Macy’s Inc. reported first quarter 2017 earnings of 23 cents per diluted share, or 24 cents per diluted share excluding premiums and fees associated with debt repurchases. This compares with 37 cents per diluted share, or 40 cents per diluted share excluding non-cash settlement charges related to the company’s retirement plans, in the first quarter of 2016.

“Our first quarter sales and earnings results were consistent with our expectations, and we remain on track to meet our 2017 guidance. We are encouraged by the performance of the pilot programs we tested last year in categories like women’s shoes, fine jewelry, and furniture and mattresses. We look forward to expanding these successful initiatives nationally this year and anticipate they will have a measurable impact on our performance starting in the second quarter, building through the fall. Additionally, our digital platforms showed continued strong growth in the first quarter,” said Jeff Gennette, president and chief executive officer of Macy’s, Inc. “In 2017, we are focused on taking actions to stabilize our brick and mortar business, including the testing and iteration of additional pilot programs in order to bring them to scale in future years. At the same time, we will invest to aggressively grow our digital and mobile business, while continuing the integration of our online and offline experience to allow our customers to shop the way they live.”

First Quarter Sales
Sales in the first quarter of 2017 totaled $5.338 billion, a decrease of 7.5 percent, compared with sales of $5.771 billion in the same period last year. The year-over-year decline in total sales reflects, in part, the store closings announced in 2016. Comparable sales on an owned basis were down 5.2 percent in the first quarter and down 4.6 percent on an owned plus licensed basis.

Operating Income
Macy’s, Inc.’s operating income totaled $220 million or 4.1 percent of sales for the first quarter of 2017, compared to $276 million or 4.8 percent of sales for the same period in 2016. The $276 million in the first quarter of 2016 included non-cash settlement charges of $13 million ($9 million after tax, or 3 cents per diluted share) related to the company’s retirement plans. There were no such settlement charges in the first quarter of 2017.

Cash Flow
Net cash provided by operating activities was $234 million in the first quarter of 2017, compared with $8 million in the first quarter last year. Net cash used by investing activities in the first quarter of 2017 was $60 million, compared with $211 million a year ago. Net cash used by financing activities in the first quarter of 2017 was $270 million, compared with $172 million last year.

The company repurchased approximately $146 million face value of senior notes and debentures in the first quarter of 2017. The debt repurchases were made in the open market for a total cost of approximately $149 million, including expenses related to the transactions. As a result of the debt repurchases, Macy’s, Inc. booked $3 million in premium and fees ($2 million after tax, or 1 cent per diluted share) in the first quarter of 2017.

Dividend
Macy’s, Inc.’s board of directors has declared a regular quarterly dividend of 37.75 cents per share on Macy’s common stock, payable July 3, 2017, to shareholders of record at the close of business on June 15, 2017.

Real Estate Update
In the first quarter of 2017, the company received cash proceeds associated with real estate transactions of $96 million and booked $68 million of real estate gains. Of these gains, $47 million were related to the sale of the company’s Downtown Minneapolis property.

Macy’s, Inc. is also under contract to sell two additional floors of its Downtown Seattle store after having sold floors five through eight in 2015. This transaction is expected to close in fall 2017.

Store Openings And Closings
In the first quarter, the company opened new Macy’s stores in Murray, UT, and Los Angeles, as well as 10 new freestanding Bluemercury beauty specialty stores and 11 new Macy’s Backstage stores within existing Macy’s stores. Additionally, one Bloomingdale’s store opened in Kuwait under a license agreement with Al Tayer Group.

Subsequent to the end of the first quarter, the company announced the sale and intended closure of the Macy’s store at Temple Mall in Temple, TX. Final clearance sales for the Temple Mall store, as well as the previously announced store closing at the Mall at Tuttle Crossing in Dublin, OH, will begin on Monday, May 15, 2017.

Looking Ahead
Macy’s, Inc. affirms its previously provided guidance for full-year 2017. The company expects comparable sales on an owned basis to decline between 2.2 percent and 3.3 percent, with comparable sales on an owned plus licensed basis to decline between 2.0 percent and 3.0 percent. Total sales are expected to be down between 3.2 percent and 4.3 percent in fiscal 2017. Total sales for fiscal 2017 reflect a 53rd week, whereas comparable sales are on a 52-week basis. Adjusted diluted earnings per share of between $3.37 and $3.62 are expected in 2017, excluding the impact of the anticipated settlement charges related to the company’s defined benefit plans and premiums and fees associated with debt repurchases.

Excluding the impact of the anticipated fourth quarter gain on the sale of the Union Square Men’s building in San Francisco, the anticipated settlement charges related to the company’s defined benefit plans and premiums and fees associated with debt repurchases, adjusted diluted earnings per share of $2.90 to $3.15 are expected in 2017.