Executive Summary
Macy's reported Q3 2024 revenue of $4.903 billion, with gross profit of $2.040 billion and a gross margin of 41.6%. Operating income was $64 million (operating margin 1.3%), and net income totaled $28 million (net margin 0.6%), yielding diluted earnings per share of $0.099. Year-over-year declines were evident across the core profitability lines: revenue was down 1.9%, gross profit down 0.7%, and operating income down 55.2% YoY with a material QoQ deterioration of 71.2%. Net income declined ~54.8% YoY and ~81.3% QoQ, with EPS down ~54.6% YoY and ~81.5% QoQ. The quarter shows a continued margin compression against a backdrop of heavy investment in inventory and omnichannel initiatives, contributing to negative free cash flow of approximately $-384 million and negative operating cash flow of about $-167 million. Cash at period end was $318 million; total debt stands around $5.83 billion with net debt of about $5.51 billion, delivering a leverage signal that requires deleveraging to restore balance sheet flexibility. Inventory remained elevated at roughly $6.26 billion, driving a notably weak quick/liquidity profile (quick ratio ~0.17; cash ratio ~0.055) and a current ratio just above 1.25. While gross margin remains robust at ~41.6%, the company displays a structurally weak operating cadence and a cash conversion cycle that implies ongoing working capital intensity. Management commentary on future profitability and cash flow is not included in the provided transcript, limiting the ability to incorporate explicit call-out quotes from the earnings call.
Key Performance Indicators
QoQ: -71.17% | YoY:-55.24%
QoQ: -81.33% | YoY:-54.84%
QoQ: -81.48% | YoY:-54.55%
Key Insights
Revenue: $4.903B; YoY -1.94%; QoQ -3.79%
Gross Profit: $2.039B; Gross Margin 41.6%; YoY -0.73%; QoQ -5.51%
Operating Income: $64.0M; Operating Margin 1.31%; YoY -55.24%; QoQ -71.17%
Net Income: $28.0M; Net Margin 0.57%; YoY -54.84%; QoQ -81.33%
EPS (Diluted): $0.0995; YoY -54.55%; QoQ -81.48%
Cash Flow: Net cash provided by operating activities -$167M; Free cash flow -$384M; Capex -$217M
Balance Sheet: Cash & equivalents ~$315M; Total debt ~$5.83B; Net debt ~$5.51B; Inventory ~$6.26B; ...
Financial Highlights
Revenue: $4.903B; YoY -1.94%; QoQ -3.79%
Gross Profit: $2.039B; Gross Margin 41.6%; YoY -0.73%; QoQ -5.51%
Operating Income: $64.0M; Operating Margin 1.31%; YoY -55.24%; QoQ -71.17%
Net Income: $28.0M; Net Margin 0.57%; YoY -54.84%; QoQ -81.33%
EPS (Diluted): $0.0995; YoY -54.55%; QoQ -81.48%
Cash Flow: Net cash provided by operating activities -$167M; Free cash flow -$384M; Capex -$217M
Balance Sheet: Cash & equivalents ~$315M; Total debt ~$5.83B; Net debt ~$5.51B; Inventory ~$6.26B; Current ratio ~1.26; Quick ratio ~0.171; Cash conversion cycle ~200 days; Inventory days outstanding ~196.6 days; DSO ~4.11 days; Debt-to-capitalization ~0.252; ROE ~0.16% (approximate from ratios)
Valuation/Multiples: P/E ~37.96; Price-to-Sales ~0.87; Price-to-Book ~0.25; Dividend yield ~1.13% (where applicable), Enterprise Value Multiple ~152.5
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.90B |
-1.94% |
-3.79% |
| Gross Profit |
2.04B |
-0.73% |
-5.51% |
| Operating Income |
64.00M |
-55.24% |
-71.17% |
| Net Income |
28.00M |
-54.84% |
-81.33% |
| EPS |
0.10 |
-54.55% |
-81.48% |
Key Financial Ratios
operatingProfitMargin
1.31%
operatingCashFlowPerShare
$-0.6
freeCashFlowPerShare
$-1.38
dividendPayoutRatio
171.4%
Management Commentary
No earnings call transcript data was provided in the input; as a result, no management quotes or theme-based highlights could be extracted. If transcripts become available, themes to emphasize would include: (1) strategy updates on inventory optimization and gross margin management, (2) store footprint optimization and omnichannel initiatives, (3) progress on cost containment and SG&A discipline, (4) liquidity and liquidity management under elevated leverage, and (5) near-term catalysts for improved operating leverage and cash flow.
Forward Guidance
No explicit forward guidance for 2025 was observed in the provided data. Given the substantial leverage (~$5.8B total debt, net debt ~$5.51B) and negative free cash flow, the key near-term drivers will be margin stabilization and cash generation. Potential confidence-improving indicators would include: evidence of inventory normalization that supports working capital efficiency, stabilization or expansion of gross margin above ~41%, disciplined SG&A control, and improved operating cash flow that could shift free cash flow toward positive territory. In the absence of explicit guidance, investors should monitor: 1) trajectory of inventory levels and days of inventory outstanding, 2) comp/foot traffic trends and e-commerce growth, 3) cost-reduction initiatives and any store rationalization plans, 4) refinancing or debt-recapitalization options, and 5) progress toward deleveraging and cash flow conversion. Favorable outcomes in these areas could support a more constructive long-term view, while continued pressure on consumer spend, promotions-driven sales, or slower inventory turnover could maintain downside risk.