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'Macy's remains financially healthy' - Mr Lundgren, Chairman
25
Feb '09
Macy's Inc reported earnings of 73 cents per diluted share for the 13-week fourth quarter of 2008, ended Jan. 31, 2009. These results include certain unusual items (described below) that negatively impacted fourth quarter earnings by 33 cents per diluted share, but do not include a non-cash charge for goodwill impairment that currently is being determined and is expected to be recorded in the fourth quarter (also described below).

Excluding unusual items, the company earned $1.06 per diluted share in the fourth quarter of 2008. This exceeds the company's most recent guidance for fourth quarter earnings per diluted share of $1.00 to $1.02, excluding one-time costs associated with division consolidations announced in February 2008 and store closings announced in January 2009.

Unusual items include $17 million in costs and expenses associated with division consolidations and localization initiatives announced in February 2008, $30 million in costs and expenses associated with division consolidations and localization initiatives announced in February 2009, and $11 million in costs and expenses associated with 11 store closings announced in January 2009. Together, these account for costs of $58 million ($36 million after tax or 9 cents per diluted share).

Additional unusual items relate to non-cash asset impairment charges - $96 million related to store properties still in operation, $40 million related to store closings announced in January 2009, $13 million related to acquired private brand tradenames and $12 million related to the company's investment in The Knot. Together, these account for costs of $161 million ($102 million after tax or 24 cents per diluted share).

Terry J. Lundgren, Macy's Inc chairman, president and chief executive officer, said, "As the economy weakened further in the fourth quarter, Macy's Inc again outperformed most major competitors in same-store sales, as we did all through the year. This speaks well of the value, quality and fashion delivered by Macy's and Bloomingdale's through the holiday season, and of the determination and strength of our organization.

"While 2008 results reflect the worst economic environment of our generation, we have taken aggressive action to drive sales, maintain profitability and conserve cash. This has included adopting a unified operating structure, rolling out our innovative My Macy's localization initiative nationwide, reducing expenses and capital expenditures, managing inventories conservatively, paying down debt and lowering the dividend. As a result, we believe that Macy's, Inc. is well-positioned to continue to weather this downturn and to accelerate results once the economy begins to rebound.

"Our company remains financially healthy, with strong cash flow and ample borrowing capacity. We ended the year with $1.3 billion in cash, more than had been planned at the beginning of the year, and no borrowings against our $2 billion bank credit agreement. Early in fiscal 2009, we used approximately $686 million of cash on hand for the early retirement of debt coming due later in 2009, and we were able to reduce 2009 interest expense by approximately $7 million in doing so."

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