Macy's, Inc. (NYSE:M) Q2 2020 Earnings Conference Call - Final Transcript
Sep 02, 2020 • 08:00 am ET
importantly, we ended the quarter with inventory, down 29% year-over-year and we are entering the third quarter with clean inventory and an appropriate sales-to-stock ratio.
As a percent of sales, SG&A expenses improved by 10 basis points in the quarter over last year to 39.2%. We recorded nearly $1.4 billion of SG&A expense, an improvement of approximately 36% from last year's second quarter, driven largely by strict expense management. Recall that we announced a reset of our cost base in February as part of our Polaris strategy and that was the primary driver of the improvement. The furlough of many of our colleagues in May and June and beginning of July, the subsequent long term and more permanent restructurings also contributed to the improvement.
Overall, this quarter, we were very disciplined with our variable costs, which we fully control and we'll continue to limit and monitor. Given the current real estate environment, real estate transactions were minimal during the second quarter and we expect that the current environment will continue to weigh on what we originally targeted this year. We are still selling assets, but we are being more selective, given that the market has slowed and we are being very thoughtful about when to go-to-market on certain assets in order to maximize value.
Year-to-date we've recognized $16 million in asset sale gains and the current expectation is that we will recognize about $50 million for the full year. We recognized $242 million of restructuring, impairment and other costs of which $154 million was for severance associated with the recent restructuring of our workforce. Additionally, we are extremely pleased to have completed approximately $4.5 billion of new financings during the quarter, much of which occurred before our first quarter call.
To summarize, this included $1.3 billion of senior secured note as well as a new $3.2 billion asset-backed credit facility. Recall that the proceeds of the notes were used to repaying the outstanding borrowings under previously existing unsecured credit facility. Additionally, we successfully executed an Exchange Offers and Consent Solicitations for $465 million of our previously issued unsecured note, allowing us to create greater financial flexibility for future needs. With all of these completed, we expect to have sufficient liquidity to fund our business for the foreseeable future while repaying upcoming debt maturities in fiscal 2020 and fiscal 2021.
Notably, we finished the quarter in a strong liquidity position, with approximately $1.4 billion in cash and approximately $3 billion of untapped capacity in the new asset-backed credit facility. We incurred net interest expense of $69 million, an increase from $47 million in the prior-year period, driven by the additional debt during the quarter. We recorded a tax benefit of $298 million, representing an effective tax rate of 40.9%. This high rate reflects the impact of the carry back of net operating losses as permitted under the CARES Act.
Summing it all up, we saw $251 million of adjusted net loss in the quarter versus income of $88 million last year.