Macy's 2013 Annual Report Download - page 20

Table of Contents
The Company's operations are impacted by competitive pressures from department stores, specialty stores, mass merchandisers, online retailers and all
other retail channels. The Company's operations are also impacted by general consumer spending levels, including the impact of general economic conditions,
consumer disposable income levels, consumer confidence levels, the availability, cost and level of consumer debt, the costs of basic necessities and other
goods and the effects of weather or natural disasters and other factors over which the Company has little or no control.
In recent years, consumer spending levels have been affected to varying degrees by a number of factors, including modest economic growth, a slowly
improving housing market, a rising stock market, uncertainty regarding governmental spending and tax policies, high unemployment levels and tightened
consumer credit. These factors have affected to varying degrees the amount of funds that consumers are willing and able to spend for discretionary purchases,
including purchases of some of the merchandise offered by the Company.
The effects of economic conditions have been, and may continue to be, experienced differently, or at different times, in the various geographic regions in
which the Company operates, in relation to the different types of merchandise that the Company offers for sale, or in relation to the Company's Macy's-
branded and Bloomingdale's-branded operations. All economic conditions, however, ultimately affect the Company's overall operations.
2013 Highlights
The Company had its fifth consecutive year of improved financial performance in 2013 despite the continued challenging macroeconomic environment.
These improvements have been driven by successful implementation of the Company's key strategies.
Selected highlights of 2013 include:
•Comparable sales increased 1.9%, which represents the fourth consecutive year of comparable sales growth. Comparable sales growth including the
impact of growth in comparable sales of departments licensed to third parties increased 2.8%. See pages 16 to 19 for a reconciliation of this non-
GAAP financial measure to the most comparable GAAP financial measure and other important information.
•Operating income for fiscal 2013 was $2.766 billion or 9.9% of sales, excluding impairments, store closing and other costs, an increase of 3.8%
and 30 basis points as a percent of sales over 2012 on a comparable basis. See pages 16 to 19 for a reconciliation of this non-GAAP financial
measure to the most comparable GAAP financial measure and other important information.
•Diluted earnings per share, excluding certain items, grew 15.6% to $4.00 in 2013. See pages 16 to 19 for a reconciliation of this non-GAAP
financial measure to the most comparable GAAP financial measure and other important information.
•Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, impairments, store closing and other costs) as a percent to net
sales reached 13.6% in 2013, reflecting steady improvement toward the Company's goal of a 14% Adjusted EBITDA rate. See pages 16 to 19 for a
reconciliation of this non-GAAP financial measure to the most comparable GAAP financial measure and other important information.
•Return on invested capital ("ROIC"), a key measure of operating productivity, reached 21.5%, continuing an improvement trend over the past five
years. See pages 16 to 19 for a reconciliation of this non-GAAP financial measure to the most comparable GAAP financial measure and other
important information.
•The Company repurchased 33.6 million shares of its common stock for $1,570 million in 2013, and increased its annualized dividend rate to
$1.00 per share.
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