Macy’s, Inc. (NYSE:M) Q4 2022 Earnings Call Transcript

Adrian Mitchell: As we think about the destination for us, it’s really €“ as Jeff described, a digitally connected omnichannel ecosystem. The stores matter, the digital matter, but how do you really integrate that in a very seamless way that’s what the customer is looking for. When we think about our margin profile, we are focused on the low-double digit EBITDA as a percent of total revenue going forward. And that’s something that we have a lot of conviction around. When you think about the growth of the digital channel, it’s important to keep in mind that even though there may be an expense dimension, for example, parcel expense on the gross margin line, you do get a lot of SG&A leverage. So, as we think about the composition of our digital penetration versus store penetration, we are obviously very focused on the impact of the different line items, but ultimately, what is the bottom line margin profile that, that delivers for us.

The other benefit as we think about digital is the expansion of capabilities that we have added. So, when you think about margin health and you think about the flexibility of selling products on the own platform versus the vendor direct platform versus the marketplace platform, that’s an additional opportunity for us to optimize our profit profile. So, we tend to look at a metric called dead net profit. So, as you can imagine, as we think about our marketplace profitability, there may be owned items that are more profitable on marketplace and so that’s an opportunity for additional margin expansion. So, those are the kinds of operational things that we are going after. But from a digital standpoint, we have many, many vectors to protect our margin expansion goals with various levels of digital penetration.

Operator: Thank you. At this time, I would like to turn the floor back over to Mr. Gennette for closing comments.

Jeff Gennette: So, thank you everybody for your interest in Macy’s, Inc. brands, and we look forward to updating you on our five growth vectors on our first quarter earnings call. Everybody, have a great day.

Operator: Ladies and gentlemen, thank you for your participation. This concludes today’s event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.