Macy’s, Inc. (NYSE:M) Q4 2023 Earnings Call Transcript February 27, 2024
Macy’s, Inc. beats earnings expectations. Reported EPS is $2.45, expectations were $2.02. Macy’s, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings, and welcome to the Macy’s, Inc. Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this call is being recorded. I would now like to turn the call over to Pamela Quintiliano, Vice President of Investor Relations. Ms. Quintiliano, you may now begin.
Pamela Quintiliano: Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our CEO; and Adrian Mitchell, our COO and CFO. Along with our fourth quarter 2023 press release, a presentation has been posted on the Investors section of our website, macysinc.com, and is being displayed live during today’s webcast. Unless otherwise noted, the comparisons we provide will be versus 2022. Comparisons to 2019 are provided where appropriate to best benchmark performance. All references to our prior expectations, outlook or guidance refer to information provided on the November 16 earnings call, unless otherwise noted. All forward-looking statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the Securities and Exchange Commission. In discussing the results of our operations, we will be providing certain non-GAAP financial measures. You can find additional information regarding these non-GAAP financial measures as well as others viewed on the Investors section of our website. Today’s call is being webcast on our website. A replay will be available approximately two hours after the conclusion of this call. With that, I’ll turn it over to Tony.
Tony Spring: Thanks, Pam. It’s great to be here on my first call as CEO. We have a lot to cover this morning, including our fourth quarter results, our outlook for fiscal 2024 and our strategy, A Bold New Chapter, which is designed to accelerate financial improvement and deliver sustainable, profitable growth. Taking a step back, this holiday season, we offered an improved omnichannel experience with effective merchandising and a clear demonstration of value. Fourth quarter and full year adjusted EPS were above our most recent guidance, reflecting better-than-expected gross margin, SG&A and other revenues and higher asset sale gains. We are a company defined by the quality of our people and we could not have accomplished these results without the enthusiasm and dedication of our teams across stores, distribution centers and our corporate offices.
Throughout the year, our consumer proved to be more resilient than expected. While there was pressure from ongoing reallocation of spend to non-discretionary items, our focus on new and relevant private and national brands enabled us to effectively compete. The likelihood of a recession is now lower than it was a year ago. Inflation has slowed, but so has labor and wage growth. As such, we expect our consumer to remain under pressure. It is against this backdrop that we share our vision from modern Macy’s, Inc. that takes a holistic view of our portfolio of brands. It is the thoughtful culmination of comprehensive research and reflection that began in earnest early last year. A Bold New Chapter is designed to return Macy’s, Inc.’s enterprise growth, unlock shareholder value and better serve our customers.
It builds on our five growth vectors as newly identified and stress tested areas of opportunity and is supported by our financial disciplines. Over the next three years, we intend to one, strengthen the Macy’s nameplate and return it to top line growth; two, accelerate luxury growth; and three, simplify and modernize end-to-end operations. We view fiscal 2024 as a transition and investment year as we begin to implement real change for our customers. Beginning in 2025, we expect Macy’s, Inc. to deliver low single-digit comp growth, mid-single-digit EBITDA dollar growth and a return to pre-pandemic levels of free cash flow. As we look across our omnichannel enterprise, we are taking a balanced portfolio approach to establish the right mix of on and off mall Macy’s, Bloomingdale’s and Bluemercury stores in the best locations and markets.
By the end of 2026, we plan to close approximately 150 underproductive Macy’s locations and reprioritize investments in our roughly 350 remaining locations, inclusive of full line, furniture and current off-mall doors, grow our Bloomingdale’s and Bluemercury store basis by a combined roughly 20% and monetize $600 million to $750 million of assets, primarily related to stores and distribution center closures. In setting our Bold New Chapter strategy, we’ve been our own toughest critics. We have challenged the status quo, identified what we’ve gotten right and where we could have done better. We also conducted external focus groups and surveys with current lapse and potential customers. We’re driving a higher level of accountability amongst our teams to ensure we keep up with customers evolving taste, needs and preferences.
As I now turn to discussing each element of A Bold New Chapter in more detail, I’d like to stress that this work is already underway. We are moving swiftly and methodically. While some aspects should take time to bear fruit, others are intended to have a more immediate impact. The first component is strengthening the Macy’s nameplate. Coming from Bloomingdale’s, I have approached Macy’s with an outsider’s point of view. There are a few brands that have the deep heritage and a strong emotional connection with its customer. But as we conducted surveys and focus groups with some of our 41 million active multigenerational customers, it became increasingly clear that the needs are not being fully met. They want an omnichannel shopping environment that’s neat, easy and convenient and edited and updated selection of relevant trending products, clarity on value and pricing and greater availability of colleagues to find product and complete a purchase.
This list is similar to what I first encountered at Bloomingdale’s. While there are certainly differences, the core formula for success is the same. It’s going back to basics and balancing the art and science of retail. By putting the customer first, which has always been my priority, we improved Bloomingdale’s sales profit and Net Promoter Scores. We will do the same for Macy’s. First, by focusing our resources and optimizing our store footprint to meet the customer where they are; second, revitalizing the assortment to improve the relevance and value; and third, modernizing the shopping environment to ensure a convenient, easy and frictionless customer experience across channels. Strengthening the Macy’s nameplate should result in healthier sell-throughs and more productive stores, benefiting Macy’s sales and margin profile and returning the nameplate to growth.
The first step is to close and monetize underproductive locations so that we can prioritize the investments in stores that will lead us to a healthier future. Over the past 10 months, we have refined our approach to closures and have developed an even more sophisticated framework to evaluate our assets. Our thresholds to keep our open have become more stringent. In the past, we may have continued operating an underproductive store that was four-wall cash flow positive. The bar has now been raised. We have conducted extensive internal and external analysis of our Macy’s fleet center by center and market by market. We have compared value to operate versus value to close and look at demand in each market to determine the right construct of stores and digital with a focus on being in the strongest centers.
This is not a one-time exercise. Given rapidly shifting market dynamics and consumer preferences, it will be an always-on practice. Through our work, we have identified approximately 150 Macy’s stores for closure over the next three years. We call these our non-go-forward locations. In fiscal 2023, they represented about 25% of Macy’s, Inc.’s gross square footage but less than 10% of its sales. The roughly 350 remaining Macy’s inclusive of full line, furniture and our current small formats are referred to as go-forward locations. In fiscal 2023, comp sales of Macy’s go-forward locations outperformed non-go-forward locations by approximately 500 basis points and the four-wall adjusted EBITDA rate outperformed by about 950 basis points. Simply put, the value to monetize non-go-forward locations is higher than the value to operate.
We expect to close about 50 non-go-forward stores by the end of this fiscal year and prioritize our focus where we have the most opportunity to improve square footage productivity and better serve our customer. Over the next three years, we estimate non-go-forward store monetization proceeds of roughly $500 million to $650 million and asset sale gains of about $250 million to $350 million. We will make sure the economics of each closure and monetization transaction makes sense. Working together with our real estate advisers, our team has generated over $2.4 billion of real estate monetization proceeds from 2015 to 2023, and we will leverage that expertise and those relationships as we continue to refine and assess our base. Importantly, our healthy balance sheet allows us to be opportunistic on timing of the closures to deliver the highest value for our shareholders.
We have recently stopped all but required maintenance investments in our non-go-forward locations. We plan to reallocate some of the capital to our go-forward fleet and we’ll work closely with our vendor partners on joint business plans. We will also work with non-go-forward location colleagues to support and place them into open roles and nearby locations whenever possible. In addition, we’ll educate our customers on the proximity of our go-forward stores and access to our digital platforms. Exiting stores allows us to prioritize our highest return on more opportunities and open more small format off-mall Macy’s. At the end of the year, we operated 12 small formats. As previously disclosed, we plan to open up 30 more in the next two years, including 12 this year, informed by the real estate analysis discussed earlier.
With these additional stores, we will have a better understanding of our competitive positioning and long-term potential. Having the right footprint in location is important, but we must also have the right product at a value that we know appeals to our customer. That is why we are revitalizing the Macy’s assortment. Recently, we shifted our merchant responsibilities to a full category approach rather than separate teams for owned and licensed. Consolidating roles creates more accountability. There is increased focus on the nuances that make each category thrive. With increased visibility and awareness across the entire categories, merchants should be able to provide more consistency in product and experience and reduce duplication. Bloomingdale’s successfully adopted this model several years ago.
It resulted in stronger relationships with our partners, diversified product and choice across price points and helped us grow market share. We also continue to rebuild our private brand portfolio, which capitalizes on white space opportunities that complement market brands and give customers more reasons to shop with us. Private brands have higher merchandise margins and profit contributions relative to market brands. In fiscal 2023, private brands represented about 15% of Macy’s sales versus 16% in 2022, reflecting the exit of several heritage women’s brands, including Alfani and Karen Scott. We expect to complete all private brand exits this year. Longer term, we expect private brand volumes to grow as we reimagine existing brands and introduce others, including our latest State of Day.
With a rationalized and focused existing store fleet and better product, we also want to improve the omnichannel experience. Reflecting learnings from our research, we know we can better serve our customer. We plan to increase resources and investments to improve the experience in our roughly 350 remaining go-forward Macy’s locations. We will test and learn and not bite off more than we can chew. We’ll be thoughtful, methodical and unemotional in our approach. In fiscal 2023, we had a small number of incubator stores, which tested new ideas that were based on customer feedback and prioritized conversion. Comps outperformed the broader Macy’s fleet by over 350 basis points. That’s given us confidence to expand the pilot to 50 doors, which we refer to as our first 50 program.
The first 50 program is purposely different from past pilots. It centers on the customer and is representative of our go-forward geographic footprint, balanced across volume tiers, in stores with strong vendor engagement, supported by more associates on the floor to serve customers and focused on merchandising and visual presentation. We are conducting additional tests in the first 50 doors this year and plan to apply pertinent learnings to a broader set of go-forward locations beginning in fiscal 2025. Now let’s turn to digital, which is also an important part of the Macy’s current and future customer experience. We view digital as the gateway for customers to research, discover, connect and transact with Macy’s. It’s imperative that we show up with inspiring content at the right place, time and value.
Our digital team is relentlessly seeking to better understand our customers’ pain points across mobile, app and desktop platforms. We have reevaluated our foundation to improve search and navigation tools. Customers will be offered personalized communications and recommendations that have a definitive Macy’s point of view, culminating in an efficient and speedy checkout. Rewriting this digital journey should generate greater loyalty and increased conversion. We also expect growth of Marketplace and Macy’s Media Network, both of which were designed to improve profitability and increase customer engagement. To conclude on the Macy’s nameplate, our focused omnichannel portfolio will empower us to provide a better customer experience. We intend to fuel go-forward locations and our digital channels with curated and compelling assortments, have a better in-stock position and appropriate investments to create a more welcoming environment and enhanced service.
Our new Chief Marketing Officer, who joined us in December, is working closely across teams to align omni touch points to customer expectations and create a modern brand platform for all of our communications. More to come as the year progresses. As I shared earlier, we view fiscal 2024 as a transition and investment year and we expect to return Macy’s, Inc. to consistent comp sales and EBITDA dollar growth beginning in 2025. Longer term, we aspire to have a compelling physical and digital portfolio in the strongest markets. We are one Macy’s, Inc. and our future relies on our ability to offer customers the optionality to shop how, where, when and for what they desire. As Macy’s rebuilds, our luxury nameplates, Bloomingdale’s and Bluemercury are poised for acceleration, which brings us to the second component of our Bold New Chapter, luxury growth.
During my 10-year leading Bloomingdale’s and Bluemercury, we strengthened relationships with our customers and vendor partners. Both nameplates have been outperformers within our portfolio and are viewed as leaders in identifying up-and-coming trends and brands. They provide a mix of accessible and aspirational product, top-notch customer service and an elevated omnichannel shopping experience that’s warm and inviting, but doesn’t take itself too seriously. Over the next three years, we plan to take advantage of our leadership position to more aggressively grow our luxury nameplates. While cognizant of luxury brand headwinds with the aspirational customer stepping back, we believe Bloomingdale’s and Bluemercury are uniquely positioned within the broader retail landscape.
Today, Bloomingdale’s current foothold is predominantly coastal. The adage that fashion trends begin in L.A., New York or Miami, and then migrate no longer holds true. With the rapid growth of social media and recent population-ships, the fashion playing field has leveled and psychographics have moved. Of the top 50 designated market areas in the U.S., the Bloomingdale’s nameplate is physically only in 14. This morning, we’re announcing the accelerated rollout of our small format Bloomingdale’s, which we call Bloomies and our Outlets. At the end of fiscal 2023, we operated just 33 Bloomingdale’s, three Bloomies and 21 Outlets, which we refer to collectively as the Bloomingdale’s nameplate. Over the next three years, we plan to open a combined 15 Bloomies and Outlets across new and existing markets.
Bloomingdale’s also has a strong digital presence, offering compelling content updated regularly in a highly curated marketplace. Currently, about 80% of Bloomingdale’s digital sales are in markets where we have physical stores. We believe that entering new markets should only benefit the digital business further. We have taken the time to prove out the Bloomies and Bloomingdale’s outlet concept before committing capital to this accelerated rollout. We are doing the same at Bluemercury where we have the opportunity to be the fastest-growing luxury beauty retailer and own a greater piece of the approximately $90 billion North American beauty market. Customers love Bluemercury’s elevated skincare, beauty, spa offerings and high-touch customer service.
We operated 159 locations at the end of the fiscal year. Our latest remodels located in Bronxville, New York and New Caney, Connecticut have been well received and will serve as the foundation for the New Blue which encompasses our total omni evolution, inclusive of updated branding, they’ll have an expanded assortment, elevated aesthetics, centralized customer service hubs, integrated spa facilities and technology to support relationship selling. Over the next three years, we anticipate at least 30 Bluemercury store openings and re-modeling roughly 30 others. Learnings from these doors will guide long-term expansion plans. Similar to other nameplates, digital remains a meaningful opportunity for Bluemercury. To close out the discussion on luxury, we have a high degree of confidence in the Bloomingdale’s and Bluemercury and nameplates which are healthy, accretive and have strong investment profiles.
Now is the time to capitalize on this momentum, and we expect these investments that we are making will fuel sales growth and margin expansion. Turning to the third and final component of our Bold New Chapter Strategy simplifying and modernizing end-to-end operations, we are committed to delivering a more efficient operating model that better serves our customers. Over the next three years, we have plans to rationalize and monetize our supply chain asset portfolio, streamline fulfillment, improved inventory planning and allocation and deliver a more scalable technology platform. A modern operation is our objective throughout the company, aligning to the anticipated future omni demand provides synergistic cost savings and allows us to improve our ways of working.
To support that, in January, we reduced our corporate workforce by 13%. We took out layers of management, consolidated positions and offshore selected roles. At the same time, we remain focused on hiring the best talent to support our view of the future. Adrian is leading the end-to-end operations work. He will now provide more detail before discussing our fourth quarter results and forward outlook. Adrian?
Adrian Mitchell: Thank you, Tony and good morning, everyone. Over the past several years, we’ve taken proactive steps to fortify our operations, including strengthening our balance sheet managing expenses and tightening inventory controls. This provides the foundation for our Bold New Chapter, which is designed to return Macy’s, Inc. to sustainable, profitable growth provide meaningful free cash flow generation and enhance shareholder value. Our new strategy gives us the opportunity to simplify and modernize our supply chain, planning and allocation and technology operations, which should drive improved inventory productivity and ultimately, better sales. Efforts should result in about $100 million of cost savings this fiscal year, an increase to an annual run rate savings of approximately $235 million by 2026.
Savings will fund the investments necessary to support our strategy, offset inflationary cost pressures and constrained fulfillment expense and SG&A dollar growth and are factored in our near and longer-term outlook. For supply chain, we should benefit from consolidating capacity as we close centers with higher processing costs and monetize select assets. In addition, we plan to further reduce fulfillment costs by increasing automation across several facilities. Our efforts should result in faster and more reliable deliveries, greater efficiencies and a right-sized distribution center network. The inventory planning and allocation changes underway should help improve how we flow products from vendors to customers. They should provide quick replenishment in stores and fulfillment centers, reduce split shipments and lead to higher in stocks, particularly for best-selling items.
We also plan to streamline and automate business processes. We will leverage this across the Macy’s Inc. portfolio. These efforts are already underway and encompass reducing dependency on expensive software and hardware by consolidating our vendor base, simplifying our application portfolio by moving over 90% from on-premise to the cloud and eliminating mainframe application which reduces expensive consumption. Embedded in our end-to-end operations is AI, which helps speed up decision-making through access to real-time data and tools. As an organization, we continue to build our data, science and AI capabilities in areas such as forecasting, inventory allocation, workload optimization and pricing. We are also experimenting with generated AI that should help improve customer and colleague experiences.
With that, let’s turn to our fourth quarter results. Let’s start with omnichannel sales. Net sales of $8.12 billion was down 1.7% to last year with comparable owned plus licensed sales down 4.2%. The 53rd week contributed $252 million to net sales. For the quarter, owned AUR rose 5.5%, driven primarily by changes in product and category mix. Other revenue, which is comprised of net credit card revenues and Macy’s Media Network was $255 million, down 20% from the prior year and better than expectations. Parsing that out, Credit card revenues decreased 26% from prior year to $195 million and Macy’s Media Network rose 5% to $60 million. By nameplate, Macy’s net sales declined 2.5% and comparable sales declined 4.7% on an owned plus licensed basis.
Go-forward locations owned plus licensed comparable sales outperformed non-go-forward by about 500 basis points. Both Backstage store within stores and off-mall small formats continue to outperform full-line stores. Within Private Brands, I.N.C outperformed the Macy’s Women’s Apparel segment on a year-over-year basis and On 34th is now one of our top 10 ready-to-wear brands and marketplace GMV on a 13-week basis grew by 145% from last quarter. At Bloomingdale’s, net sales were up 3.5% and comparable sales were down 1.6% on an owned plus licensed basis. Marketplace GMV on a 13-week basis grew by roughly 770% on a sequential basis. Bluemercury posted its 12th consecutive quarter of comparable sales growth with net sales up 7.8% and comparable sales up 2.3%.
Turning to gross margin, our fourth quarter gross margin rate was well ahead of expectations, rising 340 basis points to 37.5%. Merchandise margin was up 260 basis points to last year. We were disciplined in our approach to markdowns and clearance, delivery expense as a percent of sales improved 80 basis points as better inventory allocation led to reductions in packages per order and delivery distance. Now let’s discuss inventory productivity. Year-end inventories were up 2% to last year and down 16% to 2019, reflecting our desire to own more seasonally appropriate transitional product. We had more open to buy than the prior quarter and comparable period last year with improved composition, freshness and volume. Next, expense discipline; SG&A expense was $2.4 billion, down 2% from the prior year, driven by on-going expense management, partially offset by investments in our business.
As a percent of total revenue, SG&A was 28.7%, 10 basis points higher than last year, driven by the decline in total revenue. Adjusted diluted EPS was $2.45 versus $1.88 in the prior year. In the fourth quarter, we recognized approximately $1 billion of impairment, restructuring and other costs, which were excluded from adjusted diluted EPS. Included in the $1 billion was roughly a $950 million noncash asset impairment charge, primarily related to the approximately 150 locations planned for closure over the next the years and the remaining associated with corporate assets. Turning to cash and capital allocation, we ended the year with over $1 billion of cash in our balance sheet. We generated $1.3 billion of operating cash flow and had $993 million of capital expenditures.
Free cash flow, inclusive of proceeds from real estate sales with an inflow of $398 million and we paid $181 million in dividends. Now turning to our fiscal 2024 outlook, as a reminder, we view 2024 as a transition and investment year for Macy’s Inc. The improvements in first 50 small format, digital and luxury are not expected to offset the anticipated deceleration in non-go-forward location performance as we limit investments in these stores. Before we get into the details of our outlook, there are several important elements to consider, including that we are renaming owned plus license sales comp or O + L, to owned plus license plus marketplace or O + L + M. Marketplace has been included in O + L results since its introduction, so there is no historical restatement.
Going forward, we will provide relative performance of Macy’s nameplate sales performance for go forward versus non-go-forward stores. In addition, Macy’s nameplate has fully converted to cost accounting. We do not expect any material financial impact as a result of this transition. And lastly, the proposed credit card late fee ruling is not embedded in our outlook. We will incorporate if and when the ruling is finalized and the timing of implementation and changes are known. With that, let’s turn to our annual guidance for fiscal 2024. Please note the heightened clearance markdowns taken in the second quarter of last year on seasonal products are not expected to be repeated and all asset sale gains are anticipated to occur in the fourth quarter.
With that, we expect net sales of $22.2 billion to $22.9 billion. We are modelling a 1% to 4% decline in Macy’s Inc. net sales with the disparity between the performance of go-forward and non-go-forward locations widening. We expect Macy’s Inc. O+L+M comp sales, inclusive of non-go-forward locations and digital to be down approximately 1.5% to up approximately 1.5%. Macy’s nameplate, excluding non-go-forward locations, comparable O+L+M sales to be down 1% to up 2.5% and luxury nameplates comparable O+L+M sales to be about flat to up 2.5%. We expect total revenues of $22.9 billion to $23.6 billion, with other revenue at about 2.9% of net sales. We expect credit card revenues, excluding any impact for the proposed late fee ruling to be approximately 74% of other revenue or about $475 million to $490 million compared to 80% or $619 million last year.
We also expect gross margin rate as a percent of net sales to be 39.2% to 39.5%, benefiting from on-going inventory controls, higher full price sell-throughs, lower promotions and private brand expansion. SG&A to be 36.6% to 36.8% of total revenue, with our heightened focus on experience, we are allocating spend to customer-facing investments designed to fuel future sales growth across the portfolio. And we expect full year adjusted EBITDA as a percent of total revenues of 8.5% to 8.9%. We are also planning a reduction in overall capital spend to approximately $875 million. After interest and taxes, we expect adjusted diluted EPS of $2.45 to $2.85, which does not assume any share repurchases and we anticipate $130 million to $150 million of asset sale proceeds and $90 million to $115 million of asset sale gains, primarily reflecting the at least 50 plant closures this year.
We will continue to deploy capital prudently to ensure financial flexibility and invest in long-term profitable growth. For the first quarter of 2024, we expect net sales of $4.72 billion to $4.87 billion. As a reminder, we are anniversarying a change in our Macy’s return policy, which benefited the first quarter of 2023 by approximately $80 million relative to the current quarter. Total revenues of $4.85 billion to $5 billion with other revenue at about 3% of net sales. We expect credit card revenues, excluding any impact for the proposed late fee ruling to be approximately 77% of other revenue or about $110 million compared to 85% or $162 million last year. We expect gross margin rate to be down no more than 40 basis points to last year, reflecting a normalized clearance and promotional cycle compared to the first quarter of last year, when we did not have enough spring transitional product, adjusted EPS to be between $0.10 and $0.16 which assumes no asset sale gains.
Please note, last year’s change in return policy benefited EPS by $0.07 in the first quarter relative to the current quarter. And finally, end of quarter inventories to be relatively flat to last year. Beginning in fiscal 2025 on our Bold New Chapter strategy, we expect Macy’s, Inc. inclusive of the remaining non-go-forward locations that have not yet closed to achieve annual O+L+M comp sales growth in the low single-digit range, annual SG&A dollar growth below the historic rate of inflation of 2% to 3%. Annual adjusted EBITDA dollar growth in the mid-single-digit range, capital spend to be below 2024 levels as we remain disciplined with our uses of capital and free cash flow to return to pre-pandemic levels, allowing us to provide meaningful value for our shareholders.
In summary, we ended fiscal 2023 with momentum and in a position of financial strength with over $1 billion of cash on our balance sheet. We entered this year committed to making the tough decisions necessary to return to sustainable and profitable sales growth. While 2024 is a transition and investment year, our plan for future value creation is clear. We have the wherewithal to invest in growth, and the team to pursue the transformative actions required to strengthen Macy’s, Inc. We are confident this will result in top and bottom line expansion, meaningful cash flow generation and shareholder value creation. We will keep you updated on our progress against the financial and operational goals we set out today. With that, I would like to hand it back over to Tony.
Tony Spring: Thanks, Adrian. Let me briefly touch on the announcement that Arc House management has nominated nine individuals to stand for election to the Macy’s Inc. Board of Directors at our Annual 2024 Meeting. As we have shared, our Board is evaluating these candidates and will present its recommendation in our proxy statement. These nominations followed the December 1st, 2023 unsolicited nonbinding proposal from Arc house and Brigade and for additional details, we refer you to the two press releases that we have already issued on this matter. As the purpose of today’s call is to discuss our financial results and outlook, as well as our bold new chapter strategy, we ask that you keep your questions and comments focused here.
Before turning to Q&A, I’d like to end with this. Evolution is in our DNA. In 1858, R.H. Macy opened a dry goods store on 14th Street and 6th Avenue. In 1902, he created a new shopping district with Herald Square, and we’ve been a cultural touch point ever since. We are leaders not followers. While we have missed the mark in some years, we’re self-aware and have developed a bold strategy to deliver a better experience for our customers. As an organization, we are fully aligned on returning Macy’s, Inc. to top and bottom line growth accelerating free cash flow generation and unlocking shareholder value. We have the team in place to execute. Our senior leaders are a powerful group recently hired external and internal talent with years of institutional knowledge.
This team, with their diverse backgrounds and viewpoints are emblematic of our vision for the new modern Macy’s, Inc. With Adrian and I, they are leading our people and evolving our culture to bring our vision to reality. As we embark on our pivotal new chapter, we are confident that we are building a stronger Macy’s, Inc. that is well positioned to thrive and create meaningful value for all of our stakeholders. With that, operator, we are ready for questions.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. Our first question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question.
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