Macy's Inc M
Q4 2012 Earnings Call Transcript

Transcript Call Date 02/26/2013

Operator: Good day, everyone and welcome to Macy's Incorporated Fourth Quarter Earnings Release Conference Call. Just a reminder, today's call is being recorded.

Now it's my pleasure to turn the conference over to your host, Karen Hoguet. Karen, please go ahead.

Karen M. Hoguet - CFO: Great. Thank you, and good morning. Welcome to the Macy's call scheduled to discuss our fourth quarter and full year 2012 performance and to outline our key planning assumptions for 2013. Any transcription or other reproduction of the statements made in this call without our consent is prohibited. A replay of the call will be available on our website, beginning approximately 2 hours after the call concludes. Please refer to the Investor Relations section of our website for discussion and reconciliations of any non-GAAP financial measures discussed this morning.

Keep in mind that all forward-looking statements are subject to risks and uncertainties that could cause the Company's actual results to differ materially from the expectations and assumptions mentioned today due to a variety of factors that affects the Company, including the risks specified in the Company's most recently filed Form 10-K.

As you saw a few weeks ago, we ended 2012 very strongly with an outstanding January sales performance, which was far ahead of our expectations. We actually made up much of the November, December shortfall and achieved a 3.9% comp growth in the quarter, just short of our original guidance. It was a good quarter and a very good year. In fact it was the third year in a row in which we produced very strong sales, profit, and cash flow. We are clearly operating on all cylinders.

When we reorganized the Company in 2009, we began installing much more of a growth culture that is now beginning to take hold and our strategies are being executed very successfully. Our three key strategies are still what we affectionately call M.O.M. I'll talk more about each of these later on the call, but just to list them now. The first My Macy's; this was actually our fourth holiday season since putting the My Macy structure in place. We continue to build on our success and find new ways each year to satisfy customers through greater localization. This is so critical and frankly it cannot be emulated by the competition.

The second key strategy the O in M.O.M. Omnichannel; this strategy offers so much opportunity for us. We have been building these capabilities for years, and yet there is so much more to come on this subject. Three, the last M, magic selling, we are improving the selling capabilities of our store associates. We are also empowering more local decision making.

The momentum continues to build and we have a very long runway in front of us. Sales in the fourth quarter were $9.350 billion up 7.2% over last year. But remember part of this is due to the extra week in the 2012 calendar. On a comp basis with the same number of weeks, the fourth quarter sales were up 3.9% over last year. The categories of business that were strongest in the fourth quarter, were handbags, watches, shoes, women's suits, Active, men's overall, home textiles, luggage and furniture and mattresses. The weaker businesses were housewares and juniors. Private brands also had a good quarter with particularly good growth coming from the Millennial classic apparels and home textile brands.

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