Macy's Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
June 1, 2023

There are 12 speakers on the call.

Operator

Greetings, and welcome to the Macy's, Inc. 1st Quarter 2023 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Operator

I will now turn the call over to Pamela Quintiliano, Vice President of Investor Relations. Pamela, you may now begin.

Speaker 1

Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Jeff Gennette, our Chairman and CEO Tony Spring, President, Macy's Inc. And CEO Elect and Adrian Mitchell, our COO and CFO. Along with our Q1 2023 press release, a presentation has been posted on the Investors section of our website, macysinc.com.

Speaker 1

Unless otherwise noted, the comparisons we provide will be versus 2022. Comparisons to 2019 are provided where appropriate to All forward looking statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the Securities and Exchange Commission. In discussing the results of our operations, we will be providing certain non GAAP financial measures.

Speaker 1

You can find additional information regarding these non GAAP financial measures as well as others used on the Investors section of our website. Today's call is being webcast on our website. A replay will be available approximately 2 hours after the conclusion of this call. With that, I'll turn it over to Jeff.

Speaker 2

Thanks, Pam. So good morning, everyone, and thank you for joining us. Before getting started, I want to take a moment to On our Q4 earnings call, we said that we expected pressure to be more intense in 2023 compared to 2022. Subsequently, demand trends began to worsen in mid March and further decelerated in April. We believe cooler temperatures and headlines surrounding layoffs And the banking crisis were factors, but so were the compounding effect of some previously identified macro headwinds.

Speaker 2

The U. S. Consumer, particularly at Macy's, pulled back more than we anticipated as they reallocated spend to food, essentials and services. We have planned our business for the remainder of the year assuming mid March through April macro headwinds continue and potentially worsen We have taken decisive actions in the second quarter and the back half of the year to ensure we are well positioned to compete. We will go into more detail on these shortly, but first, let's discuss Q1 results.

Speaker 2

We achieved adjusted diluted EPS Inventories were in line and down 7% year over year. February early March performed largely in line with expectations. As previously mentioned, trends worsened in late March. We entered April confident in our product and had several important events, including friends and family at Macy's, The spring break season and Easter. As April progressed, demand worsened across nameplates.

Speaker 2

The decline was most pronounced at Macy's, which has the largest exposure to the lower and middle income consumer with roughly 50% of its identified customers At an average household income of $75,000 or under and about 85% at $150,000 or under. By nameplate, Macy's net sales declined 7.7% and comparable sales declined 7.9% on an owned plus license basis Versus a 10.1% increase last year. We began the quarter with limited inventory carryover. Consistent with our inventory discipline, we had sold through the majority of fall and holiday product in the Q4. In hindsight, we converted too early.

Speaker 2

With spring fashion well set by early March, but without enough balance in weather appropriate apparel and footwear. Store traffic was healthy, but conversion was challenged. Most of the country experienced below average temperatures for an extended period of time, While we were over indexed in spring and early summer fashion, including special occasion and did not have enough colder weather and seasonless product. Ultimately, sell throughs were below expectations as our customer became increasingly more deliberate in how they are allocating discretionary spend and buying closer to need. On the flip side, categories we are known for that are less discretionary and weather dependent, including beauty, particularly fragrances, Women's career sportswear and men's tailored all outperformed.

Speaker 2

We also began to experience a comeback in certain pandemic categories, In flows and freshness more often, store within stores outperformed the full line locations in which they operate by 150 basis points on a comp owned plus licensed sales basis. These locations benefited from a greater emphasis on seasonless product and a strong value proposition. We currently operate at 310 Backstages, including 301 store within stores and plan to open 9 more this year. Our luxury nameplates, Bloomingdale's and Blue Mercury, were also impacted by macro pressures, although not at the same rate or intensity as Macy's. Bloomingdale's results were roughly in line with our expectations.

Speaker 2

Net sales declined 2.3% and comparable sales were down 4.3% On an owned plus license basis versus a 26.9% gain last year. Bloomingdale's registered Strength and beauty, particularly fragrances, men's and women's contemporary apparel and housewares. Bloomingdale's outlet, a relatively undeveloped part of the nameplate That appeals to the more value conscious luxury customer also continue to outperform. At Blue Mercury, results once again exceeded expectations, Benefiting from our differentiated product mix and unique competitive positioning as a luxury beauty retailer. Net sales rose 4.4% As the weather has turned more seasonal, our customer has been responding well to our compelling offerings and price points.

Speaker 2

We are likely also benefiting from pent up demand. Although encouraging, we do not have clarity on whether or not These improvements indicate a trend change reflective of a healthier consumer. These improvements have been strongest at Bloomingdale's and Blue Mercury, potentially indicating Further bifurcation of customer behavior by income tier, which we are closely monitoring. While first quarter adjusted EPS Macy's, Inc. Was ultimately better than our expectations.

Speaker 2

We did not end as strong as we would have liked. We will not carry problems from 1 quarter to the next. We have moved quickly to improve the composition of our assortments for the back half. At the same time, we are also taking a more cautious view of our customer. The high end of our Q2 and full year guidance ranges assume heightened macro pressures experienced in mid March through April that they persist, While the low end of both contemplates potential deterioration as the year progresses.

Speaker 2

If demand improves, we will use our ample inventory receipt reserve, Now let's turn to the specific actions we have taken to ensure we are well positioned to compete in the back half and longer term. For the Q2, We have accelerated the timing and depth of promotional events, markdowns and clearance at Macy's to liquidate seasonal merchandise. This includes slower moving Q1 spring transitional receipts as well as May flows that we were unable to impact following the rapid deterioration in demand. We are utilizing our pricing science tools to approach markdowns and promotions with precision to maximize merchandise margin. We have also adjusted the timing, composition, amount and value proposition of receipts.

Speaker 2

For the 3rd and 4th quarters, we are leaning into categories that are working Like beauty, career sportswear and gifting and are further reducing our emphasis on down trending categories. Looking specifically at the 4th quarter, our leading position as a gifting destination, this year we will have more newness compared to last year, including exclusives that leverage our strong vendor relationships in beauty, where we had great Mother's Day and Valentine's Day performance and in toys. We also recognize The need for a better balance of cold and warm weather goods at Macy's. Adjustments have been made to flow product closer to need. In addition, we are working with our partners to offer more seasonless year round fashion content.

Speaker 2

Other actions taken improved receipt flow and in stock position Our core assortment enhanced pricing algorithms to maximize sales, margin and competitive positioning and updated marketing messaging Our customers care about with compelling value and price points that appeal to our diverse fashion conscious base. Value does not mean the lowest price. It means offering the right brands, fashion content and elevated omni channel shopping experiences. This morning, we are excited to share that we are bringing Nike back to the Macy's nameplate this fall. This mutually beneficial relationship reflects our strategy to provide Footwear will continue to be sold in our finish line licensed locations.

Speaker 2

We look forward to scaling our Nike partnership with additional locations in spring of 2024. We remain focused on the long term. Balance sheet health and cash preservation are critical to achieving our goals. About 6 months ago, we embarked on a cost savings project To reimagine our ways of working, drive clear prioritization across key enterprise capabilities and reduce complexity. Given late Q1 trends, that work was accelerated and we have identified an additional $200,000,000 of cost savings for this year and roughly $300,000,000 to Adrian will discuss the specifics, but investments in our 5 growth vectors remain protected.

Speaker 2

Our ambitions are greater than our recent results. As a seasoned retailer, we understand the challenges that we are facing and will continue to pull the levers needed to achieve our of low single digit sales growth and a sustainable low double digit adjusted EBITDA margin beginning in 2024. The biggest risk to achieving that goal is if pressures on the consumer further intensify at an accelerated rate next year. I am confident that we have the right strategy and team to lead us into the future. I have a tremendous amount of personal and professional respect For incoming CEO, Tony Spring, he is an excellent merchant and marketer and has a well deserved reputation as an innovator, brand builder And this marks Adrian's first call as Chief Operating Officer and Chief Financial Officer, a promotion that is well deserved.

Speaker 2

Adrian's strategic thinking and financial acumen have enabled us to achieve our current position of financial strength and has set us up to continue to make crucial investments for future success. Congratulations to you both. I look forward to what you will achieve together. And I know you're all excited to hear from Tony, so I'm going to turn it over to him for some brief comments.

Speaker 3

Thank you for the introduction, Jeff, and for your mentorship and tremendous support. And thank you to our Board of Directors for their confidence and support. I also want to acknowledge the entire leadership team and our colleagues for their ongoing commitment to our brands And business, please know how humbled and honored I am to have been chosen to take on Macy's, Inc. CEO role this upcoming February. For those of you I have not met before, let's start with my background and approach to leadership.

Speaker 3

I consider myself a curious generalist It brings a high level of self awareness and ambition to the teams I lead. As many of you know, I began my career at Bloomingdale's roughly 36 years ago. During my tenure, I've split my time somewhat equally between merchandise, marketing, stores and senior leadership. As I look back, I've always viewed the area I was in as the engine that was driving the business. Today, I realize how complementary and intertwined they all are.

Speaker 3

As a merchant, our products must be curated and compelling. As a marketer, our strategy must be engaging, inspiring and personalized. Of course, our digital experience is closely linked as the window to our brands and a large source of commerce. As a stores leader, we must rally our colleagues Ensure that our recipe includes the right balance of all of these elements. Over the last decade, I've had the distinct privilege of leading Bloomingdale's.

Speaker 3

I want to take a moment to acknowledge my team there. During my tenure, we achieved record sales and customer and colleague engagement. Coming off our 150th anniversary, Blooming Hills offers a curated merchandise assortment and has a loyal following. Our loyalty program is best in class and Our marketing is distinctive with events, activations and pop ups animating many campaigns, which underscores my personal belief In Retail and Theater, I view Macy's Inc. As an incredible and unparalleled portfolio of nameplates and brands, representing off price to luxury, On mall to off mall, Private to National Brands, our multi channel, multi generational and multi category platform gives us opportunity to satisfy the customers' appetite for all of our categories.

Speaker 3

It's important to acknowledge the tremendous progress we've made as we modernized our business, which sets us up for future success. But it's also important to recognize that across nameplates, we have room to improve. That is what makes our potential so exciting to be a part of. My experience at Bloomingdale's bring an outsider insider perspective to the Macy's brand, Which is beneficial during this heightened period of uncertainty. Over the next several months, I intend to continue to listen and learn And lead my new areas of responsibility, which include merchandise, marketing and digital strategy.

Speaker 3

I will do so with clear eyes and a focus on what's possible long term, While maintaining a disciplined approach to near term controllables, I look forward to sharing my thoughts and observations as the year progresses. One thing I know for certain is that this is a renowned business and one which I'm incredibly passionate about. Recent results and our revised outlook have not changed my view. However, we were out of balance in the Q1, overemphasizing spring seasonal merchandise rather than cold weather and seasonless merchandise. We are containing the related markdowns of the Q2 and have adjusted the timing amount and composition of buys for the fall and holiday.

Speaker 3

Turning to the long term, I now want to take a moment to provide my thoughts on each of our 5 growth vectors, which are designed to focus our resources and our teams On the leverage that will bring top line growth back to Macy's Inc. In 2024 and beyond. While still early, we believe That each will be a meaningful contributor to the future. First, let's start with Macy's Private Brands. I firmly believe that our success is tied to the right combination of compelling private brands, popular national brands and the curation of unique brands appropriate All at a compelling value equation.

Speaker 3

That has been one of our formulas of success at both Bloomingdale's and Blue Mercury. In my new role, I have had the pleasure of working even more closely with the Macy's private brand team on their strategy. During the Q1, Iancy women's and clubroom men's, both of which have been reimagined, outperformed their respective broader apparel segments at Macy's. Looking ahead, we are excited about the launch of our newest brand, which will offer women's apparel and accessories later this summer. Stay tuned.

Speaker 3

Our second growth vector is small format stores. These allow us to optimize our total store portfolio at both Macy's and Bloomingdale's through replacement, Densification and new market opportunities. They balance our traditional large format on mall locations with a more localized off mall is physically closer to our existing and target customers encouraging a higher frequency of trips. We're continuing to enhance these and are learning every day how we can better serve our customers. Results are very encouraging.

Speaker 3

During the Q1, our small format stores opened at least 1 fiscal year positive comparable owned plus license sales growth. Customer experience scores, particularly regarding the physical environment, ease of checkout And colleagues being helpful and available are high. Interestingly, we are experiencing limited to no cannibalization in existing markets Where we open off mall formats. Instead, customers are making additional shopping trips. Long term, we remain bullish about the Small format store opportunity as off mall retail continues to be a dominant in person shopping method for U.

Speaker 3

S. Consumers and we evaluating potential locations to enable accelerated growth. We look forward to sharing more as this work develops further. Now on to our 3rd growth vector, Macy's Marketplace. We are seeing new customers and a younger existing customer respond to our new and expanding categories, Which has resulted in increased basket size.

Speaker 3

During the Q1, we added approximately 4 50 brands, ending the quarter at roughly 9 50 brands. We're seeing indicators of a strong growth rate with Marketplaces gross merchandise value increasing over 50% compared to the Q4 of 2022 And average order value and units per order approximately 50% above those customers not shopping at Marketplace. Needless to say, we are very excited to launch our Bloomingdale's marketplace early in the fall. Our 4th growth vector is luxury. With fiscal 2022 representing record sales at both Bloomingdale's and Bloom Mercury, we're excited to continue to invest in both nameplates.

Speaker 3

The teams are attracting sought after brands, leveraging their distinctive marketing and satisfying their core customer. Based on the power of our relationships with our vendors and customers, I see opportunity for store, digital and marketplace growth in both nameplates. At Macy's, we've made a commitment to elevate our beauty business with a larger luxury assortment. We first began to offer more Beauty and Macy's in 2018 and have since added many brands, including Carolina Herrera Beauty, which is exclusive Armani, Saint Laurent, Tom Ford, Gucci, Mason Margiela and La Mer, just to name a few. This is an area that even in the current environment, we're seeing very limited price resistance and even more partnerships on the horizon.

Speaker 3

Last but certainly not least, our 5th growth vector, personalized offers and communications. The power to talk to over 40,000,000 With the right offer at the right time really resonates with me. I believe it will be a true unlock for both our promotional offerings and merchandise messaging. During the Q1, we leaned into personalization of a customer's offer within our typical event structure. These tests, Which were based on predictive behavioral models allow us to show different customers various value propositions by discount and category of offer.

Speaker 3

This is in addition to loyalty lifecycle offers such as Datus earn back accelerators and targeted offers to at risk customers. Testing suggests that Personal Lines offers can foster sales growth, margin expansion and stronger customer engagement. We have Accelerated our analytics powered campaigns in the Q2 and we'll use learnings to inform our view of opportunities at both Bloomingdale's And Blue Mercury. Now before I turn it over to Adrian, let me say how excited I am to be working even more closely with him and to have his counsel, leadership And partnership. What makes this transition so seamless and the succession so thoughtful is the complementary skills that Adrian and I bring to this company.

Speaker 3

He has had a noticeable impact on the organization since he joined almost 3 years ago. Our balance sheet health, including no material debt maturities until 2027 And fixed interest rate debt give us the financial flexibility to continue to invest in our long term opportunities and return capital to shareholders Despite the uncertainty within the macroeconomic environment. With Jeff's support, we will return MACI XING to profitable growth. I look forward to getting to know all of you and sharing our progress. Now I'll turn it over to Adrian.

Speaker 4

Thanks, Tony, and good morning, everyone. I want to start by thanking Jeff and the Board for their ongoing belief and trust in me. From bringing me on 3 years ago as Chief Financial Officer To recently expanding my responsibilities to include stores, supply chain and technology. With my new responsibilities as Chief Operating Officer, I have the opportunity to go deeper into the design and execution of our long term goals. As we aim to maximize opportunity and value, I am hyper focused on building a faster, more flexible and more efficient operating model that drives sustainable sales and margin growth By creating alignment on those priorities that will have a meaningful longer term impact on this business.

Speaker 4

What can we do to better serve our customers and improve the end to end omni channel shopping experience? How do we optimize our physical store with the small format stores to accelerate growth while enhancing our inventory flow, merchandise planning and localized assortment capabilities. And evaluating our updated growth aspirations, how do we further modernize our supply chain and technology infrastructure to support the omni channel shopping experience we Aspire to deliver in the future. Reflected on the last 2 months, I've been on a listening tour, spending a lot more time in stores, DCs and with the technology team identifying areas of opportunity. As I've been ramping up on these businesses, I've been We're encouraged to see stability in hiring, retention and turnover and have been impressed with the talent across these teams.

Speaker 4

I've also spent a significant amount of time with Tony. His experience in merchandising, marketing and stores serves as a nice balance to my years in large scale transformation and consulting and my background in retail operations, including data and analytics, Technology, strategy, stores and supply chain. He is a seasoned operator that department stores and fashion inside and out, while I'm a transformational specialist focused on modernizing our retail operations. We are fully aligned on what is needed to propel Macy's Inc. Into the future.

Speaker 4

We will maintain a disciplined approach to our inventories and markdown liability, Offer differentiated product and value to our customers and will not chase unprofitable sales. For us, that's now table stakes. Looking ahead, we will continue to strengthen the foundation of our core businesses, while simultaneously investing in our 5 growth vectors. Despite recent headwinds, Tony and I remain committed to our aspiration of achieving low single digit sales growth and We generated net sales of $5,000,000,000 a decline of 6.8% versus the prior year. Comparable sales on an owned plus license basis decreased 7 point 2%.

Speaker 4

Macy's Inc. Owned AUR was 4.7% driven by ticket increases and category mix. For the year, we continue to expect an improvement in AUR year over year through a combination of ticket increases, lower markdowns and category mix. Next, other revenue. As a reminder, beginning this quarter, we are reclassing credit card revenues and Macy's Media revenue to other revenue.

Speaker 4

Credit card revenues were previously reported as their own caption, while Macy's Media Network revenue was reported within SG and A. During the quarter, other revenues were 3.8 percent of net sales. Credit card revenues were 160 $2,000,000 down $29,000,000 from last year. As a percent of net sales, credit card revenues were 3.3% or 30 basis lower than last year, primarily reflecting the impact of higher bad debt within the portfolio. Macy's Media Network Revenue was $29,000,000 versus $26,000,000 in the prior year.

Speaker 4

Moving to the 2nd value creation lever, gross margin. Our gross margin rate was 40%, forty basis points above prior year. Merchandise margin was flat benefiting from lean beginning of the year inventory levels and lower clearance markdowns offset by promotion and category mix shifts. As it relates to delivery expense, Continued cost mitigation efforts contributed to a 40 basis point improvement versus last year, primarily on better contracted rates, Reductions in packages per order and a one point decline in digital penetration. The 3rd value creation lever is inventory productivity.

Speaker 4

Inventory declined 7% year over year in line with our net sales decline. Turnover was down 2% to last year, reflecting the decline in sales versus the comparable period. Adjustments The timing, amount and composition of receipts beginning in the second quarter are expected to drive back half sell throughs and strengthen inventory productivity. Expense discipline is the 4th value creation lever. SG and A increased $45,000,000 or 2.4 to $1,950,000,000 SG and A as a percent of total revenue was 37.7 percent, 350 basis points higher than last year.

Speaker 4

As a reminder, the increase in minimum wage for Storrs colleagues was fully implemented on May 1 Last year, the higher year over year SG and A dollars and rate reflects the lapping of these increases and includes continued investments colleagues across competitive pay, incentives and benefits. SG and A also includes the increase in depreciation and amortization expense. After accounting for interest and taxes, 1st quarter adjusted diluted EPS was $0.56 versus $1.08 in 2022. Lastly, the 5th value creation lever, capital allocation. Our top focus is liquidity.

Speaker 4

We continue to take a thoughtful approach to capital allocation, prioritizing a healthy balance sheet, We generated $105,000,000 of operating cash flow compared to $248,000,000 last year, primarily due to lower earnings in the current year quarter versus last year. We invested $296,000,000 in capital expenditures. Free cash flow inclusive of proceeds from real estate was an outflow of $166,000,000 As part of our open ended share repurchase authorization, we bought back approximately 1,400,000 shares for $25,000,000 We also paid $45,000,000 of dividends. Now on to our outlook. Let's start with a discussion of our cost savings efforts.

Speaker 4

As just mentioned, we have identified an incremental $200,000,000 of cost savings for this year versus our prior outlook. For 2024, we estimate the savings to be between $300,000,000 $350,000,000 impacting both gross margin and SG Roughly 30% of the savings in 2023 will be in gross margin and the remainder will be in SG and A. A small portion has been recognized in the Q1. Savings build as the year progresses and will be most significant in the Q4. Now let's discuss our full year and second quarter outlooks, both of which contemplate ongoing pressure on our customer.

Speaker 4

The low end assumes macro pressures worsen, while the high end assumes they remain stable with levels experienced in mid March through April. With so many mixed signals, it is prudent to take a cautious stance. We will continue to embrace the financial operational disciplines that we have implemented over the past several years. If demand improves, we will lean into our reserves and chase intra quarter, But we are going to wait for proof points to do that and our improved May trends are not enough. Alternatively, if demand trends worsen, We have the flexibility to make further adjustments.

Speaker 4

We can and will do better. We have been course correcting and have made adjustments to the second, 3rd and 4th quarters. Looking at the full year, our expectations for Macy's Inc. Are now as follows. Net sales of $22,800,000,000 to $23,200,000,000 Comparable sales on a 52 week Own Plus license basis to be down about 7.5% to 6% year over year.

Speaker 4

As a reminder, compares ease in the 3rd and 4th quarters. Other revenue to be about 3.6 percent of net sales with credit card revenues accounting for 82% to 83% of that. The reduction in our credit card revenue outlook is primarily a result of our reduced annual sales expectations. A gross margin rate of 38% to 38.5% on our expectation for deeper markdowns in the 2nd quarter to drive and ensure we enter the Q3 in a clean inventory position. The 2nd quarter should be viewed as an exception, not a changing course.

Speaker 4

Our philosophy remains unchanged. We continue to be focused on protecting gross margin. We will navigate the year with The intent to stimulate increased conversion and margin dollar expansion. Our annual gross margin rate outlook also includes an estimate For increased shrink, which we call shortage relative to our initial expectations. Starting in Q2, We have further enhanced our pricing science capabilities to automate strategic promotions from vendor direct to owned inventory.

Speaker 4

This gives us the opportunity to bring an automated pricing solution that incorporates category elasticities, maximizes inventory turnover And optimizes unit sales left and margin dollar expansion to our owned inventory portfolio. In addition, we also continue to refine our which provides us a better understanding of the competitive landscape and enhances our decisions around location level pricing. SG and A as a percent of total revenue is expected to be about 35.4% to 35.5%, Reflecting the reduction in our sales expectations along with the cost savings work discussed earlier And adjusted EBITDA as a percent of total revenue of roughly 8.8% to 9.4% or 9.1% to 9.7% as a percent of net sales. After Interest and taxes, we are estimating annual adjusted diluted EPS of $2.70 to $3.20 This takes into account a roughly $0.12 negative impact from increased shortage relative to our previous expectations. Our adjusted EPS guidance does not assume the impact of potential share repurchases, but does consider the proactive actions taken for the back half.

Speaker 4

For the Q2, we expect net sales of $5,000,000,000 to $5,100,000,000 Gross margin rate to be down no more than 100 basis points to the Q2 of 2022. The 2nd quarter includes We expect this to be the only quarterly deterioration to prior year. Adjusted diluted EPS is expected to be $0.10 to $0.15 End of quarter inventories to be down low to mid single digits to last year on a percentage basis. While we cannot control the macro environment and how our consumers respond, we remain focused on offering our customer the best product, Experience and value. There is no finish line for this work.

Speaker 4

Over the past few years, we have made significant progress across the organization. We have reduced our reliance on markdown allowances, shifted to an upfront cost negotiation model with vendors, incentivize merchants at the Macy's ink level rather than by their respective category performance and build data and analytics into our processes. Looking ahead, the Macy's nameplate is shifting to cost accounting in 2024, which should help incorporate further disciplines. These actions together speak to how we are running our business from a much healthier and more educated place than in the past. So while we recognize the macroeconomic climate has created a larger headwind on our business than originally anticipated when we first introduced our Annual outlook in early March, we are responding and remaining agile to ensure we meet the needs of our customers.

Speaker 4

The disciplines we have built into our decision making and culture gives us the foundation to balance the current environment while Executing with clarity on our long term growth goals. We remain committed to our aspiration of achieving low single digit sales growth And a sustainable low double digit adjusted EBITDA margin beginning in fiscal 2024 even with the assumption that macro pressures persist. With that, I'll turn the call back over to Jeff for some closing remarks.

Speaker 2

Thanks, Adrian. We are a modern apartment store with a rich history that has weathered these storms Before and we will do so again. Our financial health, operational efficiencies and data driven process and tools Our unique advantages that allow us to navigate through uncertain periods as we continue to invest in the future. We are a competitive team here at Macy's. We are not standing still.

Speaker 2

We are committed to better serving our customers and improving our business. Our teams are fully aligned, and we remain focused on protecting and preserving the second half of twenty twenty three and our future growth opportunities, including achieving our sales and EBITDA goals. And with that, operator, we will open it up for Q and A.

Operator

Thank you. The floor is now open for questions. A confirmation tone will indicate your line is in the question Today's first question is coming from Matthew Boss of JPMorgan. Please go ahead.

Speaker 5

Great. Thanks. So first, Tony, congrats on the promotion. Maybe high level, where do you see the largest low hanging fruit For acceleration opportunity as you take the helm. Jeff, could you elaborate on the cadence of top line trends?

Speaker 5

And in Where have you seen this most recent acceleration, whether by category or across income cohorts? And then finally for Adrian, With this dynamic backdrop, what's your comfort with inventory on hand and just your confidence in clearing any excess by the end of this quarter?

Speaker 2

So Matt, let me go first and then we'll turn it over to Tony and Adrian. On the cadence of the top line, what you saw was that When you look at our demand and what was happening in the February hit our expectations, as did early March, It started to deteriorate in the later latter part of March and then it decelerated even further in the month of April. So what we saw there was, when you look at the seasonal categories, so we basically had we thought The appropriate level of carryover in fall and holiday, we had some fresh transitional receipts there. We sold through that pretty aggressively in the first half of the quarter And did not have enough content in those categories as we look at the back half. We had well transitioned into spring and seasonal, and we did not At the sell throughs that we expected at regular price and when we started to market down.

Speaker 2

So that's the piece that When we're starting to see those inventory levels come up, which is where we kind of bucketed where we're going to be in the Q2 to deal with that to have the appropriate units into the Q3. So that would be on kind of the cadence of the top line. When you look at the recent trends in the month of May, you definitely saw a bounce back Across nameplates, but most pronounced when you look at Bloomingdale's and Blue Mercury. So that's the comment that we're making. We're attributing that to 2 things.

Speaker 2

One is that it pent up demand for warm weather categories, which is definitely where we saw the acceleration of sell throughs or is it an improvement in the macro Environment, we don't know that answer yet. So when you look at our guide for both the Q2 and the balance of the year, just to reiterate where we're at, we looked at the trend from the end of March through April and extended that by brand, by category all the way through the rest of the year. We obviously have lots of penetration differences between quarters. Certain businesses become much more important as you get to the back half of the year. We did this very scientifically.

Speaker 2

And then the lower end of the guide was really if the macro conditions stiffen and they get worse. So that is what's implied in our guide. Know that when you look at our overall strategy, our objective is to make sure that we are responding in the moment to how customers are transacting. What I would tell you about the customer right now, particularly on the Macy side, is they're buying much closer to need. So our opportunity to have the receipt reserves that we have to be able to respond in time With all the abundance of inventory that's in the market is prudent.

Speaker 2

So I'll turn it over to Tony to answer your first part of your question. Thanks, Matt. I would say, first off, I'm obviously excited about the opportunity and excited about the team that

Speaker 3

I see at Macy's as being really Dedicated, passionate and certainly committed to the overall business results despite the challenging business climate. Macy's is a beloved brand with a multi generational customer base. The scale of the business really should be an asset. I do see, however, opportunities to simplify our operation, make the experience easier for our colleagues to execute and more enjoyable for our customer. I believe the Macy's, Inc.

Speaker 3

Portfolio should be one that we can leverage more fully from both Off Price to Luxury. I think we've done a good job of leaning into the opportunity on data science or the STEM part of our business. I think if you think of Steam, the art part of our business, we have more work to do on curation, imagination, storytelling and inspiration.

Speaker 4

Terrific. Matt, good morning to you. Just to speak and close out on the topic of inventory. The simple answer is that we're confident in clearing through the inventory coming The second quarter. And as you know, we have the track record around inventory management.

Speaker 4

Our track record is clear, And we're getting better and better every quarter. Just to put in perspective, we ended last year down 3% in inventory. We ended the 1st quarter down 7% in inventory. We expect to end the 2nd quarter down low to mid single digits on inventory. So we are confident given our capabilities and our tools.

Speaker 4

Now just to put in context, the way we think about inventories in terms of the volume, the mix and having fresh content. And the reality is what we experienced in the Q1 is that we transitioned early. That was a clear bet for us because we were able We have limited carryover coming out of the Q4 and coming out of holiday. So we entered in a very solid position, but the weather cooled. But when you look at our content, beauty, healthy numbers career sportswear, healthy numbers men's tailored, healthy numbers Warm weather, spring seasonal for most of the quarter, soft numbers.

Speaker 4

So we're putting in our tools and our actions in place, which we have a clear track record on, And we are confident that we will be able to work through the inventory and get back to a balanced perspective on inventory entering the fall season.

Speaker 6

Thanks. Best of luck.

Operator

Thank you. The next question is coming from Oliver Chen of TD Cowen. Please go ahead.

Speaker 6

Hi, Jeff, Tony and Adrian. I was curious about merchandise margins and promotions for the back half and what's implied in guidance. As you do take the markdowns in Q2, what's the duration of those and how do you do those Most efficiently. Would also love your take on just things you're monitoring with the consumer and that behavior. And I assume that The comp volatility is likely in transaction counts.

Speaker 6

Would love your thoughts on that. And lastly, Tony,

Speaker 2

Hey, Oliver. Let me take 2 of your questions. So the merchandise margins, when you look at that, we As we indicated, we think that we're going to be above last year's levels for obviously, we saw that in the Q1. We're anticipating that in both the 3rd and the 4th. As we and the second we saw it was going to be within 100 basis points of last year, the full year will be higher than the What you see and can expect from us is that when you look at the spring overhang that we have right now We're anticipating that we will take the appropriate price markdowns there.

Speaker 2

And what we've been doing through the first part before we marked Down as we were doing higher POS on those. So that has a cycle that we're playing through. We've got we have a number of categories in which we're getting higher AURs Higher margins than we did last year. We're expecting that to continue. And then there's other categories in which we're getting sharper on our price points As we know that the customer is looking for promotional value right now, you can see what we're seeing in our up price arms in both outlet as well as back stage, but what we're doing with specials and what we're doing with flash sales, those are all going to be comparable to where we were last year.

Speaker 2

And we're looking at the content right now of where that is going to be. So we have a lot of confidence when we look at the back half with respect to where we're going to be with price and promotion. Probably more important when we look at the back half is where we're going to be with the newness and where we're going to be with all of our gifting categories And how we've rebuilt that based on all the learnings that we have from Q4 of last year. So that is how merchandise margins so expect merchandise margins To continue to be stable and the promotional as I've described. So

Speaker 3

Tony? Oliver, thanks for the question. Let me say first, we will continue to attract a multi generational customer. I think it's an advantage of being a department store that we have 5 generation shopping with us. But in terms of your question and how we target and grow the younger customer base, I start with I'm proud of the fact that the Bloomingdale team has generated more business with The younger customer than we did years ago, it starts with first having the brands consumers are looking for.

Speaker 3

So challenging our merchant team to be In the market and inquiring through marketplace or through our own distribution channels, those brands. 2nd is obviously a strong digital strategy. We know the younger customer starts 1st online. And then thirdly, making sure that we have a powerful Presence in the social space. I think we've made some progress.

Speaker 3

We still have more work to do. I would also add that remember all of our brands are great At being a part of life moments. And so whether that is Sweet 16s, birthdays, anniversaries, wedding, first house, first All those connote a younger customer and I think we have an opportunity to own a greater share of that business.

Speaker 4

Good morning, Oliver. It's great to be with you. Let me amplify a point that Jeff made on margin and then I'll speak to the consumer. With regards to the merch margin, just want to be very clear that the deterioration of no more than 100 basis points is isolated to the Q2. When you look at our annual Just given the softness on margin that we experienced in the 3rd and 4th quarters.

Speaker 4

With regards to the consumer for the year, we're being cautious about the consumer. Now in the month of May, we have seen slightly better trends than what we saw coming out of April. But it's too early to tell from our perspective. So we're actually taking a cautious approach to the high end of our guide, which reflects the March April trends, the low end of our guide worsening of consumer trends. As we think about May and that favorability on the trends there, is it warm weather?

Speaker 4

Is it more compelling values? Is it pent up demand? Is it new trend? For us, it's too early to tell, so we're taking a cautious stance.

Speaker 6

Thank you. Best regards.

Speaker 4

Thank you.

Operator

Thank you. The next question is coming from Brooke Roche of Goldman Sachs, please go ahead.

Speaker 7

Good morning and thank you for taking our question. Jeff, I was wondering if you could provide a bit more context on the customer engagement trends that you're seeing between your higher income demographic cohorts and your lower income demographic cohorts As you ended the quarter and moved into May, are you seeing evidence of trade down or further pressure on traffic or ticket among any specific sub demographic? And then for Adrian,

Speaker 2

So Brook, let me start with your question on customer behavior. As we've reported in past quarters, we're not seeing a trade down, not yet. What we have seen is that all customer types, I'll speak to the Macy's brand, has been basically down about the exact same percentage. What we're seeing is that in some cases with customers that are responding to either Backstage or they're responding to Market by Macy's, It's entailing another trip and we're seeing more spend out of them. When you look at the dynamics of our transactions, which you see across all of our customers It's basically an increase in AUR about the exact same basket size as what they had in their visits last year.

Speaker 2

So what they're doing is they're buying less units. They're buying, with the higher AURs. The basket size is about the same. They're coming in With the expectation of spending X and that's what they're going out with. But we're not seeing where you're seeing that when you look at the income types that you're One showing up in Backstage that didn't before.

Speaker 2

The ones that are showing up in Backstage are in the main house and we're getting more spend out of them in aggregate. So, what we saw in the month of May though was a separation of the trend, the improvement in the trend at both Blue Mercury as well as Bloomingdale's. So there is something that's on our radar screen to see does that more affluent customer. Are they is it showing up right now that they're healthier than the Macy's Raj, obviously watching that one very carefully.

Speaker 4

Brooke, good morning to you. Great to be with you as well. With regards to Cost savings, let me give a little bit of context. We started this work about 6 months ago. And so what we've been doing given the trends that we saw in the Q1 The second is around SG and A.

Speaker 4

Within gross margin, we really focus on our inbound freight, our carrier network, our delivery expense, It's about reducing the complexity within the business, repositioning the organization for growth and identifying operating expenses on the non payroll SG and A side that we can actually take out of the system. This year, we've identified an incremental $200,000,000 of opportunity. Next year, the annualized run rate is $300,000,000 to $350,000,000 In addition to responding to the environment, we've actually reduced our CapEx forecast, If you allow me to add that dimension from $1,000,000,000 to about $950,000,000 But to be clear, the growth factors are protected. We're investing appropriately in the team and the initiatives to get back to growth in 2024. So we've been very surgical, Very disciplined in where we're making adjustments and it's just going to be good for the business longer term.

Speaker 7

Thank you very much. I will pass it

Speaker 2

on. Thank

Speaker 4

you, Brett.

Operator

Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead.

Speaker 8

Welcome, Tony. Can you please expand on the AUR improvement you're expecting to see in the Back half of the year, which categories? And also, can you expand a little bit on the store strategy, both for Bloomingdale's and for Macy's in the small store component. And lastly, welcome, Tony. What do you see as bringing over from Bloomingdale's

Speaker 2

Hi, Dana. So let me take the one on AUR. And what you saw from our Q1 post was about almost 5% or 4.7% increase. We do expect that we're going to have a higher AUR in the back Cath, a lot of that is category mix. So when you look at the some of the higher AUR categories are trending for us And that is driving up that what you see there.

Speaker 2

There's other categories in which our AUR is below last year based on where we see the environment, We're looking at price matching when you look at our competitive cycle, ensuring that we've got the best value for our customers as they're searching in that particular time. So we do expect an improvement in AUR year over year. I think that outlook reflects our expectation for all of the heightened markdowns That we're talking about in the second quarter and the planned markdowns that we have for what we're doing in the back half for both POS As well as Clarence. What I bring up is just that our inventory is in really good shape. So while we are heightened right now in spring merchandise, We are chasing opportunities in other categories.

Speaker 2

We are very committed to that. We have inventory reserve Across all of our categories, even the ones that are down trending, because freshness is the name of the game in our business and we always have available content that's out there in the market to purchase. So any demand signal that our merchants have, just remember that our merchants are all rewarded based on the collective Macy's brand and how it's doing. So there's huge opportunities for us to ensure that the right customers are being addressed with the right content at the right time. There is going to be AUR improvement and but through all of that.

Speaker 2

But at the end of the day, we're making sure that our receipts are consistent with where our customers are voting.

Speaker 3

Dana, nice to connect again. I appreciate the question. No one is a bigger fan of The Bloomingdale's brand and business then I am, but I would reframe your question as how do we develop a stronger portfolio where we can learn Bloomingdale's strength is certainly curation, bringing variety versus redundancy To the expanded assortments that we offer, Bloomingdale's has a great strong best customer base representing a large portion of their business. But how do we create stronger best customer programs for each of our brands? While Bloomingdale's gets credit for retail as theater, The parade, the fireworks, the flower show are all a part of Macy's heritage.

Speaker 3

Each brand needs to develop compelling programs to motivate their customer base We engage more frequently, both in store and online. So I'm looking forward to what we can do going forward.

Speaker 4

Dana, good to be with you as well. With regards to our store strategy, the focus is on growth and our small format stores is actually part of that. As we think about the store strategy, we feel good about the box size we're looking at, the format we're looking at, the locations and the power centers that we've been having conversations with. Look, the thing that I that we're very excited about is what Tony spoke to earlier in the conversation, which is Positive growth in those stores that are now able to come. So we're on to something quite special here and we'll share more information as things progress.

Speaker 8

Thank you.

Operator

Thank you. The next question is coming from Paul Lejuez of Citi. Please go ahead.

Speaker 9

Hey, thanks guys. Curious how your ecom business performed over the quarter versus stores, if you saw a similar fall off in ecom or was it more Isolated to the store level. And then I'm curious if you could just talk about how you came into the year thinking about How you would manage inventory in the second half versus how you're planning inventories currently? Thanks.

Speaker 2

Hey, Paul. So Dotcom and Stores were very similar in terms of what happened to their performance in the Q1. We came into the year expecting that that was going to be the case that however, we were modeling dotcom and stores. So just remember where we were in terms of penetration In dotcom, this is basically the resettling of that as customers are coming more back to the stores channel, obviously very influenced By what they see digitally, either they transact there or they do research there. But in 2019, we were at a 25% penetration of digital.

Speaker 2

And in 2022, we were 33% after a high in the pandemic of 40%. That settles in 23% at 33%. So the dotcom business was off one point for where stores were in the Q1, pretty consistent with what we expected. I would tell you that on the big headline respect to both stores and digital, the traffic has been relatively good. So basically flattish online, slightly up in stores, Conversion down in both at about the same rate.

Speaker 2

So we do expect that this is the reset year with the penetration between them, but we do expect more aggressive growth in in the future versus stores as we think about 'twenty four and beyond. And that's going to be foisted by a lot of ideas And strategies, but one of the big ones is going to be what we're doing with Marketplace. Marketplace had an outstanding Q1. We're in the beginning stages of it. But to Oliver's earlier question, we're very excited to have our marketplace is really attracting the Gen Z customer, particularly in categories where it was not economically feasible For us to carry in the past.

Speaker 2

So, when it relates to the way that we kind of plan inventory,

Speaker 3

Barry, I think that outside of what happened to

Speaker 2

us in Spring with spring seasonal content and seeing the drop off in sell throughs across all different value buckets, everything else has pretty much performed as we expected it. Again, just to remind, we have a very healthy reserve. So if we're buying into a sales plan, we hold back in the receipts. We've worked all that out by our new model of working at upfront costing versus working on an MDA model or a markdown allowance model, Costing versus working on an MDA model or a markdown allowance model that we used to have in the past. So we're not buying really needless receipts We have not seen the signal for customer demand and we are not perfect here.

Speaker 2

We have so much opportunity. We've got a really good pricing science as it relates to how we mark down goods. Are developing much better pricing signs in how we promote goods based on demand signals and personalized marketing and just the opportunities that we see there, As well as being very responsive to where in common items like Levi or wherever it might be that a lot of retailers carry, but making sure that we're well priced So that the customer is not disappointed with our values versus a competitor. So all that goes into the mix. And I would just say that inventory control, Not a lot of surprises outside of what we talked about in terms of spring's seasonal sell through.

Speaker 4

Paul, good morning. The one thing I would add, just Amplify a few things on the inventory. Going back to the question earlier around the importance of volume, mix and content. As we think about the volume, we've already made adjustments for the back half to align with our sales volume expectations for the balance of the year. The important actions we're taking in Q2 to minimize liability going into the back half really gets into the mix for the back half of the year.

Speaker 4

One thing I would amplify that Jeff spoke to earlier is we're gifting the destination. And when you think about the shift in our content getting into the back half, we're going to be leaning more Beauty and gifting, which is 30% of our business in the Q1, but exceeds 40% in the Q4. And the beauty business has been growing Going through the Q1, so we feel that we're really moving ourselves into a position of strength. And with newness, we'll have more newness This year than we did last year. And we don't want to forget about the Disney distortion in toys as well as Nike being in the 4th quarter.

Speaker 9

Thank you. Good luck.

Speaker 4

Thanks, Paul.

Operator

Thank you. The next question is coming from Alex of Morgan Stanley. Please go ahead.

Speaker 10

Great. Thanks so much for taking the question. I just have a couple for the group here. First, I know that higher private label penetration was an opportunity for the year. So I'm just wondering where that stands now and if your view has changed at all there.

Speaker 10

And then second, just a quick follow-up on the cost savings question from earlier. Do you still plan to invest in People and Tech in the same way you outlined last quarter? Or has anything been paired back there on the demand slowdown? Thanks.

Speaker 4

Alex, could you repeat your question on the SG and A or on the cost savings? We didn't quite catch it. Our apologies.

Speaker 10

No problem. The question was just do you still plan to invest in people and tech in the same way that you outlined last quarter or if that's been pared back at all on the demand

Speaker 4

Got you.

Speaker 2

Alex, let me take the Private Brand and then Adrian will take the second part of your question. Our ambition on Private Brands remains the So it was 16% of our penetration. We do see that growing over time. And as you've heard us talk In this particular call about INC and Club Room, which have been brands that have been touched and basically they basically have been burnished. So they're performing quite well.

Speaker 2

And then when you look at what we've got coming, we've got a whole portfolio. We have 24 private brands that are all being touched Over the next two and a half years. So we're in the middle of that right now. So the first brand new one is coming in the summer and we'll stay tuned on all the details of that. But it is across accessories.

Speaker 2

It's across women's. It does address those key basics that we're talking about, seasonally seasonal basis seasonalist basics. We're actually quite excited about where that will be and we'll give you a full rundown on that. But we do think that the private brands will raise in penetration in out And it is why it's one of the big growth factors. Not only is the when you look at the Mugs opportunity, the margin opportunity, but really When you look at the 5 things that we are doing with private brand, brand identity against customer types, original design, Really strong strategic sourcing, relevant size and fit, which is one of the biggest pain points for our customer and of course compelling value.

Speaker 2

So we're very bullish on private brands and look forward to sharing all of those learnings and as we develop those strategies and launch them.

Speaker 4

Alex, I think what you're hearing from Tony, Jeff and I today is the importance of navigating the near term in terms of what's in front of us, but not losing sight clarity about the long term. So in terms of being prudent about what's happening in the current environment and the uncertainty that's out there, We've accelerated the $200,000,000 this year, which will translate to $300,000,000 to $350,000,000 in cost savings next year. We've reduced our capital spend from $1,000,000,000 to $950,000,000 in terms of our current projections for this year. The key thing to keep in mind is that we will continue to invest in growth, whether that be tech, whether that be people. So as we move through this Certain period, we're taking the necessary aggressive actions to protect growth investments that will get us to positive growth and profitable growth in future years.

Speaker 4

So we'll continue to drive efficiencies in our operating model. We'll continue to invest in the growth vectors and we'll find ways to be more productive with our assets.

Speaker 10

Thanks a lot. Good luck.

Speaker 3

Thank you.

Operator

Thank you. The

Speaker 11

Jeff, you talked about Flowing product closer to need, and I think that's interesting and important for the business. And I'm wondering if you could just elaborate on that a little bit further and how deep The conversations have been on that front with some of your suppliers?

Speaker 2

Yes, Chuck. So as I mentioned, when you look at the receipt reserve, That is always available to respond in season. So we're not allocating that in advance. So when we cut back, we went to kind of the upfront cost model versus the MDA model. That gave us all of the liquidity that we wanted to build into the system.

Speaker 2

And that when a customer is signaling something in season, we're able to jump on that. So that is a discipline that has been well honed over the past year and that you will see play out for the balance of the year. We did though do receipt cuts when you look at total to make sure that we retain that liquidity and we didn't take our full reserve to respond to where we took sales down for the balance of the year. So there were conversations that we had with brands that we see downtrending categories that are not doing well to ensure that we're able to put the right receipts against those categories that are Trending. This is a balanced conversation for us.

Speaker 2

Every single merchant knows that those receipts are really company assets to serve our customers And not their own. And that has expect that discipline to continue with us. So as soon as I mean, we're ordering every single week based on how things are trending. And as I mentioned, we find there's plenty of inventory in the market to be able to respond to that.

Speaker 11

Okay, helpful. Thank you very much. And then from a category perspective, I wonder if you could just elaborate across the board what you saw in apparel and other areas. And in particular, you called Styles and top of table and housewares improving, which is interesting. So I was wondering if you could just elaborate on that and what that tells you

Speaker 2

1st quarter from our expectations was been in the seasonal categories in men's, women's and kids. So that would be all the spring and early summer content. And again, too early to tell whether or not that is content or whether or not that is environment. So we're working through that right now, but we're going to As mentioned, all the pricing that we are taking is to ensure that we have the right number of units going into the Q3. What's going on in the rest of the You've got pockets of strength in center core.

Speaker 2

The beauty category continues to be strong across fragrance, color and treatment. You've got the home categories as you mentioned. Things like textiles has been a real turnaround for us with newness coming like our UGGS opportunity that you're We're starting to see signs of life there. On our last call, we talked about looking for signs of life there. We started to see that in the first We really see it in the Bloomingdale's brand right now where the home business is quite robust.

Speaker 2

We're starting to see signs of that in on the Macy's side. So again, when you look at the overall categories, think about comment that Adrian made it to Paul Lejuez's question earlier. Our two strengths that are trending positively in the Q1 and have a much higher penetration of those in the Q4 is our confidence in where we completely derisked Our plan for what we know today with our customers today for the back half of the year. And we feel like our guide is appropriate and conservative

Operator

Thank you. We're showing time for one final question today. The final question is coming from Jay Sole of UBS. Please go ahead. Great.

Speaker 11

Thank you so much. I wanted to ask about this new Nike partnership. Maybe can you just tell us a little bit about how that partnership came together? And maybe how big was Nike As a percent of sales back the last time Macy's had it and do you expect this to be like a long term partnership or is this getting inventory for a couple quarters and then sort of we'll see from there. Thank you.

Speaker 2

A. J, long term partnership. So I look at it as we took a pause. We've been out of the Nike brand outside of where we are in footwear and certain license businesses and kids, really for the last year and a half. And we're committing to a long term partnership together and our opportunity to basically provide our customer a multi brand Or a multi category experience that is elevated and enhanced.

Speaker 2

And so we're not quoting what we used to do, but obviously it's One of the most important brands for our customer, we had lots of customers that were disappointed that we didn't carry it over the past year. So this is very important to uniform for many of our customers. It gives heft to the balance of our active assortments. We're excited about things like our Reebok Engagement, obviously, what we're doing with the other brands. So this is going to be, we believe, a real catalyst without cannibalizing much else in the balance of the apparel assortments.

Speaker 2

So this is a win for us. And we think it's a win for Nike. When you look at our 40,000,000 plus customers They come to us for curation across multi categories and 1 in Nike. So those are the conversations that we had with Nike Management on the pause that we took. So you're going to see it come in, in the month of October.

Speaker 2

You have it in apparel that's including plus size women's, it's big and tall men's, It's the kids area that we weren't carrying it through the licensed areas. It's badge, it's gear. It's going to be in key locations, obviously online and then expands out To many, many more locations as we get into 2024. Our finish line business has been quite strong and so that will continue in all the doors that we have in today.

Speaker 11

Got it. Thank you so much.

Speaker 3

Thanks, Jeff.

Operator

Thank you. At this time, I'd like Turn the floor back over to Mr. Gannett for closing comments.

Speaker 2

Just thank you everybody for your interest in Macy's and everybody have a great Summer, look forward to talking to you again in August with our first with our second quarter results.

Operator

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines and log off the webcast at this time and enjoy the rest of your day.

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Earnings Conference Call
Macy's Q1 2024
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