UNITED STATES
          SECURITIES AND EXCHANGE COMMISSION
          WASHINGTON, D.C. 20549
           
          FORM 10-Q
           

          ý    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the quarterly period ended October 28, 2017

          OR

          o
          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

          For the transition period from    to

          Commission file number: 1-13536
           
          g129830g60l13.jpg
           
          Incorporated in Delaware
           
          I.R.S. Employer Identification No.
           
           
          13-3324058

          7 West Seventh Street
          Cincinnati, Ohio 45202
          (513) 579-7000
          and
          151 West 34th Street
          New York, New York 10001
          (212) 494-1602

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
          Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
          Large accelerated filer ý
           
          Accelerated filer o
           
          Non-accelerated filer o (Do not check if a smaller reporting company)
           
          Smaller reporting 
          company  o
           
          Emerging growth company  o
          If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
          Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
          Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
          Class
           
          Outstanding at November 25, 2017
          Common Stock, $0.01 par value per share
           
          304,566,377 shares
           



          PART I - FINANCIAL INFORMATION
          Item 1. Financial Statements
          MACY’S, INC.
          CONSOLIDATED STATEMENTS OF INCOME
          (Unaudited)

          (millions, except per share figures)
           
           
           
           
           
           
           
           
           
           
          13 Weeks Ended
           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          October 28, 2017
           
          October 29, 2016
          Net sales
          $
          5,281

           
          $
          5,626

           
          $
          16,171

           
          $
          17,263

          Cost of sales
          (3,175
          )
           
          (3,386
          )
           
          (9,794
          )
           
          (10,370
          )
          Gross margin
          2,106

           
          2,240

           
          6,377

           
          6,893

          Selling, general and administrative expenses
          (1,995
          )
           
          (2,112
          )
           
          (5,853
          )
           
          (6,139
          )
          Gains on sale of real estate
          65

           
          41

           
          176

           
          76

          Impairments, restructuring and other costs
          (33
          )
           

           
          (33
          )
           
          (249
          )
          Settlement charges
          (22
          )
           
          (62
          )
           
          (73
          )
           
          (81
          )
          Operating income
          121

           
          107

           
          594

           
          500

          Interest expense
          (76
          )
           
          (82
          )
           
          (244
          )
           
          (279
          )
          Net premiums on early retirement of debt

           

           
          (1
          )
           

          Interest income
          2

           
          1

           
          7

           
          3

          Income before income taxes
          47

           
          26

           
          356

           
          224

          Federal, state and local income tax expense
          (13
          )
           
          (11
          )
           
          (140
          )
           
          (85
          )
          Net income
          34

           
          15

           
          216

           
          139

          Net loss attributable to noncontrolling interest
          2

           
          2

           
          6

           
          5

          Net income attributable to Macy's, Inc. shareholders
          $
          36

           
          $
          17

           
          $
          222

           
          $
          144

          Basic earnings per share attributable to Macy's, Inc. shareholders
          $
          .12

           
          $
          .05

           
          $
          .73

           
          $
          .46

          Diluted earnings per share attributable to Macy's, Inc. shareholders
          $
          .12

           
          $
          .05

           
          $
          .73

           
          $
          .46


          The accompanying notes are an integral part of these Consolidated Financial Statements.

          2


          MACY’S, INC.
          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
          (Unaudited)

          (millions)

           
           
           
           
           
           
           
           
           
          13 Weeks Ended
           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          October 28, 2017
           
          October 29, 2016
          Net income
          $
          34

           
          $
          15

           
          $
          216

           
          $
          139

          Other comprehensive income (loss):
           
           
           
           
           
           
           
          Actuarial gain (loss) on post employment and postretirement benefit plans, before tax
          10

           
          3

           
          57

           
          (74
          )
          Settlement charges included in net income, before tax
          22

           
          62

           
          73

           
          81

          Amortization of net actuarial loss on post employment and postretirement benefit plans included in net income, before tax
          8

           
          9

           
          26

           
          26

          Tax effect related to items of other comprehensive income (loss)
          (15
          )
           
          (29
          )
           
          (60
          )
           
          (13
          )
          Total other comprehensive income, net of tax effect
          25

           
          45

           
          96

           
          20

          Comprehensive income
          59

           
          60

           
          312

           
          159

          Comprehensive loss attributable to noncontrolling interest
          2

           
          2

           
          6

           
          5

          Comprehensive income attributable to
          Macy's, Inc. shareholders
          $
          61

           
          $
          62

           
          $
          318

           
          $
          164


          The accompanying notes are an integral part of these Consolidated Financial Statements.


          3


          MACY’S, INC.
          CONSOLIDATED BALANCE SHEETS
          (Unaudited)

          (millions)
           
           
           
           
           
           
           
           
          October 28, 2017
           
          January 28, 2017
           
          October 29, 2016
          ASSETS
           
           
           
           
           
          Current Assets:
           
           
           
           
           
          Cash and cash equivalents
          $
          534

           
          $
          1,297

           
          $
          457

          Receivables
          219

           
          522

           
          262

          Merchandise inventories
          7,065

           
          5,399

           
          7,587

          Income tax receivable

           

           
          60

          Prepaid expenses and other current assets
          432

           
          408

           
          454

          Total Current Assets
          8,250

           
          7,626

           
          8,820

          Property and Equipment - net of accumulated depreciation and
          amortization of $5,330, $4,856 and $5,625
          6,742

           
          7,017

           
          7,149

          Goodwill
          3,897

           
          3,897

           
          3,897

          Other Intangible Assets – net
          491

           
          498

           
          499

          Other Assets
          835

           
          813

           
          909

          Total Assets
          $
          20,215

           
          $
          19,851

           
          $
          21,274

          LIABILITIES AND SHAREHOLDERS’ EQUITY
           
           
           
           
           
          Current Liabilities:
           
           
           
           
           
          Short-term debt
          $
          22

           
          $
          309

           
          $
          938

          Merchandise accounts payable
          3,173

           
          1,423

           
          3,375

          Accounts payable and accrued liabilities
          3,162

           
          3,563

           
          2,930

          Income taxes
          34

           
          352

           

          Total Current Liabilities
          6,391

           
          5,647

           
          7,243

          Long-Term Debt
          6,297

           
          6,562

           
          6,563

          Deferred Income Taxes
          1,553

           
          1,443

           
          1,548

          Other Liabilities
          1,750

           
          1,877

           
          2,129

          Shareholders' Equity:
           
           
           
           
           
          Macy's, Inc.
          4,231

           
          4,323

           
          3,789

          Noncontrolling interest
          (7
          )
           
          (1
          )
           
          2

          Total Shareholders’ Equity
          4,224

           
          4,322

           
          3,791

          Total Liabilities and Shareholders’ Equity
          $
          20,215

           
          $
          19,851

           
          $
          21,274


          The accompanying notes are an integral part of these Consolidated Financial Statements.


          4


          MACY’S, INC.
          CONSOLIDATED STATEMENTS OF CASH FLOWS
          (Unaudited)

          (millions)
           
           
           
           
           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
          Cash flows from operating activities:
           
           
           
          Net income
          $
          216

           
          $
          139

          Adjustments to reconcile net income to net cash provided by operating activities:
           
           
           
          Impairments, restructuring and other costs
          33

           
          249

          Settlement charges
          73

           
          81

          Depreciation and amortization
          741

           
          787

          Stock-based compensation expense
          46

           
          56

          Gains on sale of real estate
          (176
          )
           
          (76
          )
          Amortization of financing costs and premium on acquired debt
          (10
          )
           
          (14
          )
          Changes in assets and liabilities:
           
           
           
          Decrease in receivables
          274

           
          237

          Increase in merchandise inventories
          (1,665
          )
           
          (2,081
          )
          Increase in prepaid expenses and other current assets
          (20
          )
           
          (37
          )
          Increase in merchandise accounts payable
          1,630

           
          1,665

          Decrease in accounts payable, accrued liabilities
          and other items not separately identified
          (375
          )
           
          (380
          )
          Decrease in current income taxes
          (318
          )
           
          (287
          )
          Increase in deferred income taxes
          49

           
          45

          Change in other assets and liabilities not separately identified
          (109
          )
           
          (76
          )
          Net cash provided by operating activities
          389

           
          308

          Cash flows from investing activities:
           
           
           
          Purchase of property and equipment
          (359
          )
           
          (451
          )
          Capitalized software
          (191
          )
           
          (230
          )
          Disposition of property and equipment
          212

           
          138

          Other, net
          (8
          )
           
          52

          Net cash used by investing activities
          (346
          )
           
          (491
          )
          Cash flows from financing activities:
           
           
           
          Debt issued

           
          51

          Financing costs
          (1
          )
           
          (3
          )
          Debt repaid
          (554
          )
           
          (174
          )
          Dividends paid
          (346
          )
           
          (344
          )
          Increase in outstanding checks
          80

           
          193

          Acquisition of treasury stock
          (1
          )
           
          (230
          )
          Issuance of common stock
          3

           
          31

          Proceeds from noncontrolling interest
          13

           
          7

          Net cash used by financing activities
          (806
          )
           
          (469
          )
          Net decrease in cash and cash equivalents
          (763
          )
           
          (652
          )
          Cash and cash equivalents beginning of period
          1,297

           
          1,109

          Cash and cash equivalents end of period
          $
          534

           
          $
          457

          Supplemental cash flow information:
           
           
           
          Interest paid
          $
          251

           
          $
          279

          Interest received
          7

           
          3

          Income taxes paid (net of refunds received)
          412

           
          308

          The accompanying notes are an integral part of these Consolidated Financial Statements.

          5


          MACY’S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (Unaudited)
           

          1.    Summary of Significant Accounting Policies
          Nature of Operations
          Macy's, Inc. and subsidiaries (the "Company") is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell a wide range of merchandise, including apparel and accessories (men's, women's and children's), cosmetics, home furnishings and other consumer goods. The Company's operations are conducted through approximately 860 Macy's, Macy's Backstage, Bloomingdale's, Bloomingdale's The Outlet and bluemercury stores in 45 states, the District of Columbia, Guam and Puerto Rico, as well as macys.com, bloomingdales.com and bluemercury.com. In addition, Bloomingdale's in Dubai, United Arab Emirates and Al Zahra, Kuwait are operated under a license agreement with Al Tayer Insignia, a company of Al Tayer Group, LLC.
          A description of the Company's significant accounting policies is included in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2017 (the "2016 10-K"). The accompanying Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto in the 2016 10-K.
          Use of Estimates
          The preparation of financial statements in conformity with United States generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are subject to inherent uncertainties, which may result in actual amounts differing from reported amounts.
          The Consolidated Financial Statements for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly, in all material respects, the consolidated financial position and results of operations of the Company.
          Seasonality
          Because of the seasonal nature of the retail business, the results of operations for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016 (which do not include the Christmas season) are not necessarily indicative of such results for the full fiscal year.
          Reclassifications
          Certain reclassifications were made to prior years’ amounts to conform to the classifications of such amounts in the most recent years.
          Comprehensive Income
          Total comprehensive income represents the change in equity during a period from sources other than transactions with shareholders and, as such, includes net income. For the Company, the only other components of total comprehensive income for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016 relate to post employment and postretirement plan items. Settlement charges incurred are included as a separate component of operating expenses in the Consolidated Statements of Income. Amortization reclassifications out of accumulated other comprehensive loss are included in the computation of net periodic benefit cost (income) and are included in selling, general and administrative expenses on the Consolidated Statements of Income. See Note 4, "Benefit Plans," for further information.
          Newly Adopted Accounting Pronouncements
          The Company adopted Accounting Standards Update ("ASU") No. 2016-09, Improvements to Employee Share-Based Payment Accounting, effective January 29, 2017. This standard was issued to simplify several aspects of the accounting for share-based payment awards, including the income tax consequences, financial statement classification and forfeiture considerations of such awards. Upon adoption, the Company began to recognize, on a prospective basis, all excess tax benefits and tax deficiencies as income tax benefit or expense, respectively, in its Consolidated Statements of Income. For awards that were exercised, vested or expired during the 39 weeks ended October 28, 2017, approximately $12 million of additional income tax expense associated with net tax deficiencies was recognized. Additionally, these net tax deficiencies have been classified as an operating activity

          6

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           


          along with other income tax cash flows in the Consolidated Statements of Cash Flows. The Company has elected to adopt such presentation on a prospective basis.

          2.    Earnings Per Share Attributable to Macy's, Inc. Shareholders
          The following tables set forth the computation of basic and diluted earnings per share attributable to Macy's, Inc. shareholders:

           
          13 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          Net
          Income
           
           
           
          Shares
           
          Net
          Income
           
           
           
          Shares
           
          (millions, except per share data)
          Net income attributable to Macy's, Inc. shareholders and
          average number of shares outstanding
          $
          36

           
           
           
          304.6

           
          $
          17

           
           
           
          307.5

          Shares to be issued under deferred
          compensation and other plans
           
           
           
           
          0.9

           
           
           
           
           
          0.9

           
          $
          36

           
           
           
          305.5

           
          $
          17

           
           
           
          308.4

          Basic earnings per share attributable to
          Macy's, Inc. shareholders
           
           
          $
          .12

           
           
           
           
           
          $
          .05

           
           
          Effect of dilutive securities:
           
           
           
           
           
           
           
           
           
           
           
          Stock options, restricted stock and restricted stock units
           
           
           
           
          1.0

           
           
           
           
           
          2.2

           
          $
          36

           
           
           
          306.5

           
          $
          17

           
           
           
          310.6

          Diluted earnings per share attributable to
          Macy's, Inc. shareholders
           
           
          $
          .12

           
           
           
           
           
          $
          .05

           
           

           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          Net
          Income
           
           
           
          Shares
           
          Net
          Income
           
           
           
          Shares
           
          (millions, except per share data)
          Net income attributable to Macy's, Inc. shareholders and
          average number of shares outstanding
          $
          222

           
           
           
          304.5

           
          $
          144

           
           
           
          308.6

          Shares to be issued under deferred
          compensation and other plans
           
           
           
           
          0.8

           
           
           
           
           
          0.9

           
          $
          222

           
           
           
          305.3

           
          $
          144

           
           
           
          309.5

          Basic earnings per share attributable to
          Macy's, Inc. shareholders
           
           
          $
          .73

           
           
           
           
           
          $
          .46

           
           
          Effect of dilutive securities:
           
           
           
           
           
           
           
           
           
           
           
          Stock options, restricted stock and restricted stock units
           
           
           
           
          1.3

           
           
           
           
           
          2.3

           
          $
          222

           
           
           
          306.6

           
          $
          144

           
           
           
          311.8

          Diluted earnings per share attributable to
          Macy's, Inc. shareholders
           
           
          $
          .73

           
           
           
           
           
          $
          .46

           
           

          For the 13 and 39 weeks ended October 28, 2017, in addition to the stock options and restricted stock units reflected in the foregoing tables, stock options to purchase 18.9 million shares of common stock and restricted stock units relating to 1.2 million shares of common stock were outstanding at October 28, 2017, but were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.



          7

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           


          For the 13 and 39 weeks ended October 29, 2016, in addition to the stock options and restricted stock units reflected in the foregoing tables, stock options to purchase 15.7 million shares of common stock and restricted stock units relating to 0.7 million shares of common stock were outstanding at October 29, 2016, but were not included in the computation of diluted earnings per share because their inclusion would have been antidilutive or they were subject to performance conditions that had not been met.

          3.    Financing Activities
          The following table shows the detail of debt repayments:
           
           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          (millions)
          7.45% Senior debentures due 2017
          $
          300

           
          $

          7.875% Senior debentures due 2036

           
          108

          6.375% Senior notes due 2037
          135

           

          7.45% Senior debentures due 2016

           
          59

          6.9% Senior debentures due 2032
          72

           

          6.7% Senior debentures due 2034
          28

           

          6.65% Senior debentures due 2024
          4

           

          6.9% Senior debentures due 2029
          3

           

          6.7% Senior debentures due 2028
          3

           

          7.0% Senior debentures due 2028
          2

           

          9.5% amortizing debentures due 2021
          4

           
          4

          9.75% amortizing debentures due 2021
          2

           
          2

          Capital leases and other obligations
          1

           
          1

           
          $
          554

           
          $
          174

          During the 39 weeks ended October 28, 2017, the Company repaid, at maturity, $300 million of 7.45% senior debentures due July 2017.
          During the 39 weeks ended October 28, 2017, the Company repurchased $247 million face value of senior notes and debentures. The debt repurchases were made in the open market for a total cash cost of $257 million, including expenses related to the transactions. Such repurchases resulted in the recognition of expense of $1 million during the 39 weeks ended October 28, 2017 presented as net premiums on early retirement of debt on the Consolidated Statements of Income.
          On November 27, 2017, the Company commenced a cash tender offer ("tender offer") to purchase up to $400 million in aggregate principal amount of certain senior unsecured notes and debentures, with stated interest rates ranging from 6.375% to 10.25% and maturities ranging from fiscal years 2021 to 2037. The tender offer expires on December 22, 2017, with an early tender date on December 8, 2017. The Company expects to record the redemption premium and other costs related to these repurchases as net premiums on early retirement of debt on the Consolidated Statements of Income during the fourth quarter of 2017.

          4.    Benefit Plans
          The Company has defined contribution plans which cover substantially all employees who work 1,000 hours or more in a year. In addition, the Company has a funded defined benefit plan ("Pension Plan") and an unfunded defined benefit supplementary retirement plan ("SERP"), which provides benefits, for certain employees, in excess of qualified plan limitations. Effective January 1, 2012, the Pension Plan was closed to new participants, with limited exceptions, and effective January 2, 2012, the SERP was closed to new participants.

          8

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           


          In February 2013, the Company announced changes to the Pension Plan and SERP whereby eligible employees no longer earn future pension service credits after December 31, 2013, with limited exceptions. All retirement benefits attributable to service in subsequent periods are provided through defined contribution plans.
          In addition, certain retired employees currently are provided with specified health care and life insurance benefits ("Postretirement Obligations"). Eligibility requirements for such benefits vary, but generally state that benefits are available to eligible employees who were hired prior to a certain date and retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated.
          The defined contribution plan expense and actuarially determined components of the net periodic benefit cost (income) associated with the defined benefit plans are as follows:
           
          13 Weeks Ended
           
          39 Weeks Ended
           
          October 28, 2017
           
          October 29, 2016
           
          October 28, 2017
           
          October 29, 2016
           
          (millions)
           
          (millions)
          401(k) Qualified Defined Contribution Plan
          $
          20

           
          $
          22

           
          $
          65

           
          $
          71

           
           
           
           
           
           
           
           
          Non-Qualified Defined Contribution Plan
          $

           
          $

           
          $

           
          $
          1

           
           
           
           
           
           
           
           
          Pension Plan
           
           
           
           
           
           
           
          Service cost
          $
          1

           
          $
          1

           
          $
          4

           
          $
          3

          Interest cost
          25

           
          27

           
          79

           
          83

          Expected return on assets
          (55
          )
           
          (56
          )
           
          (168
          )
           
          (170
          )
          Recognition of net actuarial loss
          8

           
          7

           
          24

           
          22

          Amortization of prior service credit

           

           

           

           
          $
          (21
          )
           
          $
          (21
          )
           
          $
          (61
          )
           
          $
          (62
          )
          Supplementary Retirement Plan
           
           
           
           
           
           
           
          Service cost
          $

           
          $

           
          $

           
          $

          Interest cost
          5

           
          5

           
          16

           
          17

          Recognition of net actuarial loss
          2

           
          3

           
          6

           
          7

          Amortization of prior service cost

           

           

           

           
          $
          7

           
          $
          8

           
          $
          22

           
          $
          24

           
           
           
           
           
           
           
           
          Total Retirement Expense
          $
          6

           
          $
          9

           
          $
          26

           
          $
          34

           
           
           
           
           
           
           
           
          Postretirement Obligations
           
           
           
           
           
           
           
          Service cost
          $

           
          $

           
          $

           
          $

          Interest cost
          1

           
          1

           
          4

           
          4

          Recognition of net actuarial gain
          (2
          )
           
          (1
          )
           
          (4
          )
           
          (3
          )
          Amortization of prior service cost

           

           

           

           
          $
          (1
          )
           
          $

           
          $

           
          $
          1


          During the 13 and 39 weeks ended October 28, 2017, the Company incurred $22 million and $73 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. During the 13 and 39 weeks ended October 29, 2016, the Company also incurred $62 million and $81 million, respectively, of non-cash settlement charges relating to the Company's defined benefit plans. These charges relate to the pro-rata recognition of net actuarial losses associated with the Company's defined benefit plans and are a result of an increase in lump sum distributions associated with a voluntary separation program, organizational restructuring, and store closings, in addition to periodic distribution activity.


          9

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           


          5.    Fair Value Measurements
          The following table shows the Company's financial assets that are required to be measured at fair value on a recurring basis, by level within the hierarchy as defined by applicable accounting standards:
           
           
          October 28, 2017
           
          October 29, 2016
           
           
           
          Fair Value Measurements
           
           
           
          Fair Value Measurements
           
          Total
           
          Quoted Prices
          in Active
          Markets for
          Identical Assets
          (Level 1)
           
          Significant
          Observable
          Inputs
          (Level 2)
           
          Significant
          Unobservable
          Inputs
          (Level 3)
           
          Total
           
          Quoted Prices
          in Active
          Markets for
          Identical Assets
          (Level 1)
           
          Significant
          Observable
          Inputs
          (Level 2)
           
          Significant
          Unobservable
          Inputs
          (Level 3)
           
          (millions)
          Marketable equity and debt securities
          $
          100

           
          $
          23

           
          $
          77

           
          $

           
          $
          127

           
          $
          19

           
          $
          108

           
          $


          Other financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, receivables, certain short-term investments and other assets, short-term debt, merchandise accounts payable, accounts payable and accrued liabilities and long-term debt. With the exception of long-term debt, the carrying amount of these financial instruments approximates fair value because of the short maturity of these instruments. The fair values of long-term debt, excluding capitalized leases, are generally estimated based on quoted market prices for identical or similar instruments, and are classified as Level 2 measurements within the hierarchy as defined by applicable accounting standards.
          The following table shows the estimated fair value of the Company's long-term debt:
           
           
          October 28, 2017
           
          October 29, 2016
           
          Notional
          Amount
           
          Carrying
          Amount
           
          Fair
          Value
           
          Notional
          Amount
           
          Carrying
          Amount
           
          Fair
          Value
           
          (millions)
          Long-term debt
          $
          6,206

           
          $
          6,297

           
          $
          5,908

           
          $
          6,459

           
          $
          6,536

           
          $
          6,749


          6.    Condensed Consolidating Financial Information
          Certain debt obligations of the Company, which constitute debt obligations of Macy's Retail Holdings, Inc. ("Subsidiary Issuer"), a 100%-owned subsidiary of Macy's, Inc. ("Parent"), are fully and unconditionally guaranteed by Parent. In the following condensed consolidating financial statements, "Other Subsidiaries" includes all other direct subsidiaries of Parent, including Bluemercury, Inc., FDS Bank, West 34th Street Insurance Company New York, Macy's Merchandising Corporation, Macy's Merchandising Group, Inc. and its subsidiaries Macy's Merchandising Group (Hong Kong) Limited, Macy's Merchandising Group Procurement, LLC, Macy's Merchandising Group International, LLC, Macy's Merchandising Group International (Hong Kong) Limited, and its majority-owned subsidiary Macy's China Limited. "Subsidiary Issuer" includes operating divisions and non-guarantor subsidiaries of the Subsidiary Issuer on an equity basis. The assets and liabilities and results of operations of the non-guarantor subsidiaries of the Subsidiary Issuer are also reflected in "Other Subsidiaries."
          Condensed Consolidating Statements of Comprehensive Income for the 13 and 39 weeks ended October 28, 2017 and October 29, 2016, Condensed Consolidating Balance Sheets as of October 28, 2017, October 29, 2016 and January 28, 2017, and the related Condensed Consolidating Statements of Cash Flows for the 39 weeks ended October 28, 2017 and October 29, 2016 are presented on the following pages.

          10

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Statement of Comprehensive Income
          For the 13 Weeks Ended October 28, 2017
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          Net sales
          $

           
          $
          2,077

           
          $
          5,861

           
          $
          (2,657
          )
           
          $
          5,281

          Cost of sales

           
          (1,391
          )
           
          (4,441
          )
           
          2,657

           
          (3,175
          )
          Gross margin

           
          686

           
          1,420

           

           
          2,106

          Selling, general and administrative expenses

           
          (813
          )
           
          (1,182
          )
           

           
          (1,995
          )
          Gains on sale of real estate

           
          24

           
          41

           

           
          65

          Restructuring and other costs

           
          (1
          )
           
          (32
          )
           

           
          (33
          )
          Settlement charges

           
          (8
          )
           
          (14
          )
           

           
          (22
          )
          Operating income (loss)

           
          (112
          )
           
          233

           

           
          121

          Interest (expense) income, net:
           
           
           
           
           
           
           
           
           
          External
          1

           
          (76
          )
           
          1

           

           
          (74
          )
          Intercompany

           
          (34
          )
           
          34

           

           

          Equity in earnings (loss) of subsidiaries
          35

           
          (61
          )
           

           
          26

           

          Income (loss) before income taxes
          36

           
          (283
          )
           
          268

           
          26

           
          47

          Federal, state and local income
          tax benefit (expense)

           
          59

           
          (72
          )
           

           
          (13
          )
          Net income (loss)
          36

           
          (224
          )
           
          196

           
          26

           
          34

          Net loss attributable to noncontrolling interest

           

           
          2

           

           
          2

          Net income (loss) attributable to
          Macy's, Inc. shareholders
          $
          36

           
          $
          (224
          )
           
          $
          198

           
          $
          26

           
          $
          36

          Comprehensive income (loss)
          $
          61

           
          $
          (201
          )
           
          $
          212

           
          $
          (13
          )
           
          $
          59

          Comprehensive loss attributable to
          noncontrolling interest

           

           
          2

           

           
          2

          Comprehensive income (loss) attributable to
          Macy's, Inc. shareholders
          $
          61

           
          $
          (201
          )
           
          $
          214

           
          $
          (13
          )
           
          $
          61


          11

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Statement of Comprehensive Income
          For the 13 Weeks Ended October 29, 2016
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          Net sales
          $

           
          $
          2,376

           
          $
          6,183

           
          $
          (2,933
          )
           
          $
          5,626

          Cost of sales

           
          (1,577
          )
           
          (4,742
          )
           
          2,933

           
          (3,386
          )
          Gross margin

           
          799

           
          1,441

           

           
          2,240

          Selling, general and administrative expenses
          (1
          )
           
          (950
          )
           
          (1,161
          )
           

           
          (2,112
          )
          Gains on sale of real estate

           
          41

           

           

           
          41

          Settlement charges

           
          (24
          )
           
          (38
          )
           

           
          (62
          )
          Operating income (loss)
          (1
          )
           
          (134
          )
           
          242

           

           
          107

          Interest (expense) income, net:
           
           
           
           
           
           
           
           
           
          External
          1

           
          (82
          )
           

           

           
          (81
          )
          Intercompany

           
          (51
          )
           
          51

           

           

          Equity in earnings (loss) of subsidiaries
          17

           
          (101
          )
           

           
          84

           

          Income (loss) before income taxes
          17

           
          (368
          )
           
          293

           
          84

           
          26

          Federal, state and local income
          tax benefit (expense)

           
          68

           
          (79
          )
           

           
          (11
          )
          Net income (loss)
          17

           
          (300
          )
           
          214

           
          84

           
          15

          Net loss attributable to noncontrolling interest

           

           
          2

           

           
          2

          Net income (loss) attributable to
          Macy's, Inc. shareholders
          $
          17

           
          $
          (300
          )
           
          $
          216

           
          $
          84

           
          $
          17

          Comprehensive income (loss)
          $
          62

           
          $
          (255
          )
           
          $
          241

           
          $
          12

           
          $
          60

          Comprehensive loss attributable to
          noncontrolling interest

           

           
          2

           

           
          2

          Comprehensive income (loss) attributable to
          Macy's, Inc. shareholders
          $
          62

           
          $
          (255
          )
           
          $
          243

           
          $
          12

           
          $
          62




          12

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Statement of Comprehensive Income
          For the 39 weeks ended October 28, 2017
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          Net sales
          $

           
          $
          6,319

           
          $
          15,727

           
          $
          (5,875
          )
           
          $
          16,171

          Cost of sales

           
          (4,126
          )
           
          (11,543
          )
           
          5,875

           
          (9,794
          )
          Gross margin

           
          2,193

           
          4,184

           

           
          6,377

          Selling, general and administrative expenses
          (1
          )
           
          (2,430
          )
           
          (3,422
          )
           

           
          (5,853
          )
          Gains on sale of real estate

           
          116

           
          60

           

           
          176

          Restructuring and other costs

           
          (1
          )
           
          (32
          )
           

           
          (33
          )
          Settlement charges

           
          (24
          )
           
          (49
          )
           

           
          (73
          )
          Operating income (loss)
          (1
          )
           
          (146
          )
           
          741

           

           
          594

          Interest (expense) income, net:
           
           
           
           
           
           
           
           
           
          External
          4

           
          (243
          )
           
          2

           

           
          (237
          )
          Intercompany

           
          (102
          )
           
          102

           

           

          Net premiums on early retirement of debt

           
          (1
          )
           

           

           
          (1
          )
          Equity in earnings (loss) of subsidiaries
          220

           
          (30
          )
           

           
          (190
          )
           

          Income (loss) before income taxes
          223

           
          (522
          )
           
          845

           
          (190
          )
           
          356

          Federal, state and local income
          tax benefit (expense)
          (1
          )
           
          142

           
          (281
          )
           

           
          (140
          )
          Net income (loss)
          222

           
          (380
          )
           
          564

           
          (190
          )
           
          216

          Net loss attributable to noncontrolling interest

           

           
          6

           

           
          6

          Net income (loss) attributable to
          Macy's, Inc. shareholders
          $
          222

           
          $
          (380
          )
           
          $
          570

           
          $
          (190
          )
           
          $
          222

          Comprehensive income (loss)
          $
          318

           
          $
          (290
          )
           
          $
          627

           
          $
          (343
          )
           
          $
          312

          Comprehensive loss attributable to
          noncontrolling interest

           

           
          6

           

           
          6

          Comprehensive income (loss) attributable to
          Macy's, Inc. shareholders
          $
          318

           
          $
          (290
          )
           
          $
          633

           
          $
          (343
          )
           
          $
          318














          13

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Statement of Comprehensive Income
          For the 39 weeks ended October 29, 2016
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          Net sales
          $

           
          $
          7,324

           
          $
          16,546

           
          $
          (6,607
          )
           
          $
          17,263

          Cost of sales

           
          (4,704
          )
           
          (12,273
          )
           
          6,607

           
          (10,370
          )
          Gross margin

           
          2,620

           
          4,273

           

           
          6,893

          Selling, general and administrative expenses
          (2
          )
           
          (2,803
          )
           
          (3,334
          )
           

           
          (6,139
          )
          Gains on sale of real estate

           
          71

           
          5

           

           
          76

          Impairments and other costs

           
          (184
          )
           
          (65
          )
           

           
          (249
          )
          Settlement charges

           
          (29
          )
           
          (52
          )
           

           
          (81
          )
          Operating income (loss)
          (2
          )
           
          (325
          )
           
          827

           

           
          500

          Interest (expense) income, net:
           
           
           
           
           
           
           
           
           
          External
          2

           
          (278
          )
           

           

           
          (276
          )
          Intercompany

           
          (166
          )
           
          166

           

           

          Equity in earnings (loss) of subsidiaries
          144

           
          (69
          )
           

           
          (75
          )
           

          Income (loss) before income taxes
          144

           
          (838
          )
           
          993

           
          (75
          )
           
          224

          Federal, state and local income
          tax benefit (expense)

           
          243

           
          (328
          )
           

           
          (85
          )
          Net income (loss)
          144

           
          (595
          )
           
          665

           
          (75
          )
           
          139

          Net loss attributable to noncontrolling interest

           

           
          5

           

           
          5

          Net income (loss) attributable to
          Macy's, Inc. shareholders
          $
          144

           
          $
          (595
          )
           
          $
          670

           
          $
          (75
          )
           
          $
          144

          Comprehensive income (loss)
          $
          164

           
          $
          (575
          )
           
          $
          677

           
          $
          (107
          )
           
          $
          159

          Comprehensive loss attributable to
          noncontrolling interest

           

           
          5

           

           
          5

          Comprehensive income (loss) attributable to
          Macy's, Inc. shareholders
          $
          164

           
          $
          (575
          )
           
          $
          682

           
          $
          (107
          )
           
          $
          164















          14

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Balance Sheet
          As of October 28, 2017
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          ASSETS:
           
           
           
           
           
           
           
           
           
          Current Assets:
           
           
           
           
           
           
           
           
           
          Cash and cash equivalents
          $
          116

           
          $
          89

           
          $
          329

           
          $

           
          $
          534

          Receivables

           
          67

           
          152

           

           
          219

          Merchandise inventories

           
          3,218

           
          3,847

           

           
          7,065

          Income tax receivable

           
          2

           

           
          (2
          )
           

          Prepaid expenses and other current assets

           
          86

           
          346

           

           
          432

          Total Current Assets
          116

           
          3,462

           
          4,674

           
          (2
          )
           
          8,250

          Property and Equipment – net

           
          3,184

           
          3,558

           

           
          6,742

          Goodwill

           
          3,315

           
          582

           

           
          3,897

          Other Intangible Assets – net

           
          46

           
          445

           

           
          491

          Other Assets
          1

           
          62

           
          772

           

           
          835

          Deferred Income Taxes
          26

           

           

           
          (26
          )
           

          Intercompany Receivable
          1,436

           

           
          1,971

           
          (3,407
          )
           

          Investment in Subsidiaries
          2,882

           
          3,644

           

           
          (6,526
          )
           

          Total Assets
          $
          4,461

           
          $
          13,713

           
          $
          12,002

           
          $
          (9,961
          )
           
          $
          20,215

          LIABILITIES AND SHAREHOLDERS’ EQUITY:
           
           
           
           
           
           
           
           
           
          Current Liabilities:
           
           
           
           
           
           
           
           
           
          Short-term debt
          $

           
          $
          6

           
          $
          16

           
          $

           
          $
          22

          Merchandise accounts payable

           
          1,339

           
          1,834

           

           
          3,173

          Accounts payable and accrued liabilities
          139

           
          975

           
          2,048

           

           
          3,162

          Income taxes
          20

           

           
          16

           
          (2
          )
           
          34

          Total Current Liabilities
          159

           
          2,320

           
          3,914

           
          (2
          )
           
          6,391

          Long-Term Debt

           
          6,280

           
          17

           

           
          6,297

          Intercompany Payable

           
          3,407

           

           
          (3,407
          )
           

          Deferred Income Taxes

           
          707

           
          872

           
          (26
          )
           
          1,553

          Other Liabilities
          71

           
          476

           
          1,203

           

           
          1,750

          Shareholders' Equity:
           
           
           
           
           
           
           
           
           
          Macy's, Inc.
          4,231

           
          523

           
          6,003

           
          (6,526
          )
           
          4,231

          Noncontrolling Interest

           

           
          (7
          )
           

           
          (7
          )
          Total Shareholders' Equity
          4,231

           
          523

           
          5,996

           
          (6,526
          )
           
          4,224

          Total Liabilities and Shareholders' Equity
          $
          4,461

           
          $
          13,713

           
          $
          12,002

           
          $
          (9,961
          )
           
          $
          20,215








          15

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Balance Sheet
          As of October 29, 2016
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          ASSETS:
           
           
           
           
           
           
           
           
           
          Current Assets:
           
           
           
           
           
           
           
           
           
          Cash and cash equivalents
          $
          60

           
          $
          99

           
          $
          298

           
          $

           
          $
          457

          Receivables

           
          74

           
          188

           

           
          262

          Merchandise inventories

           
          3,621

           
          3,966

           

           
          7,587

          Income tax receivable
          99

           

           

           
          (39
          )
           
          60

          Prepaid expenses and other current assets

           
          89

           
          365

           

           
          454

          Total Current Assets
          159

           
          3,883

           
          4,817

           
          (39
          )
           
          8,820

          Property and Equipment – net

           
          3,534

           
          3,615

           

           
          7,149

          Goodwill

           
          3,315

           
          582

           

           
          3,897

          Other Intangible Assets – net

           
          47

           
          452

           

           
          499

          Other Assets
          1

           
          153

           
          755

           

           
          909

          Deferred Income Taxes
          24

           

           

           
          (24
          )
           

          Intercompany Receivable
          878

           

           
          1,876

           
          (2,754
          )
           

          Investment in Subsidiaries
          2,954

           
          3,173

           

           
          (6,127
          )
           

          Total Assets
          $
          4,016

           
          $
          14,105

           
          $
          12,097

           
          $
          (8,944
          )
           
          $
          21,274

          LIABILITIES AND SHAREHOLDERS’ EQUITY:
           
           
           
           
           
           
           
           
           
          Current Liabilities:
           
           
           
           
           
           
           
           
           
          Short-term debt
          $

           
          $
          935

           
          $
          3

           
          $

           
          $
          938

          Merchandise accounts payable

           
          1,481

           
          1,894

           

           
          3,375

          Accounts payable and accrued liabilities
          164

           
          910

           
          1,856

           

           
          2,930

          Income taxes

           
          3

           
          36

           
          (39
          )
           

          Total Current Liabilities
          164

           
          3,329

           
          3,789

           
          (39
          )
           
          7,243

          Long-Term Debt

           
          6,545

           
          18

           

           
          6,563

          Intercompany Payable

           
          2,754

           

           
          (2,754
          )
           

          Deferred Income Taxes

           
          694

           
          878

           
          (24
          )
           
          1,548

          Other Liabilities
          63

           
          565

           
          1,501

           

           
          2,129

          Shareholders' Equity:
           
           
           
           
           
           
           
           
           
          Macy's, Inc.
          3,789

           
          218

           
          5,909

           
          (6,127
          )
           
          3,789

          Noncontrolling Interest

           

           
          2

           

           
          2

          Total Shareholders' Equity
          3,789

           
          218

           
          5,911

           
          (6,127
          )
           
          3,791

          Total Liabilities and Shareholders' Equity
          $
          4,016

           
          $
          14,105

           
          $
          12,097

           
          $
          (8,944
          )
           
          $
          21,274







          16

          MACY'S, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
          (Unaudited)
           



          Condensed Consolidating Balance Sheet
          As of January 28, 2017
          (millions)
           
           
          Parent
           
          Subsidiary
          Issuer
           
          Other
          Subsidiaries
           
          Consolidating
          Adjustments
           
          Consolidated
          ASSETS:
           
           
           
           
           
           
           
           
           
          Current Assets:
           
           
           
           
           
           
           
           
           
          Cash and cash equivalents
          $
          938

           
          $
          81

           
          $
          278

           
          $

           
          $
          1,297