Table of Contents

MACY'S, INC.

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

For purposes of the following discussion, all references to "third quarter of 2024" and "third quarter of 2023" are to the Company's 13-week fiscal periods ended November 2, 2024 and October 28, 2023, respectively. References to "2024" and "2023" are to the Company's 39-week fiscal periods ended November 2, 2024 and October 28, 2023, 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 2023 10-K. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed below and elsewhere in this report (particularly in "Risk Factors" and in "Forward-Looking Statements") and in the 2023 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".

Quarterly Overview

The Company continues to view fiscal 2024 as a transition and investment year as it implements its new strategy, A Bold New Chapter, which is designed to return the Company to enterprise growth, unlock shareholder value, improve the omni-channel experience and better serve its customers. During the third quarter of 2024, the Company continued to make progress on its three-year Bold New Chapter strategy, as follows:

•.Strengthen the Macy's nameplate

◦Rationalize store base: At the end of fiscal 2023, the Company announced it had identified approximately 150 underproductive Macy's locations for closure through fiscal 2026 (collectively, the "non-go-forward" locations), which will allow for monetization of these non-go-forward locations and prioritization of investments in the approximately 350 remaining Macy's locations (collectively, the "go-forward" locations) where the Company believes it has the most opportunity to improve square footage productivity. For the non-go-forward Macy's locations and distribution centers, the Company is thoughtfully and strategically approaching monetization to execute accretive deals and is encouraged by the pace and quality of deal activity to date. As a result, the Company now expects to close approximately 65 locations in fiscal 2024 versus its original expectations of roughly 50.

◦Launch of First 50 Locations: The First 50 locations are a key component of the Macy's Bold New Chapter growth strategy as they are an early indicator for go-forward Macy's nameplate growth and ultimately the Macy's, Inc. go-forward business' ability to achieve comparable sales growth. They serve as pilots to test ideas with staffing initiatives, enhanced merchandising, visual presentation and eventing.

The First 50 achieved its third consecutive quarter of both comparable sales growth and improvement in Net Promoter Scores. Its Net Promoter Score improved approximately 400 basis points from the third quarter of 2023. The Company has been testing staffing in women's shoes and/or handbags in roughly 100 additional go-forward Macy's locations this fall. Compared to total Macy's locations that are not in the First 50 or did not receive additional staffing, year-over-year women's shoes and handbags sales outperformed by roughly 600 and 700 basis points, respectively.

◦Revitalize assortment: The Company's focus on offering new product across categories is gaining traction. In the third quarter of 2024, Macy's reduced exposure to less-relevant brands, and expanded offerings in brands to which its customers are responding. Macy's is providing compelling fashion and value in its women's apparel private brands, including Charter Club and Style & Co. Additionally, fragrance continues to be a standout in performance during the third quarter of 2024.

◦Rollout of additional Macy's small format stores: The Company opened six Macy's small format locations during the third quarter of 2024, bringing the total Macy's small format location count to 24.

◦Grow digital: Digital continues to serve as both a gateway to the Macy's nameplate and a source of commerce and omni engagement. Macy's digital visits increased 0.4% while the conversion rate decreased 20 basis points compared to the third quarter of 2023.

MACY'S, INC.

•.Accelerate luxury growth

◦The Company continues its plans to expand its luxury store footprint by approximately 20% through fiscal 2026.

▪Bloomingdale's: Bloomingdale's returned to positive comparable sales in the third quarter of 2024, supported by continued strength in advanced contemporary apparel, as well as beauty and digital. Net Promoter Scores improved 70 basis points compared to the third quarter of 2023 and remain a strength for the Bloomingdale's nameplate.The Company expects to open approximately 15 additional small format (Bloomie's and Bloomingdale's the Outlet) locations through fiscal 2026. Two Bloomingdale's the Outlet locations opened in the third quarter of 2024, bringing the total Bloomingdale's small format count to 26.

▪Bluemercury: Bluemercury achieved its 15th consecutive quarter of comparable sales growth driven by continued strength in skincare and the expansion of key brand partners both in skincare and fragrances. It opened eight new locations and completed four remodels in the third quarter of 2024. The new and remodeled stores elevate Bluemercury's service model, spa integration and product mix and continued to outperform the total Bluemercury fleet in the third quarter of 2024.

•.Simplify and modernize end-to-end operations

◦The Company is actively advancing on solutions to reduce organizational complexity and generate cost savings to fund growth investments. During the third quarter of 2024, the Company realized lower fulfillment costs, optimized cash flow generation and improved Net Promoter Scores for product availability due to the continued focus on creating a more efficient fulfillment network. The Company is also phasing out legacy technology across the organization to deliver an improved customer experience.

Comparable sales highlights for the third quarter of 2024 versus the third quarter of 2023 related to components of a Bold New Chapter strategy are as follows:

•Macy's, Inc. comparable sales declined 2.4% on an owned basis and declined 1.3% on an owned-plus-licensed-plus-marketplace basis.

◦Macy's, Inc. go-forward business comparable sales, inclusive of go-forward locations and digital across nameplates, declined 2.0% on an owned basis and declined 0.9% on an owned-plus-licensed-plus-marketplace basis.

•Company's nameplate highlights include:

◦Macy's comparable sales declined 3.0% on an owned basis and declined 2.2% on an owned-plus-licensed-plus-marketplace basis. Macy's go-forward business comparable sales, inclusive of Macy's go-forward locations and digital, declined 2.6% on an owned basis and declined 1.8% on an owned-plus-licensed-plus-marketplace basis.

•First 50 locations comparable sales, included within go-forward locations comparable sales, increased 1.9% on an owned basis and on an owned-plus-licensed basis.

◦Bloomingdale's comparable sales increased 1.0% on an owned basis and increased 3.2% on an owned-plus-licensed-plus-marketplace basis1.

◦Bluemercury comparable sales increased 3.3% on an owned basis.

1 Bloomingdale's excludes one non-go-forward location.

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Results of Operations

Comparison of the Third Quarter of 2024 and the Third Quarter of 2023

Third Quarter of 2024Third Quarter of 2023

Amount% to Net Sales% to Total RevenueAmount% to Net Sales% to Total Revenue

(dollars in millions, except per share figures)

Net sales$4,742 $4,860

Other revenue161 3.4 %178 3.7 %

Total revenue4,903 5,038

Cost of sales(2,864)(60.4)%(2,905)(59.8)%

Selling, general and administrative expenses(2,064)(42.1)%(2,040)(40.5)%

Gains on sale of real estate66 1.3 %5 0.1 %

Impairment, restructuring and other benefits (costs)23 0.5 %(15)(0.3)%

Operating income64 1.3 %83 1.6 %

Diluted earnings per share$0.10 $0.15

Supplemental Financial Measures

Gross margin (a)

$1,878 39.6 %$1,955 40.2 %

Decrease in comparable sales(2.4)%(7.0)%

Supplemental Non-GAAP Financial Measures

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.3)%(6.3)%

Adjusted diluted earnings per share$0.04 $0.21

EBITDA$296 $309

Adjusted EBITDA$273 $331

(a) Gross margin is not directly comparable to the prior year given the change in inventory valuation method from LIFO RIM to LIFO cost on February 4, 2024. Gross margin is defined as net sales less cost of sales.

See pages 30 to 33 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

Third Quarter of 2024Third Quarter of 2023

Net sales$4,742 $4,860

Decrease in comparable sales(2.4)%(7.0)%

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.3)%(6.3)%

Net sales for the third quarter of 2024 decreased $118 million, or 2.4%, compared to the third quarter of 2023. Sales growth during the third quarter of 2024 at Macy's First 50 locations, Bloomingdale's, and Bluemercury was offset primarily by weakness in Macy's non-First 50 locations as well as its digital channel and cold weather categories.

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Third Quarter of 2024Third Quarter of 2023

$% to Net Sales$% to Net Sales

Credit card revenues, net$120 2.5 %$142 2.9 %

Macy's Media Network, net41 0.9 %36 0.7 %

Other revenue$161 3.4 %$178 3.7 %

The decrease in other revenues included a $22 million decrease in credit card revenues due to higher net credit losses, which were in-line with the Company's expectations. Macy's Media Network grew $5 million, or 14% from the third quarter of 2023, driven by higher advertiser and campaign counts.

Third Quarter of 2024Third Quarter of 2023

Cost of sales$(2,864)(2,905)

As a percent to net sales60.4 %59.8 %

Gross margin$1,878 $1,955

As a percent to net sales39.6 %40.2 %

Gross margin rate and merchandise margin rate2 decreased 60 basis points and 70 basis points, respectively, in the third quarter of 2024 compared to the third quarter of 2023. The decrease in both gross margin and merchandise margin rates primarily reflected the Company's change in inventory valuation method and product mix, partially offset by efficiencies in the Company's fulfillment network and lower shipped sales volume.

Third Quarter of 2024Third Quarter of 2023

SG&A expenses$(2,064)$(2,040)

As a percent to total revenue42.1 %40.5 %

SG&A expenses increased $24 million, or 1.2%, in the third quarter of 2024 compared to the third quarter of 2023 primarily due to strategic customer-facing investments, partially offset by a disciplined approach to cost controls. The increase in SG&A expenses as a percent to total revenue in the third quarter of 2024 was due to a decline in total revenue, mainly net sales, compared to the third quarter of 2023.

Third Quarter of 2024Third Quarter of 2023

Gains on sale of real estate$66 $5

Asset sale gains in the third quarter of 2024 reflected the monetization of non-go-forward assets as part of the Company's Bold New Chapter strategy. Asset sale gains reflect the acceleration of the monetization of certain non-go-forward assets into the third quarter from the fourth quarter.

Third Quarter of 2024Third Quarter of 2023

Settlement charges$- $(7)

Settlement accounting was not required in the third quarter of 2024. During the third quarter of 2023, the Company recognized a non-cash settlement charge of $7 million related to the pro-rata recognition of net actuarial losses associated with the Company's Pension Plan and are the result of an increase in lump sum distributions associated with the retiree distribution elections.

Third Quarter of 2024Third Quarter of 2023

Net interest expense$(32)$(35)

The decrease in net interest expense in the third quarter of 2024 compared to the third quarter of 2023 was primarily driven by an increase in interest income on investments.

2 Merchandise margin is defined as net sales less cost of sales less net delivery expense.

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Third Quarter of 2024Third Quarter of 2023

Effective tax rate20.0 %4.7 %

Federal income statutory rate21 %21 %

The income tax expense of $7 million, or 20.0% of pretax income, for the third quarter of 2024 and $2 million, or 4.7% of pretax income, for third quarter of 2023, reflect a different effective tax rate as compared to the Company's federal income tax statutory rate of 21%. The income tax effective rates for the third quarter of 2024 and the third quarter of 2023 were primarily impacted by the recognition of return-to-provision adjustments associated with the filings of the Company's 2023 and 2022 U.S. Federal income tax returns during each respective period, as well as the effect of state and local taxes.

Comparison of the 39 Weeks Ended November 2, 2024 and October 28, 2023

39 Weeks Ended November 2, 202439 Weeks Ended October 28, 2023

Amount% to Net Sales% to Total RevenueAmount% to Net Sales% to Total Revenue

(dollars in millions, except per share figures)

Net sales$14,525 $14,972

Other revenue474 3.3 %519 3.5 %

Total revenue14,999 15,491

Cost of sales(8,749)(60.2)%(9,070)(60.6)%

Selling, general and administrative expenses(5,948)(39.7)%(5,970)(38.5)%

Gains on sale of real estate103 0.7 %20 0.1 %

Impairment, restructuring and other benefits (costs)5 - %(21)(0.1)%

Operating income$410 2.7 %$450 2.9 %

Diluted earnings per share$0.85 $0.62

Supplemental Financial Measures

Gross margin (a)$5,776 39.8 %$5,902 39.4 %

Decrease in comparable sales(2.5)%(7.7)%

Supplemental Non-GAAP Financial Measures

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.6)%(6.9)%

Adjusted diluted earnings per share$0.84 $1.02

EBITDA$1,079 $996

Adjusted EBITDA$1,074 $1,146

(a) Gross margin is not directly comparable to the prior year given the change in inventory valuation method from LIFO RIM to LIFO cost on February 4, 2024. Gross margin is defined as net sales less cost of sales.

See pages 30 to 33 for reconciliations of the supplemental non-GAAP financial measures to their most comparable GAAP financial measure and for other important information.

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MACY'S, INC.

20242023

Net sales$14,525 $14,972

Decrease in comparable sales(2.5)%(7.7)%

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.6)%(6.9)%

Net sales for 2024 decreased $447 million, or 3.0%, compared to 2023. Net sales were impacted by ongoing macroeconomic conditions. Macy's experienced strong performance in the First 50 locations, which benefited from various initiatives including, but not limited to, enhanced merchandising through elevated product rollouts across top markets and new brands and staffing initiatives.

20242023

$% to Net Sales$% to Net Sales

Credit card revenues, net$362 2.5 %$424 2.8 %

Macy's Media Network, net112 0.8 %95 0.6 %

Other revenue$474 3.3 %$519 3.5 %

The decrease in other revenues was driven by a $62 million decrease in credit card revenues. This decrease was primarily driven by higher net credit losses as compared to 2023. Macy's Media Network grew $17 million, or 18%, compared to 2023, due to increased vendor engagement and higher advertiser and campaign counts.

20242023

Cost of sales$(8,749)$(9,070)

As a percent to net sales60.2 %60.6 %

Gross margin$5,776 $5,902

As a percent to net sales39.8 %39.4 %

Gross margin rate and merchandise margin rate increased 40 basis points 20 basis points, respectively, in 2024 compared to 2023. The increase in gross margin rate is primarily due to lower year-over-year discounting and favorable shortage due to the Company's asset protection work, slightly offset by the Company's change in inventory valuation method. Delivery expense as a percent of net sales reflects efficiencies in the Company's fulfillment network and lower shipped sales volume.

20242023

SG&A expenses$(5,948)$(5,970)

As a percent to total revenue39.7 %38.5 %

SG&A expenses decreased 0.4% in 2024 compared to 2023 due to the Company's appropriate cost controls while it protected customer-facing investments, particularly in First 50 locations. The increase in SG&A expenses as a percent to total revenue in 2024 was due to a decline in total revenue compared to 2023.

20242023

Gains on sale of real estate$103 $20

Asset sale gains in 2024 relate to the monetization of non-go-forward assets as part of the Company's Bold New Chapter strategy while asset sale gains in 2023 mainly related to the sale of a distribution center.

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MACY'S, INC.

20242023

Settlement charges$- $(129)

Settlement accounting was not required the 39 weeks ended November 2, 2024. During 2023, the Company recognized a non-cash settlement charge of $129 million associated primarily with the transfer of fully funded pension obligations for certain retirees and beneficiaries through the purchase of a group annuity contract with an insurance company, which occurred in the second quarter of 2023.

20242023

Net interest expense$(94)$(108)

The decrease in net interest expense in 2024 compared to 2023 was primarily driven by an increase in interest income on investments.

20242023

Effective tax rate26.6 %22.4 %

Federal income statutory rate21 %21 %

Income tax expense increased $37 million in 2024 compared to 2023 due to higher income before income taxes. Additionally, the effective tax rates in 2024 and 2023 were 26.6% and 22.4%, respectively, and reflect a different effective tax rate as compared to the Company's Federal income tax statutory rate of 21% primarily due to the recognition of return-to-provision adjustments associated with the filings of the Company's 2023 and 2022 U.S. Federal income tax returns during each respective period, as well as the effect of state and local taxes.

Liquidity and Capital Resources

The Company's principal sources of liquidity are cash from operations, cash on hand and the ABL Credit Facility (as defined below). Material contractual obligations arising in the normal course of business primarily consist of long-term debt and related interest payments, lease obligations, merchandise purchase obligations, retirement plan benefits, and self-insurance reserves. The Company believes that, assuming no change in its current business plan, its available cash, together with expected future cash generated from operations, the amount available under the ABL Credit Facility, and credit available in the market, will be sufficient to satisfy its anticipated needs for working capital, capital expenditures, and cash dividends for at least the next twelve months and the foreseeable future thereafter.

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

Capital Allocation

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

The Company ended the third quarter of 2024 with a cash and cash equivalents balance of $315 million, a decrease of $49 million from $364 million at the end of the third quarter of 2023. The Company is party to an ABL Credit Facility with certain financial institutions providing for a $3,000 million asset-based credit facility.

20242023

Net cash (used) provided by operating activities$(30)$158

Net cash used by investing activities(455)(716)

Net cash (used) provided by financing activities(234)60

Operating Activities

The net cash used by operating activities in the current year versus net cash provided by operating activities in the prior year was primarily driven by lower earnings when including non-cash adjustments.

Investing Activities

The Company's capital expenditures were $649 million in 2024 compared to $749 million in 2023. Capital expenditures in the current year are primarily focused on digital and technology investments as well as omni-channel capabilities.

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MACY'S, INC.

Financing Activities

Dividends

The Company paid dividends totaling $144 million and $135 million in 2024 and 2023, respectively.

On October 25, 2024, the Company announced that its Board of Directors declared a regular quarterly dividend of 17.37 cents per share on its common stock, which will be paid on January 2, 2025, to Macy's shareholders of record at the close of business on December 13, 2024. Subsequent dividends will be subject to approval of the Board of Directors, which will depend on market and other conditions.

Stock Repurchases

On February 22, 2022, the Board of Directors authorized a new $2,000 million share repurchase program, which does not have an expiration date. During the first quarter of 2023, the Company repurchased approximately 1.4 million shares of its common stock at an average cost of $17.57 per share on the open market under its share repurchase program. The Company did not repurchase any shares of its common stock during 2024. As of November 2, 2024, $1,375 million remained available under the authorization. Repurchases may be made from time to time in the open market or through privately negotiated transactions in accordance with applicable securities laws, including Rule 10b-18 under the Securities Exchange Act of 1934, on terms determined by the Company. During the first quarter of 2023, the Company also withheld approximately $12 million of shares for tax purposes associated with the issuance of certain stock awards.

Debt Transactions

On September 18, 2024, Macy's Retail Holdings, LLC ("MRH"), a direct, wholly owned subsidiary of Macy's, Inc., completed a tender offer in which $221 million aggregate principal amount of certain senior notes and debentures were tendered for early settlement and purchased by MRH. The total cash cost for the tender offer was $225 million and was funded with cash on hand. The Company recognized $1 million of losses on early retirement of debt on the Consolidated Statements of Income during the third quarter of 2024.

As of November 2, 2024 and October 28, 2023, the Company had $144 million and $138 million of standby letters of credit outstanding under its ABL Credit Facility, respectively, which reduced the available borrowing capacity to $2,856 million and $2,862 million, respectively. The Company had $86 million and $160 million outstanding borrowings under the ABL Credit Facility as of November 2, 2024 and October 28, 2023, respectively.

Contractual Obligations

As of November 2, 2024, other than the financing transactions discussed in Note 4 to the accompanying Consolidated Financial Statements, there were no material changes to the Company's contractual obligations and commitments outside the ordinary course of business since February 3, 2024, as reported in the Company's 2023 Form 10-K.

Guarantor Summarized Financial Information

The Company had $2,786 million aggregate principal amount of senior unsecured notes and senior unsecured debentures (collectively the "Unsecured Notes") outstanding as of both November 2, 2024 and February 3, 2024 with maturities ranging from 2025 to 2043. The Unsecured Notes constitute debt obligations of Macy's Retail Holdings, LLC ("MRH" or "Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent" and together with the "Subsidiary Issuer," the "Obligor Group"), and are fully and unconditionally guaranteed on a senior unsecured basis by Parent. The Unsecured Notes rank equally in right of payment with all of the Company's existing and future senior unsecured obligations, senior to any of the Company's future subordinated indebtedness, and are structurally subordinated to all existing and future obligations of each of the Company's subsidiaries that do not guarantee the Unsecured Notes. Holders of the Company's secured indebtedness, including any borrowings under the ABL Credit Facility, will have a priority claim on the assets that secure such secured indebtedness; therefore, the Unsecured Notes and the related guarantees are effectively subordinated to all of the Subsidiary Issuer's and Parent and their subsidiaries' existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness.

The following tables include combined financial information of the Obligor Group. Investments in subsidiaries of $9,837 million and $9,423 million as of November 2, 2024 and February 3, 2024, respectively, have been excluded from the Summarized Balance Sheets. Equity in earnings of non-Guarantor subsidiaries of $344 million and $1,138 million for the 13 and 39 weeks ended November 2, 2024, respectively, have been excluded from the Summarized Statement of Operations. The combined financial information of the Obligor Group is presented on a combined basis with intercompany balances and transactions within the Obligor Group eliminated.

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MACY'S, INC.

Summarized Balance Sheets

November 2, 2024February 3, 2024

(in millions)

ASSETS

Current Assets$1,087 $1,028

Noncurrent Assets6,205 6,145

LIABILITIES

Current Liabilities$1,754 $1,800

Noncurrent Liabilities (a)11,222 10,654

(a)Includes net amounts due to non-Guarantor subsidiaries of $5,188 million and $6,784 million as of November 2, 2024 and February 3, 2024, respectively.

Summarized Statement of Operations

13 Weeks Ended November 2, 202439 Weeks Ended November 2, 2024

(in millions)

Net sales$167 $582

Consignment commission income (a)759 2,309

Other revenue42 112

Cost of sales(80)(278)

Operating loss(379)(1,034)

Loss before income taxes (b)(318)(844)

Net loss(193)(526)

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

(b)Includes $124 million and $373 million of dividend income from non-Guarantor subsidiaries for the 13 and 39 weeks ended November 2, 2024, respectively.

Important Information Regarding Non-GAAP Financial Measures

The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, management believes that certain non-GAAP financial measures provide users of the Company's financial information with additional useful information in evaluating operating performance. Management believes that providing supplemental changes in comparable sales on an owned-plus-licensed basis and an owned-plus-licensed-plus-marketplace basis, which includes the impact of growth in comparable sales of departments licensed to third parties and marketplace sales, as applicable, assists in evaluating the Company's ability to generate sales growth, whether through owned businesses, departments licensed to third parties or marketplace sales, on a comparable basis, and in evaluating the impact of changes in the manner in which certain departments are operated. Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure which the Company believes provides meaningful information about its operational efficiency by excluding the impact of changes in tax law and structure, debt levels and capital investment. In addition, management believes that excluding certain items that are not associated with the Company's core operations and that may vary substantially in frequency and magnitude from period-to-period from net income (loss), diluted earnings (loss) per share and EBITDA provide useful supplemental measures that assist in evaluating the Company's ability to generate earnings and leverage sales, respectively, and to more readily compare these metrics between past and future periods. Management also believes that EBITDA and Adjusted EBITDA are frequently used by investors and securities analysts in their evaluations of companies, and that such supplemental measures facilitate comparisons between companies that have different capital and financing structures and/or tax rates. The Company uses certain non-GAAP financial measures as performance measures for components of executive compensation.

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MACY'S, INC.

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

Changes in Comparable Sales

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

13 Weeks Ended November 2, 2024 vs.

13 Weeks Ended October 28, 2023

Macy's, Inc.Macy's

Decrease in comparable sales on an owned basis (Note 1)(2.4 %)(3.0 %)

Impact of departments licensed to third parties and marketplace sales (Note 2)1.1 %0.8 %

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.3 %)(2.2 %)

13 Weeks Ended November 2, 2024 vs.

13 Weeks Ended October 28, 2023

Macy's, Inc. go-forward businessMacy's go-forward businessBloomingdale's (a)Bluemercury

Increase (decrease) in comparable sales on an owned basis (Note 1)(2.0)%(2.6)%1.0 %3.3 %

Impact of departments licensed to third parties and marketplace sales (Note 2)1.1 %0.8 %2.2 %- %

Increase (decrease) in comparable sales on an owned-plus-licensed-plus-marketplace basis(0.9 %)(1.8 %)3.2 %3.3 %

(a) Bloomingdale's excludes one non-go-forward location.

13 Weeks Ended November 2, 2024 vs.

13 Weeks Ended October 28, 2023

Macy's First 50 locations

Increase (decrease) in comparable sales on an owned basis (Note 1)1.9 %

Impact of departments licensed to third parties (Note 2)- %

Increase (decrease) in comparable sales on an owned-plus-licensed basis1.9 %

39 Weeks Ended November 2, 2024 vs.

39 Weeks Ended October 28, 2023

Macy's, Inc.

Decrease in comparable sales on an owned basis (Note 1)(2.5 %)

Impact of departments licensed to third parties and marketplace sales (Note 2)0.9 %

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(1.6 %)

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13 Weeks Ended October 28, 2023 vs.

13 Weeks Ended October 29, 2022

39 Weeks Ended October 28, 2023 vs.

39 Weeks Ended October 29, 2022

Macy's, Inc.

Decrease in comparable sales on an owned basis (Note 1)(7.0 %)(7.7 %)

Impact of departments licensed to third parties and marketplace sales (Note 2)0.7 %0.8 %

Decrease in comparable sales on an owned-plus-licensed-plus-marketplace basis(6.3 %)(6.9 %)

Notes:

(1)Represents the period-to-period percentage change in net sales from stores in operation for one full fiscal year for the 13 and 39 weeks ended November 2, 2024 and October 28, 2023. Such calculation includes all digital sales and excludes commissions from departments licensed to third parties and marketplace. Stores impacted by a natural disaster or undergoing significant expansion or shrinkage remain in the comparable sales calculation unless the store, or material portion of the store, is closed for a significant period of time. Definitions and calculations of comparable sales may differ among companies in the retail industry.

(2)Represents the impact of including the sales of departments licensed to third parties occurring in stores in operation throughout the year presented and the immediately preceding year and all online sales, including marketplace sales, in the calculation of comparable sales. Macy's and Bloomingdale's license third parties to operate certain departments in their stores and online, including Macy's and Bloomingdale's digital Marketplace, and receive commissions from these third parties based on a percentage of their net sales, while Bluemercury does not participate in licensed or marketplace businesses. In its financial statements prepared in conformity with GAAP, the Company includes these commissions (rather than sales of the departments licensed to third parties and marketplace) in its net sales. The Company does not, however, include any amounts in respect of licensed department or marketplace sales (or any commissions earned on such sales) in its comparable sales in accordance with GAAP (i.e., on an owned basis). The amounts of commissions earned on sales of departments licensed to third parties and from the digital marketplace are not material to its net sales for the periods presented.

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EBITDA and Adjusted EBITDA

The following is a tabular reconciliation of the non-GAAP financial measure EBITDA and Adjusted EBITDA to GAAP net income, which the Company believes to be the most directly comparable GAAP measure.

13 Weeks Ended November 2, 202413 Weeks Ended October 28, 20231

39 Weeks Ended November 2, 2024

39 Weeks Ended October 28, 20231

(millions)

Net income$28 $41 $240 $173

Interest expense - net32 35 94 108

Losses on early retirement of debt1 - 1 -

Federal, state and local income tax expense7 2 87 50

Depreciation and amortization228 231 657 665

EBITDA$296 $309 $1,079 $996

Impairment, restructuring and other costs (benefits)(23)15 (5)21

Settlement charges- 7 - 129

Adjusted EBITDA$273 $331 $1,074 $1,146

1 Refer to the tables on page 34 for a reconciliation of the revised historical Non-GAAP financial measures due to the immaterial error identified in the current period as disclosed further in Note 8 to the Consolidated Financial Statements.

Adjusted Net Income and Adjusted Diluted Earnings Per Share

The following is a tabular reconciliation of the non-GAAP financial measures adjusted net income to GAAP net income and adjusted diluted earnings per share to GAAP diluted earnings per share, which the Company believes to be the most directly comparable GAAP measures.

13 Weeks Ended November 2, 202413 Weeks Ended October 28, 20231

Net Income DilutedEarningsPer ShareNet IncomeDilutedEarningsPer Share

(millions, except per share figures)

As reported$28 $0.10 $41 $0.15

Impairment, restructuring and other costs (benefits)(23)(0.08)15 0.05

Settlement charges- - 7 0.03

Losses on early retirement of debt1 - - -

Income tax impact of certain items noted above5 0.02 (6)(0.02)

As adjusted to exclude certain items above$11 $0.04 $57 $0.21

39 Weeks Ended November 2, 202439 Weeks Ended October 28, 20231

Net IncomeDilutedEarningsPer ShareNet IncomeDilutedEarningsPer Share

(millions, except per share figures)

As reported$240 $0.85 $173 $0.62

Impairment, restructuring and other costs (benefits)(5)(0.01)21 0.07

Settlement charges- - 129 0.46

Losses on early retirement of debt1 - - -

Income tax impact of certain items noted above1 - (38)(0.13)

As adjusted to exclude certain items above$237 $0.84 $285 $1.02

1 Refer to the tables on page 34 for a reconciliation of the revised historical Non-GAAP financial measures due to the immaterial error identified in the current period as disclosed further in Note 8 to the Consolidated Financial Statements.

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MACY'S, INC.

Reconciliation of Revised Non-GAAP Financial Measures

13 Weeks Ended October 28, 2023

39 Weeks Ended October 28, 2023

As ReportedAdjustmentAs CorrectedAs ReportedAdjustmentAs Corrected

(millions)

Net income$43 $(2)$41 $175 $(2)$173

Interest expense - net35 - 35 108 - 108

Losses on early retirement of debt- - - - - -

Federal, state and local income tax expense3 (1)2 51 (1)50

Depreciation and amortization231 - 231 665 - 665

EBITDA$312 $(3)$309 $999 $(3)$996

Impairment, restructuring and other costs (benefits)15 - 15 21 - 21

Settlement charges7 - 7 129 - 129

Adjusted EBITDA$334 $(3)$331 $1,149 $(3)$1,146

13 Weeks Ended October 28, 2023

As ReportedAdjustmentAs Corrected

Net Income DilutedEarningsPer ShareNet IncomeDilutedEarningsPer ShareNet IncomeDilutedEarningsPer Share

(millions, except per share figures)

As reported$43 $0.15 $(2)$- $41 $0.15

Impairment, restructuring and other costs (benefits)15 0.05 - - 15 0.05

Settlement charges7 0.03 - - 7 0.03

Income tax impact of certain items noted above(6)(0.02)- - (6)(0.02)

As adjusted to exclude certain items above$59 $0.21 $(2)$- $57 $0.21

39 Weeks Ended October 28, 2023

As ReportedAdjustmentAs Corrected

Net IncomeDilutedEarningsPer ShareNet IncomeDilutedEarningsPer ShareNet IncomeDilutedEarningsPer Share

(millions, except per share figures)

As reported$175 $0.63 $(2)$(0.01)$173 $0.62

Impairment, restructuring and other costs (benefits)21 0.07 - - 21 0.07

Settlement charges129 0.46 - - 129 0.46

Income tax impact of certain items noted above(38)(0.13)- - (38)(0.13)

As adjusted to exclude certain items above$287 $1.03 $(2)$(0.01)$285 $1.02

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MACY'S, INC.

Critical Accounting Estimates

Commencing in fiscal 2024, the Company no longer considers merchandise inventories be a critical accounting estimate due to the change in inventory valuation method from LIFO RIM to LIFO cost. Certain operational management judgments and estimates, such as the amount and timing of permanent markdowns to clear unproductive or slow-moving inventory, do not impact inventory valuation under LIFO cost to the same extent as they previously did under LIFO RIM.