Macy’s expects leverage to fall to 2.5x after planned debt repayment

By Devika Patel

Knoxville, Tenn., Aug. 19 – Macy’s Inc. hopes to return to investment-grade metrics and is working on deleveraging the balance sheet with the intention of cutting leverage to 2.5x by the end of this year.

“With the excess cash we’ve generated, we have taken additional actions to de-lever the balance sheet and return capital to shareholders,” chairman and chief executive officer Jeff Gennette said on the company’s second quarter ended July 31 earnings conference call on Wednesday.

Management expects leverage to fall to 2.5x after a bond redemption earlier this week and a planned repayment of $294 million of unsecured debt due in January 2022.

“We’re now well-positioned to focus not only on deleveraging the balance sheet, but also returning cash to shareholders,” chief financial officer Adrian V. Mitchell said on the call.

“First, we redeemed our $1.3 billion secured bonds earlier this week in cash.

“This action along with our planned repayment of $294 million of unsecured debt due in January 2022 is expected to result in a year-end leverage ratio of no more than 2.5x.

“All in, it saved us more than $6 million on a cash basis versus calling the debt in June of next year.

“This is a significant step towards our goal of returning to investment grade metrics this fiscal year, which would be far earlier than we originally expected,” Mitchell said.

Macy’s is a department store chain based in Cincinnati.

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