In the first quarter of 2008, Macy's, Inc. lost 14 cents per diluted share. Excluding costs related to divisional consolidations announced in 2008 of $87 million ($55 million after tax; 13 cents per diluted share), and a reserve for a potential settlement of litigation of $23 million ($14 million after tax; 3 cents per diluted share), first quarter 2008 diluted earnings per share were 2 cents.

"We continue to successfully navigate this very difficult economic environment," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer. "Our first quarter sales were consistent with our initial expectations, while earnings and cash flow performance were better than expected.

"By the end of the first quarter, we completed the unification of our organizational structure, as well as the nationwide rollout of our My Macy's localization initiative. We have entered the second quarter with our new organization in place and expect to benefit from approximately $400 million of annual expense savings beginning in 2010 (and $250 million in the partial year of 2009). Meanwhile, we expect to see an improvement in sales trend from My Macy's beginning in the fourth quarter of 2009 and especially in spring 2010," Lundgren said.

Sales

Sales in the first quarter totaled $5.199 billion, down 9.5 percent from total sales of $5.747 billion in the first 13 weeks of 2008. On a same-store basis, Macy's, Inc.'s first quarter sales were down 9.0 percent.

Online sales (macys.com and bloomingdales.com combined) were up 16.2 percent in the first quarter of 2009 and positively affected the company's first quarter 2009 same-store sales by 0.5 percentage points. Online sales are included in the same-store sales calculation for Macy's, Inc.

In the first quarter of 2009, the company opened one new Macy's store in the Phoenix market.

Operating Income (Loss)

Macy's, Inc.'s operating loss totaled $114 million or 2.2 percent of sales for the quarter ended May 2, 2009, compared with operating income of $30 million or 0.5 percent of sales for the same period last year. First quarter 2009 operating loss included $138 million in restructuring charges. Excluding these costs, operating income for the first quarter of 2009 was $24 million or 0.5 percent of sales. Macy's, Inc.'s first quarter 2008 operating income included $87 million in division consolidation costs and a $23 million reserve for the potential litigation settlement. Excluding these costs, operating income for the first quarter of 2008 was $140 million or 2.4 percent of sales.

Cash Flow

Net cash used by operating activities was $35 million in the first quarter of 2009, compared with $21 million of net cash provided in the first quarter last year. Net cash used by investing activities in the first quarter of 2009 was $68 million, compared with $99 million a year ago. Net cash used by financing activities in the first quarter of 2009 was $908 million, including $837 million used to repay debt. Net cash used by financing activities was $139 million in the first quarter last year.

Looking Ahead

Given the continued uncertainty in the macro-economic environment, management believes it is prudent to maintain its previous annual guidance (initially provided on Feb. 2, 2009) for fiscal 2009 sales to be down between 6 percent and 8 percent, and for earnings of 40 cents to 55 cents per diluted share, excluding division consolidation costs. The company expects it will exceed this guidance if the economy improves in the second half of the year. The company expects to book approximately $230 million in division consolidation costs in the final three quarters of 2009.

Macy's, Inc., with corporate offices in Cincinnati and New York, is one of the nation's premier retailers, with fiscal 2008 sales of $24.9 billion. The company operates more than 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's. The company also operates macys.com and bloomingdales.com. Prior to June 1, 2007, Macy's, Inc. was known as Federated Department Stores, Inc.

All statements in this press release that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Macy's management and are subject to significant risks and uncertainties. Actual results could differ materially from those expressed in or implied by the forward-looking statements contained in this release because of a variety of factors, including conditions to, or changes in the timing of, proposed transactions, prevailing interest rates, changes in expected synergies, cost savings and non-recurring charges, competitive pressures from specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, new and established forms of home shopping (including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather and other factors identified in documents filed by the company with the Securities and Exchange Commission.

(NOTE: Additional information on Macy's, Inc., including past news releases, is available at www.macysinc.com/pressroom. A webcast of Macy's, Inc.'s first quarter earnings call with analysts will be held beginning at 10:30 a.m. ET on Wednesday, May 13. The webcast is accessible to the media and general public via the company's Web site at www.macysinc.com. Analysts and investors may call in on 1-877-704-5382, passcode 2006146. A replay of the conference call can be accessed on the Web site or by calling 1-888-203-1112 (same passcode) about two hours after the conclusion of the call.)

MACY'S, INC.
Consolidated Statements of Operations (Unaudited) (Note 1)

Notes:

Note: Certain reclassifications were made to prior period amounts to conform with the classifications of such amounts for the most recent period.

SOURCE: Macy's, Inc.

Macy's, Inc.
Media - Jim Sluzewski, 513-579-7764
or
Investor - Susan Robinson, 513-579-7780