Macy's Inc. Historical Financial Analysis (Essay Sample)

Macy’s Inc. Historical Financial Analysis Student’s Name Institutional Affiliation Course Name & Number Professor’s Name Date Macy’s Inc. Historical Financial Analysis Macy's Inc. is one of the major department stores. It began with the opening of R.H. Macy & Co. as a small dry goods store in 1858 in New York (Macy's Inc., n.d.). Macy's Inc.'s main products include clothing, household items, and footwear. While Macy's Inc. is the leading department store in sales, Kohl's Corporation is second. In 2022, Macy's and Kohl's Corporation sales were $24 billion and $17 billion, respectively (Smith, 2023). The paper will evaluate Macy's historical financial statements, conduct various ratio analyses, and make relevant comparisons to its main competitor, Kohl's Corporation. Historical Financial Statements (Horizontal and Vertical Analysis) Macy’s Inc. Consolidated Income Statement Horizontal Analysis For the years ending January 28th, 2020, 2021, and 2022 2022 2021 % Change from 2021 to 2022 2020 % Change from 2020 to 2021 Net sales 24442 24460 0.07 17346 41.1 Credit card revenues, net 863 832 3.72 751 10.76 Cost of sales (15306) (14956) 2.34 (12286) 21.86 Selling, general and administrative expenses (8317) (8047) 3.35 (6767) 19.1 Gains on sale of real estate 89 91 2.2 60 51.67 Restructuring, impairment, store closing, and other costs (41) (30) 36.67 (3579) 99.16 Operating income (loss) 1730 2350 26.38 % (4475) - Benefit plan income, net 20 66 69.7 54 22.22 Settlement charges (39) (96) 59.38 (84) 14.29 Interest expense (175) (256) 31.64 (284) 10.56 Financing costs - - - (5) - Losses on early retirement of debt (31) (199) 84.42 - - Interest income 13 1 92.30 4 - Income (loss) before income taxes 1518 1866 18.61% (4790) - Federal, state, and local income tax benefits (expense) (341) (436) 21.83 846 48.5 Net income (loss) 1177 1430 17.63% (3944) - Macy’s Inc. Consolidated Income Statement Vertical Analysis For the years ending January 28th, 2020, 2021, and 2022 2022 % 2021 % 2020 % Net sales 24442 100 24460 100 17346 100 Credit card revenues, net 863 3.53 832 3.40 751 4.33 Cost of sales (15306) 62.63 (14956) 61.14 (12286) 70.79 Selling, general and administrative expenses (8317) 34.03 (8047) 32.92 (6767) 39.05 Gains on sale of real estate 89 0.36 91 0.37 60 0.35 Restructuring, impairment, store closing, and other costs (41) 0.17 (30) 0.12 (3579) 20.63 Operating income (loss) 1730 7.07 2350 9.61 (4475) 25.82 Benefit plan income, net 20 0.08 66 0.27 54 0.31 Settlement charges (39) 0.16 (96) 0.39 (84) 0.49 Interest expense (175) 0.72 (256) 1.05 (284) 1.64 Financing costs - - - - (5) 0.03 Losses on early retirement of debt (31) 0.13 (199) 0.81 - 0.00 Interest income 13 0.05 1 0.00 4 0.02 Income (loss) before income taxes 1518 6.21 1866 7.63 (4790) 27.64 Federal, state, and local income tax benefits (expense) (341) 1.39 (436) 1.78 846 4.88 Net income (loss) 1177 4.81 1430 5.85 (3944) 22.77 Macy’s Inc. Consolidated Balance Sheet Horizontal Analysis For the years ending January 28th, 2020, 2021, and 2022 ASSETS 2022 2021 % Change from 2021 to 2022 2020 % Change from 2020 to 2021 Current Assets: Cash and cash equivalents 1712 1679 1.96 685 145.26 Receivables 297 276 7.61 409 -32.54 Merchandise inventories 4383 3774 16.13 5188 -27.25 Prepaid expenses and other current assets 366 455 -19.45 528 -13.79 Total Current Assets 6758 6184 9.28 6810 -9.19 Property and Equipment – net 5665 5940 -4.61 6633 -10.45 Right of Use Assets 2808 2878 -2.43 2668 7.87 Goodwill 828 828 0 3908 -78.84 Other Intangible Assets – net 435 437 -0.46 439 -0.45 Other Assets 1096 1439 -23.84 714 101.54 Total Assets 17590 17706 -0.65 21172 -16.27 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Short-term debt - 452 -100 539 -16.18 Merchandise accounts payable 2222 1978 12.34 1682 17.54 Accounts payable and accrued liabilities 3086 2927 5.45 3448 -15.10 Income taxes 108 - N/A 81 N/A Total Current Liabilities 5416 5357 1.10 5750 -6.85 Long-Term Debt 3295 4407 -25.22 3621 21.70 Long-Term Lease Liabilities 3098 3185 -2.69 2918 9.14 Deferred Income Taxes 983 908 8.27 1169 -22.28 Other Liabilities 1177 1296 -9.18 1337 -3.06 Shareholders’ Equity: Common stock (271.3 and 292.4 shares outstanding) 3 3 0 3 0 Additional paid-in capital 517 571 -9.45 621 -8.06 Accumulated equity 5268 3928 34.32 7989 -50.91 Treasury stock (1545) (1161) 33.12 (1241) -6.46 Accumulated other comprehensive loss (622) (788) 21.12 (995) -20.86 Total Shareholders' Equity 3621 2553 41.77 6377 -59.94 Total Liabilities and Shareholders’ Equity 17590 17706 -0.65 21172 -16.27 Macy’s Inc. Consolidated Balance Sheet Vertical Analysis For the years ending January 28th, 2020, 2021, and 2022 ASSETS 2022 % 2021 % 2020 % Current Assets: Cash and cash equivalents 1712 9.72 1679 9.49 685 3.23 Receivables 297 1.69 276 1.56 409 1.93 Merchandise inventories 4383 24.86 3774 21.32 5188 24.49 Prepaid expenses and other current assets 366 2.08 455 2.57 528 2.49 Total Current Assets 6758 38.38 6184 34.91 6810 32.15 Property and Equipment – net 5665 32.14 5940 33.53 6633 31.29 Right of Use Assets 2808 15.95 2878 16.25 2668 12.59 Goodwill 828 4.7 828 4.67 3908 18.42 Other Intangible Assets – net 435 2.47 437 2.46 439 2.07 Other Assets 1096 6.24 1439 8.12 714 3.37 Total Assets 17590 100 17706 100 21172 100 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Short-term debt - 0.00 452 2.55 539 2.54 Merchandise accounts payable 2222 12.63 1978 11.18 1682 7.95 Accounts payable and accrued liabilities 3086 17.51 2927 16.53 3448 16.27 Income taxes 108 0.61 - 0.00 81 0.38 Total Current Liabilities 5416 30.78 5357 30.25 5750 26.14 Long-Term Debt 3295 18.73 4407 24.88 3621 17.09 Long-Term Lease Liabilities 3098 17.58 3185 18.00 2918 13.76 Deferred Income Taxes 983 5.59 908 5.13 1169 5.52 Other Liabilities 1177 6.69 1296 7.30 1337 6.31 Shareholders’ Equity: Common stock (271.3 and 292.4 shares outstanding) 3 0.02 3 0.02 3 0.01 Additional paid-in capital 517 2.94 571 3.22 621 2.92 Accumulated equity 5268 29.92 3928 22.15 7989 37.79 Treasury stock (1545) -8.79 (1161) -6.55 (1241) -5.86 Accumulated other comprehensive loss (622) -3.53 (788) -4.44 (995) -4.69 Total Shareholders' Equity 3621 20.59 2553 14.43 6377 30.41 Total Liabilities and Shareholders’ Equity 17590 100 17706 100 21172 100 Macy’s Inc. Consolidated Statements of Cash Flows Horizontal Analysis For the years ending January 28th, 2020, 2021, and 2022 2022 2021 % change between 2022 and 2021 2020 %Change between 2021 and 2020 Cash flows from operating activities: Net income (loss) 1,177 1,430 (17.2) (3944) N/A) NN/N/A Adjustments to reconcile net income (loss) to net cash provided by operating activities: Impairment, restructuring, and other costs 41 30 36.7 3,579 (88.4) Settlement charges 39 96 (59.4) 84 14.3 Depreciation and amortization 857 874 (1.9) 959 (8.8) Benefit plans 17 34 (50) 47 (30.9) Stock-based compensation expense 54 55 (1.8) 31 77.4 Gains on sale of real estate (89) (91) (1.1) (60) (51.6) Deferred income taxes (38) 19 N/A (327) (105.2) Amortization of financin...