Macy's, Inc. (NYSE:M) Q2 2017 Earnings Conference Call - Preliminary Transcript

Aug 10, 2017 • 10:00 am ET

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Macy's, Inc. (NYSE:M) Q2 2017 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day and welcome to the Macy's, Inc. Second Quarter 2017 Earnings Conference Call. Today's conference is being recorded.

I would now like to turn the call over to your host, Karen Hoguet. Please go ahead, ma'am.

Executive
Karen M. Hoguet

Great, thank you. Good morning and welcome to the Macy's conference call, scheduled to discuss our second quarter earnings. As she said, I'm Karen Hoguet, CFO of the company. Joining me on the call today is Jeff Gennette, our CEO.

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, www.MacysInc.com, beginning approximately two hours after the call concludes. Please refer to the Investor Relations section of our website for a 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 affect the company, including the risks specified in the company's most recent Form 10-K and other SEC filings.

On this morning's call, I will take you through our results for the second quarter and our outlook for the back half of the year. Jeff will provide some perspective. And then, we will both take your questions. So let's get started.

Our second quarter performance demonstrates that we are on track to produce sales and earnings consistent with our annual guidance that we provided at the beginning of the year and affirmed at our June Investor Meeting. As the quarter progressed, we saw sequential improvements and continued to gain confidence in our strategies. We believe we are on the right track to achieve our objectives.

Sales in the second quarter were $5.552 billion, down 5.4% from last year. Comparable sales on an owned plus licensed basis were down 2.5% versus last year. This is much improved relative to the first quarter and is also somewhat better than we expected when we started the quarter.

As I will discuss in a minute, both the base trend as well as the initiatives that we outlined at the Investor Meeting helped to improve our sales trend. This is in spite of weaker international tourist sales, which we did not anticipate.

In the second quarter, international tourist sales were down approximately 9%, which was much worse than in the first quarter and negatively impacted our comp owned plus licensed sales in the second quarter by approximately 40 basis points.

At our Investor Meeting in June, you will recall that we estimated that our base trend for our comp owned plus licensed sales on an annual basis was in the minus 3% to minus 4% range. And to that trend, we expected that our strategic initiatives to contribute $200 million to $260 million of additional sales in the last nine months of the year.

The second quarter results would indicate that our base