps down 0.9% [44] - Bloomingdale's achieved a positive 6.5% comp, the strongest fourth quarter volume in its history [22] - Bluemercury's net sales were up 2.4%, with comps rising 6.2% [44] - The First 50 locations at Macy's achieved a positive 1.2% comp, outperforming the rest of the fleet [16] Market Data and Key Metrics Changes - The luxury segment showed strong performance, with Bloomingdale's and Bluemercury continuing positive comp trends [21] - Macy's media network revenues increased by 7%, reflecting growth in advertisers and campaign counts [45] Company Strategy and Development Direction - The "Bold New Chapter" strategy focuses on improving store environments and enhancing the omnichannel customer experience [9][10] - The company plans to continue reducing CapEx while prioritizing investments that support growth and profitability [29] - The strategy includes closing underperforming stores to focus resources on go-forward locations [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic shifts made, while acknowledging the need for continued work [13] - The company is cautious about the external environment and consumer health, expecting pressure to continue in the near term [100][126] - The outlook for fiscal 2025 includes net sales of $21 billion to $21.4 billion, with comps expected to decline by 2% to 0.5% [55][56] Other Important Information - The company closed 64 non-go-forward Macy's stores ahead of the planned 50 closures, contributing to asset sale gains of $144 million [12][18] - The company is focused on enhancing its private brand offerings, with plans to address all home furnishing brands by mid-2025 [134] Q&A Session Summary Question: Areas of strength relative to same-store sales constraints - Management highlighted progress in the first year of the Bold New Chapter, including growth in the First 50 stores and closing underperforming locations [69][70] Question: Drivers of SG&A rate pressure - SG&A expenses were impacted by lower total revenue, but savings from store closures are being reinvested into customer experience initiatives [48][78] Question: Engaging various customer demographics - The company emphasized its multi-category business and strong partnerships, which allow for flexibility in navigating the uncertain environment [85][86] Question: Overall consumer health and promotional levels - Management noted that consumer health remains under pressure, with a focus on making offerings more compelling [99][103] Question: Trends in go-forward comps and category dynamics - The company observed strong performance in ready-to-wear and beauty categories, while the home business faced challenges [116][120] Question: Private label penetration and store closures - The company is working to rebuild its private label business and remains committed to closing approximately 150 stores by the end of fiscal 2026 [134][139]

4Q24 Earnings March 6, 2025 Safe Harbor Statement All statements in this presentation that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy's management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this prese ...