Macys 4Q15 Earnings Call Notes

Karen M. Hoguet – Chief Financial Officer

Decline in tourist sales did not lessen

“Unfortunately, the decline in international tourist sales did not lessen during the fourth quarter and hurt our comp performance by approximately one point. This was less of an impact than experienced in the third quarter, but that is because international tourism is less important for us in the holiday period.”

Closely monitoring a rise in delinquency levels

“Going forward, we are closely monitoring a rise in delinquency levels that could generate some increase in losses in 2016, as I’ll discuss later.”

Credit profitability expected to decline

“Credit profitability is expected to decline slightly in 2016 from 2015 as sales decline and the profitability of our portfolio stabilizes at a historic high rate or possibly declines slightly with higher interest rates and potentially higher delinquency trends.”

Store base and supply chain are competitive advantages vs. Amazon in apparel

“Well, I think a lot of it is, as I said is the store base and having the ability for customers to interact with us in different ways. The second, I think is our talent in the whole fashion arena, from picking, editing the assortments, presenting it, and the vendor relationships. I think that is a huge competitive advantage to date, vis-à-vis, Amazon. But I think it starts with the store base, and our understanding of the fashion customer, which is different.”

Should have some benefit from anniversarying west coast port

“Well, we have factored in some improvement in the first half as a result of the receipt disruption last year with the port strike. So we’ll see if, in fact, that happens. But we have thought about that. And in terms of the impact of the restructure, that was something that we believe we felt through the whole year. So it wasn’t just a first-half disruption.”

Weather was a standout issue but energy not great either

“in terms of the energy markets, they were not as weak on the West Coast, but obviously weather was less of a factor there. So weather was a standout for us, but we didn’t do great in the energy markets either.”