## Macy’s (M) — filings-only deep dive (focused on the “hard-to-find” nuggets) **Core framing:** Macy’s is simultaneously (1) a large, mall-anchored retailer with meaningful lease and real estate optionality, (2) a **credit-card economics participant** (not the receivables owner) via a long-term alliance with Citibank, and (3) an increasingly “platformed” retailer trying to monetize traffic via **Macy’s Media Network**—all while executing a multi‑year fleet reset (“A Bold New Chapter”) that explicitly includes **closing/monetizing ~150 underproductive Macy’s locations** and reinvesting in ~350 “go-forward” stores. ["A Bold New Chapter"](0001628280-25-014315|0) ["approximately 150"](0001628280-25-014315|0) ["approximately 350"](0001628280-25-014315|0) --- # 1) Choose-your-own-path navigation (no extra info needed) Pick any module below and skim the tables; each module stands alone: 1) **Fleet reset + “A Bold New Chapter” mechanics** (store closures, monetization, restructuring cash flow) 2) **Credit card economics** (what Macy’s actually earns, what can break) 3) **Macy’s Media Network (MMN)** (why it’s strategically interesting, what it contributes) 4) **Lease stack** (maturity profile, extension options embedded, hidden non-lease components) 5) **Pension + settlement charges** (why earnings can jump around) 6) **Liquidity + ABL mechanics** (availability vs. capacity; covenant “tripwires”) --- # 2) “A Bold New Chapter”: what’s *actually* happening (and how it flows through financials) ### 2.1 The strategy is operationally specific (not just marketing) Macy’s describes the 3-year plan as: close/monetize ~150 underperforming stores, prioritize ~350 go-forward stores, launch “First 50 Stores,” expand Bloomingdale’s/Bluemercury, and modernize supply chain/tech. ["three-year strategy"](0001628280-25-014315|0) ["closing and monetizing"](0001628280-25-014315|0) ["First 50 Stores"](0001628280-25-014315|0) ["Accelerate and differentiate"](0001628280-25-014315|0) ["modernizing the"](0001628280-25-014315|0) **Hard-to-find detail:** they state they closed **64 underproductive locations in fiscal 2024** vs original expectations of ~50, and explicitly tie “deal activity” to monetization of non‑go‑forward stores *and distribution centers*. ["closed 64"](0001628280-25-014315|0) ["original expectations"](0001628280-25-014315|0) ["distribution centers"](0001628280-25-014315|0) ### 2.2 Where it hits the P&L: impairment vs restructuring vs real-estate gains Macy’s separates (a) **gains on sale of real estate**, (b) **impairment/restructuring/other costs**, and (c) “normal” opex. ["Gains on sale"](0001628280-25-014315|0) ["Impairment, restructuring"](0001628280-25-014315|0) #### Table — FY2024–FY2022 headline bridge (USD millions) | Metric | FY2024 | FY2023 | FY2022 | |---|---:|---:|---:| | Net sales | 22,293 ["Net sales | $ | 22,293"](0001628280-25-014315|0) | 23,092 ["Net sales | $ | 23,092"](0001628280-25-014315|0) | 24,442 ["Net sales | $ | 24,442"](0001628280-25-014315|0) | | Total revenue | 23,006 ["Total revenue | 23,006"](0001628280-25-014315|0) | 23,866 ["Total revenue | 23,866"](0001628280-25-014315|0) | 25,449 ["Total revenue | 25,449"](0001628280-25-014315|0) | | Gross margin % | 38.4% ["Gross margin | $ | 8,553"](0001628280-25-014315|0) | 38.4% ["Gross margin | $ | 8,868"](0001628280-25-014315|0) | 37.2% ["Gross margin | $ | 9,095"](0001628280-25-014315|0) | | SG&A (as % total revenue) | (8,330) ["Selling, general"](0001628280-25-014315|0) | (8,375) ["Selling, general"](0001628280-25-014315|0) | (8,461) ["Selling, general"](0001628280-25-014315|0) | | Gains on sale of real estate | 144 ["Gains on sale"](0001628280-25-014315|0) | 61 ["Gains on sale"](0001628280-25-014315|0) | 89 ["Gains on sale"](0001628280-25-014315|0) | | Impairment, restructuring & other | (171) ["Impairment, restructuring"](0001628280-25-014315|0) | (1,027) ["Impairment, restructuring"](0001628280-25-014315|0) | (41) ["Impairment, restructuring"](0001628280-25-014315|0) | | Operating income | 909 ["Operating income | $ | 909"](0001628280-25-014315|0) | 301 ["Operating income | $ | 301"](0001628280-25-014315|0) | 1,689 ["Operating income | $ | 1,689"](0001628280-25-014315|0) | | Net income | 582 ["Net Income | $ | 582"](0001628280-25-014315|0) | 45 ["Net Income | $ | 45"](0001628280-25-014315|0) | 1,146 ["Net Income | $ | 1,146"](0001628280-25-014315|0) | **Interpretation (filings-grounded):** FY2023’s earnings were heavily distorted by impairment/restructuring, and FY2024’s normalization is partly because that line item dropped from ~$1.0B to ~$0.17B. ["$171 million"](0001628280-25-014315|0) ["$1.0 billion"](0001628280-25-014315|0) ### 2.3 The “cash reality” of restructuring (the rollforward most people miss) Impairments are largely non-cash; restructuring is the “cash drain” you track. Macy’s provides a restructuring cash activity rollforward (balance sheet accrual). ["restructuring cash"](0001628280-25-014315|0) - Ending restructuring liability **$31M** at Feb 1, 2025. ["Balance at February 1, 2025"](0001628280-25-014315|0) --- # 3) Credit card economics: Macy’s earns *fees/profit share*, but doesn’t own the receivables This is one of Macy’s most misunderstood disclosures. ### 3.1 Legal/economic structure (what it really is) Macy’s says the credit card program traces back to 2005 (sale of most accounts/receivables to Citibank), and under the **Program Agreement** Citibank **owns the credit card receivables**, while Macy’s receives fees and profit sharing tied to portfolio returns (net of program expenses). ["sale of most"](0001628280-25-014315|0) ["Citibank owns"](0001628280-25-014315|0) ["tiered return"](0001628280-25-014315|0) **Duration risk (hard-to-find):** the Program Agreement **extends until March 31, 2030**, with a potential 3-year renewal term. ["extends until March 31, 2030"](0001628280-25-014315|0) ["additional renewal term"](0001628280-25-014315|0) ### 3.2 What Macy’s earned (and why it fell) Credit card revenues, net were **$537M in FY2024** vs **$619M FY2023**; Macy’s ties the decline to **higher net credit losses**. ["Credit card revenues, net"](0001628280-25-014315|0) ["higher net credit losses"](0001628280-25-014315|0) #### Table — “Other revenue” decomposition (USD millions) | Other revenue component | FY2024 | FY2023 | Notes | |---|---:|---:|---| | Credit card revenues, net | 537 ["Credit card revenues, net | $ | 537"](0001628280-25-014315|0) | 619 ["Credit card revenues, net | $ | 619"](0001628280-25-014315|0) | Penetration 41.6% vs 42.9%. ["sales penetration | 41.6"](0001628280-25-014315|0) ["42.9"](0001628280-25-014315|0) | | Macy’s Media Network, net | 176 ["Media Network, net | 176"](0001628280-25-014315|0) | 155 ["Media Network, net | 155"](0001628280-25-014315|0) | MMN +14% Y/Y (company explanation). ["grew $21"](0001628280-25-014315|0) | | Total other revenue | 713 ["Other revenue | $ | 713"](0001628280-25-014315|0) | 774 ["Other revenue | $ | 774"](0001628280-25-014315|0) | CC decline was a major driver. ["decrease ... driven"](0001628280-25-014315|0) | ### 3.3 A “sleeper” regulatory risk explicitly called out Macy’s flags CFPB late-fee rule changes (Reg Z): lowering safe-harbor late fees (e.g., from up to $41 to $8), noting the rule is **stayed due to litigation** and that lower late fees would reduce credit card revenue. ["finalized a rule"](0001628280-25-014315|0) ["has been stayed"](0001628280-25-014315|0) ["reduce credit card"](0001628280-25-014315|0) --- # 4) Macy’s Media Network (MMN): why it matters and what it is (filing definition) Macy’s explicitly defines MMN as an **in-house media platform** supporting Macy’s and Bloomingdale’s customers across “owned and operated” plus offsite formats. ["in-house media"](0001628280-25-014315|0) ["owned and operated"](0001628280-25-014315|0) **Why it’s strategically “high-leverage”:** - It scales with **traffic + vendor participation**, not store count alone, and Macy’s ties FY2024 growth to “increased vendor engagement” and more advertisers/campaigns. ["increased vendor engagement"](0001628280-25-014315|0) ["higher advertiser"](0001628280-25-014315|0) --- # 5) Lease stack: the “hidden” commitments are in the options and non-lease components ### 5.1 Maturity profile (and how far out it really goes) As of Feb 1, 2025, Macy’s shows operating lease payments heavily weighted “after 2029,” with **operating lease undiscounted payments of $6.327B** and total lease liabilities of **$3.294B** (operating $3.279B + finance $15M). ["6,327"](0001104659-25-030593|0) ["Total lease liabilities"](0001104659-25-030593|0) #### Table — Lease maturity (USD millions; undiscounted) | Fiscal year | Finance leases | Operating leases | Total | |---|---:|---:|---:| | 2025 | 3 ["2025 | $ \n3"](0001104659-25-030593|0) | 365 ["2025 ... 365"](0001104659-25-030593|0) | 368 ["2025 ... 368"](0001104659-25-030593|0) | | 2026 | 3 ["2026 \n \n3"](0001104659-25-030593|0) | 388 ["2026 ... 388"](0001104659-25-030593|0) | 391 ["2026 ... 391"](0001104659-25-030593|0) | | 2027 | 3 ["2027 \n \n3"](0001104659-25-030593|0) | 369 ["2027 ... 369"](0001104659-25-030593|0) | 372 ["2027 ... 372"](0001104659-25-030593|0) | | 2028 | 2 ["2028 \n \n2"](0001104659-25-030593|0) | 349 ["2028 ... 349"](0001104659-25-030593|0) | 351 ["2028 ... 351"](0001104659-25-030593|0) | | 2029 | 2 ["2029 \n \n2"](0001104659-25-030593|0) | 321 ["2029 ... 321"](0001104659-25-030593|0) | 323 ["2029 ... 323"](0001104659-25-030593|0) | | After 2029 | 10 ["After 2029 \n \n10"](0001104659-25-030593|0) | 4,535 ["After 2029 ... 4,535"](0001104659-25-030593|0) | 4,545 ["After 2029 ... 4,545"](0001104659-25-030593|0) | ### 5.2 The “options” are the real obligation (and they’re explicitly quantified) Operating lease payments include **$2.552B** tied to extension options Macy’s deems “reasonably certain” of being exercised. ["$2,552 million"](0001104659-25-030593|0) ### 5.3 Non-lease components are embedded (often missed in quick reads) Macy’s discloses that operating lease liabilities include non-lease components (e.g., CAM, services) — **$36M current** and **$356M noncurrent** at Feb 1, 2025. ["current and \nnoncurrent"](0001104659-25-030593|0) ### 5.4 Duration and discount rates Weighted-average remaining operating lease term is **19.6 years** and operating lease discount rate **6.80%**. ["Operating leases\n19.6"](0001104659-25-030593|0) ["Operating leases\n 6.80"](0001104659-25-030593|0) --- # 6) Pensions + settlement charges: the “quiet” earnings-volatility engine ### 6.1 Funded status is positive for the qualified Pension Plan (but SERP is a liability) Macy’s shows Pension Plan funded status **+$490M** (asset) at Feb 1, 2025, while SERP funded status is **–$425M**. ["Funded status at end of year"](0001628280-25-014315|0) ### 6.2 Settlement charges are real and recurring (linked to lump-sum behavior) Macy’s reports non-cash settlement charges **$46M in 2024** and **$134M in 2023**, tied to lump-sum distributions and, in 2023, an annuity purchase transaction. ["settlement charges"](0001628280-25-014315|0) ["purchase of a group"](0001628280-25-014315|0) ### 6.3 Sensitivity disclosure (rarely used, very useful) Macy’s quantifies that a **0.25% discount rate decrease** would increase projected benefit obligations by **~$33M** (and reduce 2025 pension expense by ~$1M). ["Lowering the discount"](0001628280-25-014315|0) ["increase ... by approximately $33"](0001628280-25-014315|0) --- # 7) Liquidity + ABL: capacity is not availability (and inventory drives the haircut) ### 7.1 Macy’s frames liquidity as cash + operations + ABL Macy’s states key sources of liquidity include cash from operations, cash on hand, and the **asset-based credit facility**. ["principal sources of liquidity"](0001628280-25-014315|0) ### 7.2 The “availability math” (hard-to-find and extremely important) As of Feb 1, 2025: - Revolving ABL facility size: **$3.0B**. ["$3,000 million"](0001628280-25-014315|0) - Borrowing capacity: **$2.856B**, reduced by **$144M** standby letters of credit. ["borrowing capacity"](0001628280-25-014315|0) ["$144 million reduction"](0001628280-25-014315|0) - Borrowing availability: **$2.459B**, reflecting an additional **$397M** reduction due to inventory levels / borrowing base. ["borrowing availability"](0001628280-25-014315|0) ["$397 million"](0001628280-25-014315|0) ### 7.3 Covenant “tripwire” & what it actually measures (from the credit agreement exhibit) During a “Covenant Compliance Period,” Macy’s must maintain **Consolidated Fixed Charge Coverage Ratio ≥ 1.00x**. ["less than 1.00"](0000794367-25-000087|1) And the ratio itself is defined (in plain English) as: > (EBITDA − cash capex − cash taxes) / fixed charges as detailed in the exhibit. ["Consolidated Fixed Charge Coverage Ratio"](0000794367-25-000087|1) ["minus (ii) Capital Expenditures"](0000794367-25-000087|1) ["minus (iii) ... income taxes"](0000794367-25-000087|1) ### 7.4 Pricing grid (SOFR margin depends on utilization) SOFR margin is **1.25% or 1.50%** depending on average monthly revolver exposure relative to commitments. ["Applicable SOFR\nMargin"](0000794367-25-000087|1) ["1.50%"](0000794367-25-000087|1) ["1.25%"](0000794367-25-000087|1) --- # 8) Two “Alpha Analyst” edge insights (still filings-only) ### Insight A — Macy’s is actively running a “three-layer monetization stack” 1) **Real estate monetization** via non-go-forward store/DC dispositions (gains on sale + strategic deal cadence). ["monetization"](0001628280-25-014315|0) ["deal activity"](0001628280-25-014315|0) 2) **Traffic monetization** via MMN (ad platform economics). ["Macy's Media Network"](0001628280-25-014315|0) 3) **Financial-services monetization** via credit card profit-share economics (but exposed to credit losses and late-fee regulation). ["profit share"](0001628280-25-014315|0) ["higher net credit losses"](0001628280-25-014315|0) ["late fees"](0001628280-25-014315|0) ### Insight B — Lease obligations are “long-dated by design,” and options are the hidden lever The disclosed operating lease term (~19.6 years) plus $2.552B of “reasonably certain” extension-option payments means a large portion of Macy’s footprint economics is effectively pre-committed even before future renegotiations. ["Operating leases\n19.6"](0001104659-25-030593|0) ["$2,552 million"](0001104659-25-030593|0) --- ## If you want the most “alpha per minute” Read these 3 tables again (they’re the highest signal): - **Other revenue decomposition** (credit cards vs MMN) ["Credit card revenues, net"](0001628280-25-014315|0) ["Macy's Media Network"](0001628280-25-014315|0) - **Lease maturity + options** ["Operating lease payments include $2,552"](0001104659-25-030593|0) - **ABL availability vs capacity** ["borrowing availability was $2,459"](0001628280-25-014315|0)

## Macy’s (M) — filings-only deep dive (focused on the “hard-to-find” nuggets) **Core framing:** Macy’s is simultaneously (1) a large, mall-anchored retailer with meaningful lease and real estate optionality, (2) a **credit-card economics participant** (not the receivables owner) via a long-term alliance with Citibank, and (3) an increasingly “platformed” retailer trying to monetize traffic via **Macy’s Media Network**—all while executing a multi‑year fleet reset (“A Bold New Chapter”) that explicitly includes **closing/monetizing ~150 underproductive Macy’s locations** and reinvesting in ~350 “go-forward” stores. ["A Bold New Chapter"](0001628280-25-014315|0) ["approximately 150"](0001628280-25-014315|0) ["approximately 350"](0001628280-25-014315|0) --- # 1) Choose-your-own-path navigation (no extra info needed) Pick any module below and skim the tables; each module stands alone: 1) **Fleet reset + “A Bold New Chapter” mechanics** (store closures, monetization, restructuring cash flow) 2) **Credit card economics** (what Macy’s actually earns, what can break) 3) **Macy’s Media Network (MMN)** (why it’s strategically interesting, what it contributes) 4) **Lease stack** (maturity profile, extension options embedded, hidden non-lease components) 5) **Pension + settlement charges** (why earnings can jump around) 6) **Liquidity + ABL mechanics** (availability vs. capacity; covenant “tripwires”) --- # 2) “A Bold New Chapter”: what’s *actually* happening (and how it flows through financials) ### 2.1 The strategy is operationally specific (not just marketing) Macy’s describes the 3-year plan as: close/monetize ~150 underperforming stores, prioritize ~350 go-forward stores, launch “First 50 Stores,” expand Bloomingdale’s/Bluemercury, and modernize supply chain/tech. ["three-year strategy"](0001628280-25-014315|0) ["closing and monetizing"](0001628280-25-014315|0) ["First 50 Stores"](0001628280-25-014315|0) ["Accelerate and differentiate"](0001628280-25-014315|0) ["modernizing the"](0001628280-25-014315|0) **Hard-to-find detail:** they state they closed **64 underproductive locations in fiscal 2024** vs original expectations of ~50, and explicitly tie “deal activity” to monetization of non‑go‑forward stores *and distribution centers*. ["closed 64"](0001628280-25-014315|0) ["original expectations"](0001628280-25-014315|0) ["distribution centers"](0001628280-25-014315|0) ### 2.2 Where it hits the P&L: impairment vs restructuring vs real-estate gains Macy’s separates (a) **gains on sale of real estate**, (b) **impairment/restructuring/other costs**, and (c) “normal” opex. ["Gains on sale"](0001628280-25-014315|0) ["Impairment, restructuring"](0001628280-25-014315|0) #### Table — FY2024–FY2022 headline bridge (USD millions) | Metric | FY2024 | FY2023 | FY2022 | |---|---:|---:|---:| | Net sales | 22,293 ["Net sales | $ | 22,293"](0001628280-25-014315|0) | 23,092 ["Net sales | $ | 23,092"](0001628280-25-014315|0) | 24,442 ["Net sales | $ | 24,442"](0001628280-25-014315|0) | | Total revenue | 23,006 ["Total revenue | 23,006"](0001628280-25-014315|0) | 23,866 ["Total revenue | 23,866"](0001628280-25-014315|0) | 25,449 ["Total revenue | 25,449"](0001628280-25-014315|0) | | Gross margin % | 38.4% ["Gross margin | $ | 8,553"](0001628280-25-014315|0) | 38.4% ["Gross margin | $ | 8,868"](0001628280-25-014315|0) | 37.2% ["Gross margin | $ | 9,095"](0001628280-25-014315|0) | | SG&A (as % total revenue) | (8,330) ["Selling, general"](0001628280-25-014315|0) | (8,375) ["Selling, general"](0001628280-25-014315|0) | (8,461) ["Selling, general"](0001628280-25-014315|0) | | Gains on sale of real estate | 144 ["Gains on sale"](0001628280-25-014315|0) | 61 ["Gains on sale"](0001628280-25-014315|0) | 89 ["Gains on sale"](0001628280-25-014315|0) | | Impairment, restructuring & other | (171) ["Impairment, restructuring"](0001628280-25-014315|0) | (1,027) ["Impairment, restructuring"](0001628280-25-014315|0) | (41) ["Impairment, restructuring"](0001628280-25-014315|0) | | Operating income | 909 ["Operating income | $ | 909"](0001628280-25-014315|0) | 301 ["Operating income | $ | 301"](0001628280-25-014315|0) | 1,689 ["Operating income | $ | 1,689"](0001628280-25-014315|0) | | Net income | 582 ["Net Income | $ | 582"](0001628280-25-014315|0) | 45 ["Net Income | $ | 45"](0001628280-25-014315|0) | 1,146 ["Net Income | $ | 1,146"](0001628280-25-014315|0) | **Interpretation (filings-grounded):** FY2023’s earnings were heavily distorted by impairment/restructuring, and FY2024’s normalization is partly because that line item dropped from ~$1.0B to ~$0.17B. ["$171 million"](0001628280-25-014315|0) ["$1.0 billion"](0001628280-25-014315|0) ### 2.3 The “cash reality” of restructuring (the rollforward most people miss) Impairments are largely non-cash; restructuring is the “cash drain” you track. Macy’s provides a restructuring cash activity rollforward (balance sheet accrual). ["restructuring cash"](0001628280-25-014315|0) - Ending restructuring liability **$31M** at Feb 1, 2025. ["Balance at February 1, 2025"](0001628280-25-014315|0) --- # 3) Credit card economics: Macy’s earns *fees/profit share*, but doesn’t own the receivables This is one of Macy’s most misunderstood disclosures. ### 3.1 Legal/economic structure (what it really is) Macy’s says the credit card program traces back to 2005 (sale of most accounts/receivables to Citibank), and under the **Program Agreement** Citibank **owns the credit card receivables**, while Macy’s receives fees and profit sharing tied to portfolio returns (net of program expenses). ["sale of most"](0001628280-25-014315|0) ["Citibank owns"](0001628280-25-014315|0) ["tiered return"](0001628280-25-014315|0) **Duration risk (hard-to-find):** the Program Agreement **extends until March 31, 2030**, with a potential 3-year renewal term. ["extends until March 31, 2030"](0001628280-25-014315|0) ["additional renewal term"](0001628280-25-014315|0) ### 3.2 What Macy’s earned (and why it fell) Credit card revenues, net were **$537M in FY2024** vs **$619M FY2023**; Macy’s ties the decline to **higher net credit losses**. ["Credit card revenues, net"](0001628280-25-014315|0) ["higher net credit losses"](0001628280-25-014315|0) #### Table — “Other revenue” decomposition (USD millions) | Other revenue component | FY2024 | FY2023 | Notes | |---|---:|---:|---| | Credit card revenues, net | 537 ["Credit card revenues, net | $ | 537"](0001628280-25-014315|0) | 619 ["Credit card revenues, net | $ | 619"](0001628280-25-014315|0) | Penetration 41.6% vs 42.9%. ["sales penetration | 41.6"](0001628280-25-014315|0) ["42.9"](0001628280-25-014315|0) | | Macy’s Media Network, net | 176 ["Media Network, net | 176"](0001628280-25-014315|0) | 155 ["Media Network, net | 155"](0001628280-25-014315|0) | MMN +14% Y/Y (company explanation). ["grew $21"](0001628280-25-014315|0) | | Total other revenue | 713 ["Other revenue | $ | 713"](0001628280-25-014315|0) | 774 ["Other revenue | $ | 774"](0001628280-25-014315|0) | CC decline was a major driver. ["decrease ... driven"](0001628280-25-014315|0) | ### 3.3 A “sleeper” regulatory risk explicitly called out Macy’s flags CFPB late-fee rule changes (Reg Z): lowering safe-harbor late fees (e.g., from up to $41 to $8), noting the rule is **stayed due to litigation** and that lower late fees would reduce credit card revenue. ["finalized a rule"](0001628280-25-014315|0) ["has been stayed"](0001628280-25-014315|0) ["reduce credit card"](0001628280-25-014315|0) --- # 4) Macy’s Media Network (MMN): why it matters and what it is (filing definition) Macy’s explicitly defines MMN as an **in-house media platform** supporting Macy’s and Bloomingdale’s customers across “owned and operated” plus offsite formats. ["in-house media"](0001628280-25-014315|0) ["owned and operated"](0001628280-25-014315|0) **Why it’s strategically “high-leverage”:** - It scales with **traffic + vendor participation**, not store count alone, and Macy’s ties FY2024 growth to “increased vendor engagement” and more advertisers/campaigns. ["increased vendor engagement"](0001628280-25-014315|0) ["higher advertiser"](0001628280-25-014315|0) --- # 5) Lease stack: the “hidden” commitments are in the options and non-lease components ### 5.1 Maturity profile (and how far out it really goes) As of Feb 1, 2025, Macy’s shows operating lease payments heavily weighted “after 2029,” with **operating lease undiscounted payments of $6.327B** and total lease liabilities of **$3.294B** (operating $3.279B + finance $15M). ["6,327"](0001104659-25-030593|0) ["Total lease liabilities"](0001104659-25-030593|0) #### Table — Lease maturity (USD millions; undiscounted) | Fiscal year | Finance leases | Operating leases | Total | |---|---:|---:|---:| | 2025 | 3 ["2025 | $ \n3"](0001104659-25-030593|0) | 365 ["2025 ... 365"](0001104659-25-030593|0) | 368 ["2025 ... 368"](0001104659-25-030593|0) | | 2026 | 3 ["2026 \n \n3"](0001104659-25-030593|0) | 388 ["2026 ... 388"](0001104659-25-030593|0) | 391 ["2026 ... 391"](0001104659-25-030593|0) | | 2027 | 3 ["2027 \n \n3"](0001104659-25-030593|0) | 369 ["2027 ... 369"](0001104659-25-030593|0) | 372 ["2027 ... 372"](0001104659-25-030593|0) | | 2028 | 2 ["2028 \n \n2"](0001104659-25-030593|0) | 349 ["2028 ... 349"](0001104659-25-030593|0) | 351 ["2028 ... 351"](0001104659-25-030593|0) | | 2029 | 2 ["2029 \n \n2"](0001104659-25-030593|0) | 321 ["2029 ... 321"](0001104659-25-030593|0) | 323 ["2029 ... 323"](0001104659-25-030593|0) | | After 2029 | 10 ["After 2029 \n \n10"](0001104659-25-030593|0) | 4,535 ["After 2029 ... 4,535"](0001104659-25-030593|0) | 4,545 ["After 2029 ... 4,545"](0001104659-25-030593|0) | ### 5.2 The “options” are the real obligation (and they’re explicitly quantified) Operating lease payments include **$2.552B** tied to extension options Macy’s deems “reasonably certain” of being exercised. ["$2,552 million"](0001104659-25-030593|0) ### 5.3 Non-lease components are embedded (often missed in quick reads) Macy’s discloses that operating lease liabilities include non-lease components (e.g., CAM, services) — **$36M current** and **$356M noncurrent** at Feb 1, 2025. ["current and \nnoncurrent"](0001104659-25-030593|0) ### 5.4 Duration and discount rates Weighted-average remaining operating lease term is **19.6 years** and operating lease discount rate **6.80%**. ["Operating leases\n19.6"](0001104659-25-030593|0) ["Operating leases\n 6.80"](0001104659-25-030593|0) --- # 6) Pensions + settlement charges: the “quiet” earnings-volatility engine ### 6.1 Funded status is positive for the qualified Pension Plan (but SERP is a liability) Macy’s shows Pension Plan funded status **+$490M** (asset) at Feb 1, 2025, while SERP funded status is **–$425M**. ["Funded status at end of year"](0001628280-25-014315|0) ### 6.2 Settlement charges are real and recurring (linked to lump-sum behavior) Macy’s reports non-cash settlement charges **$46M in 2024** and **$134M in 2023**, tied to lump-sum distributions and, in 2023, an annuity purchase transaction. ["settlement charges"](0001628280-25-014315|0) ["purchase of a group"](0001628280-25-014315|0) ### 6.3 Sensitivity disclosure (rarely used, very useful) Macy’s quantifies that a **0.25% discount rate decrease** would increase projected benefit obligations by **~$33M** (and reduce 2025 pension expense by ~$1M). ["Lowering the discount"](0001628280-25-014315|0) ["increase ... by approximately $33"](0001628280-25-014315|0) --- # 7) Liquidity + ABL: capacity is not availability (and inventory drives the haircut) ### 7.1 Macy’s frames liquidity as cash + operations + ABL Macy’s states key sources of liquidity include cash from operations, cash on hand, and the **asset-based credit facility**. ["principal sources of liquidity"](0001628280-25-014315|0) ### 7.2 The “availability math” (hard-to-find and extremely important) As of Feb 1, 2025: - Revolving ABL facility size: **$3.0B**. ["$3,000 million"](0001628280-25-014315|0) - Borrowing capacity: **$2.856B**, reduced by **$144M** standby letters of credit. ["borrowing capacity"](0001628280-25-014315|0) ["$144 million reduction"](0001628280-25-014315|0) - Borrowing availability: **$2.459B**, reflecting an additional **$397M** reduction due to inventory levels / borrowing base. ["borrowing availability"](0001628280-25-014315|0) ["$397 million"](0001628280-25-014315|0) ### 7.3 Covenant “tripwire” & what it actually measures (from the credit agreement exhibit) During a “Covenant Compliance Period,” Macy’s must maintain **Consolidated Fixed Charge Coverage Ratio ≥ 1.00x**. ["less than 1.00"](0000794367-25-000087|1) And the ratio itself is defined (in plain English) as: > (EBITDA − cash capex − cash taxes) / fixed charges as detailed in the exhibit. ["Consolidated Fixed Charge Coverage Ratio"](0000794367-25-000087|1) ["minus (ii) Capital Expenditures"](0000794367-25-000087|1) ["minus (iii) ... income taxes"](0000794367-25-000087|1) ### 7.4 Pricing grid (SOFR margin depends on utilization) SOFR margin is **1.25% or 1.50%** depending on average monthly revolver exposure relative to commitments. ["Applicable SOFR\nMargin"](0000794367-25-000087|1) ["1.50%"](0000794367-25-000087|1) ["1.25%"](0000794367-25-000087|1) --- # 8) Two “Alpha Analyst” edge insights (still filings-only) ### Insight A — Macy’s is actively running a “three-layer monetization stack” 1) **Real estate monetization** via non-go-forward store/DC dispositions (gains on sale + strategic deal cadence). ["monetization"](0001628280-25-014315|0) ["deal activity"](0001628280-25-014315|0) 2) **Traffic monetization** via MMN (ad platform economics). ["Macy's Media Network"](0001628280-25-014315|0) 3) **Financial-services monetization** via credit card profit-share economics (but exposed to credit losses and late-fee regulation). ["profit share"](0001628280-25-014315|0) ["higher net credit losses"](0001628280-25-014315|0) ["late fees"](0001628280-25-014315|0) ### Insight B — Lease obligations are “long-dated by design,” and options are the hidden lever The disclosed operating lease term (~19.6 years) plus $2.552B of “reasonably certain” extension-option payments means a large portion of Macy’s footprint economics is effectively pre-committed even before future renegotiations. ["Operating leases\n19.6"](0001104659-25-030593|0) ["$2,552 million"](0001104659-25-030593|0) --- ## If you want the most “alpha per minute” Read these 3 tables again (they’re the highest signal): - **Other revenue decomposition** (credit cards vs MMN) ["Credit card revenues, net"](0001628280-25-014315|0) ["Macy's Media Network"](0001628280-25-014315|0) - **Lease maturity + options** ["Operating lease payments include $2,552"](0001104659-25-030593|0) - **ABL availability vs capacity** ["borrowing availability was $2,459"](0001628280-25-014315|0)