Macy's, Inc. (NYSE:M) Q2 2019 Earnings Conference Call - Final Transcript

Aug 14, 2019 • 09:30 am ET

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Macy's, Inc. (NYSE:M) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Michael Binetti

make it a little bit inflexible if sales are to the downside of the plan? Thanks.

Executive
Paula A. Price

Sure. I would just -- just repeat at our guidance in terms of SG&A, at the high end of our guidance, we would expect the performance to be better in the fall than in the spring. And, again, as you know, our expenses are weighted more heavily to the first half of the year because we begin our investment earlier in the year and we'll benefit from expenses later in the year. Sales are higher then that you would see that in our SG&A leverage, if sales are lower. Yes, we always manage our expenses prudently and think about different sales scenarios and what we would do there. And so, we've demonstrated that we can flex our sales in different sales environment or flex our expenses in different sales environments.

Analyst
Michael Binetti

Okay, thanks to both of you for all the help the detail here.

Executive
Jeff Gennette

Thanks, Brian.

Executive
Paula A. Price

Thank you.

Operator
Operator

Next question comes from Brian Callen with Bank of America.

Analyst
Brian Douglas Callen

Hi, good morning. Thank you. I just wanted to peel back on your perspective on balance sheet health. Debt reduction has been strong, but 2019 leverage looks like it could still be at or above the high-end of your target range. So what option should we consider being available near-term to keep the balance sheet in line with investment grade ratings? You don't seem to be getting credit for the -- I guess 10% dividend yield. So would you consider altering that dividend payout?

Executive
Paula A. Price

So again, I would just reiterate our capital allocation strategy, which hasn't changed. We do continue to generate strong cash flows and we -- we use that cash flow prudently. And so, just to reiterate what our priorities are, first and foremost is to invest in the business. And so we've guided that we'll invest about $1 billion this year. Second, it's to maintain a healthy balance sheet, so we're significantly -- we've been significantly reducing our debt. We plan to use excess cash in 2019 as we said before, to further reduce our debt, to be well within our target leverage range of 2.5 to 2.8 times and you look at that with and without asset sale gains, and that's important as we face into any economic environment. And being in this range gives us flexibility as well. And next, we will continue to return a competitive cash dividend to our shareholders, we're doing that and we're committed to continuing to do that and then the last thing is that, as our cash position warrant, we will consider along with our Board resuming our share repurchase program. So that's how we think about capital allocation strategy and it hasn't changed.

Analyst
Brian Douglas Callen

Thank you.

Operator
Operator

And if there are no further questions at this time, I'd like to turn the conference back to your hosts for any additional or closing remarks.

Executive
Mike McGuire

Thanks everybody.

Executive
Paula A. Price

Thank you, everyone,

Executive
Jeff Gennette

Thank you.

Operator
Operator

[Operator Closing Remarks]