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Macy's (M 0.44%)
Q4 2023 Earnings Call
Feb 27, 2024, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings, and welcome to the Macy's, Inc. fourth-quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
[Operator instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Pamela Quintiliano, vice president of investor relations. Ms. Quintiliano, you may now begin.
Pam Quintiliano -- Vice President, Investor Relations
Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our CEO; and Adrian Mitchell, our COO and CFO. Along with our fourth-quarter 2023 press release, a presentation has been posted on the Investors section of our website, macysinc.com, and is being displayed live during today's webcast.
Unless otherwise noted, the comparisons we provide will be versus 2022. Comparisons to 2019 are provided where appropriate to best benchmark performance. All references to our prior expectations, outlook, or guidance refer to information provided on the November 16th earnings call, unless otherwise noted. All forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the Securities and Exchange Commission. In discussing the results of our operations, we will be providing certain non-GAAP financial measures. You can find additional information regarding these non-GAAP financial measures as well as others viewed on the Investors section of our website.
Today's call is being webcast on our website. A replay will be available approximately two hours after the conclusion of this call. With that, I'll turn it over to Tony.
Tony Spring -- Chief Executive Officer
Thanks, Pam. It's great to be here on my first call as CEO. We have a lot to cover this morning, including our fourth-quarter results, our outlook for fiscal 2024, and our strategy, A Bold New Chapter, which is designed to accelerate financial improvement and deliver sustainable, profitable growth. Taking a step back, this holiday season, we offered an improved omnichannel experience with effective merchandising and a clear demonstration of value. Fourth-quarter and full-year adjusted EPS were above our most recent guidance, reflecting better-than-expected gross margin, SG&A and other revenues, and higher asset sale gains.
We are a company defined by the quality of our people, and we could not have accomplished these results without the enthusiasm and dedication of our teams across stores, distribution centers, and our corporate offices. Throughout the year, our consumer proved to be more resilient than expected. While there was pressure from ongoing reallocation of spend to nondiscretionary items, our focus on new and relevant private and national brands enabled us to effectively compete. The likelihood of a recession is now lower than it was a year ago.
Inflation has slowed but so has labor and wage growth. As such, we expect our consumer to remain under pressure. It is against this backdrop that we share our vision from modern Macy's, Inc. that takes a holistic view of our portfolio of brands.
It is the thoughtful culmination of comprehensive research and reflection that began in earnest early last year. A Bold New Chapter is designed to return Macy's, Inc.'s enterprise growth, unlock shareholder value, and better serve our customers. It builds on our five growth vectors as newly identified and stress tested areas of opportunity and is supported by our financial disciplines. Over the next three years, we intend to: one, strengthen the Macy's nameplate and return it to top-line growth; two, accelerate luxury growth; and three, simplify and modernize end-to-end operations.
We view fiscal 2024 as a transition and investment year as we begin to implement real change for our customers. Beginning in 2025, we expect Macy's, Inc. to deliver low single-digit comp growth, mid single-digit EBITDA dollar growth, and a return to pre-pandemic levels of free cash flow. As we look across our omnichannel enterprise, we are taking a balanced portfolio approach to establish the right mix of on- and off-mall Macy's, Bloomingdale's, and Bluemercury stores in the best locations and markets.
By the end of 2026, we plan to close approximately 150 underproductive Macy's locations and reprioritize investments in our roughly 350 remaining locations, inclusive of full line, furniture, and current off-mall doors; grow our Bloomingdale's and Bluemercury store basis by a combined roughly 20%; and monetize $600 million to $750 million of assets, primarily related to stores and distribution center closures. In setting our Bold New Chapter strategy, we've been our own toughest critics. We have challenged the status quo, identified what we've gotten right and where we could have done better. We also conducted external focus groups and service with current, lapsed, and potential customers.
We're driving a higher level of accountability among our teams to ensure we keep up with customers' evolving taste, needs, and preferences. As I now turn to discussing each element of A Bold New Chapter in more detail, I'd like to stress that this work is already underway. We are moving swiftly and methodically. While some aspects should take time to bear fruit, others are intended to have a more immediate impact.
The first component is strengthening the Macy's nameplate. Coming from Bloomingdale's, I have approached Macy's with an outsider's point of view. There are a few brands that have the deep heritage and a strong emotional connection with its customer. But as we conducted service and focus groups with some of our 41 million active multigenerational customers, it became increasingly clear that the needs are not being fully met.
They want an omnichannel shopping environment that's neat, easy, and convenient; and edited and updated selection of relevant trending products; clarity on value and pricing; and greater availability of colleagues to find product and complete a purchase. This list is similar to what I first encountered at Bloomingdale's. While there are certainly differences, the core formula for success is the same. It's going back to basics and balancing the art and science of retail.
By putting the customer first, which has always been my priority, we improved Bloomingdale's sales profit and Net Promoter Scores. We will do the same for Macy's. First, by focusing our resources and optimizing our store footprint to meet the customer where they are. Second, revitalizing the assortment to improve the relevance and value.
And third, modernizing the shopping environment to ensure a convenient, easy, and frictionless customer experience across channels. Strengthening the Macy's nameplate should result in healthier sell-throughs and more productive stores, benefiting Macy's sales and margin profile and returning the nameplate to growth. The first step is to close and monetize underproductive locations so that we can prioritize the investments in stores that will lead us to a healthier future. Over the past 10 months, we have refined our approach to closures and have developed an even more sophisticated framework to evaluate our assets.
Our thresholds to keep our stores open have become more stringent. In the past, we may have continued operating an underproductive store that was four-wall cash flow positive. The bar has now been raised. We have conducted extensive internal and external analysis of our Macy's fleet center by center and market by market.
We have compared value to operate versus value to close and look at demand in each market to determine the right construct of stores and digital with a focus on being in the strongest centers. This is not a one-time exercise. Given rapidly shifting market dynamics and consumer preferences, it will be an always-on practice. Through our work, we have identified approximately 150 Macy's stores for closure over the next three years.
We call these our non-go-forward locations. In fiscal 2023, they represented about 25% of Macy's, Inc.'s gross square footage but less than 10% of its sales. The roughly 350 remaining Macy's inclusive of full line, furniture, and our current small formats are referred to as go-forward locations. In fiscal 2023, comp sales of Macy's go-forward locations outperformed non-go-forward locations by approximately 500 basis points, and the four-wall adjusted EBITDA rate outperformed by about 950 basis points.
Simply put, the value to monetize non-go-forward locations is higher than the value to operate. We expect to close about 50 non-go-forward stores by the end of this fiscal year and prioritize our focus where we have the most opportunity to improve square footage productivity and better serve our customer. Over the next three years, we estimate non-go-forward store monetization proceeds of roughly $500 million to $650 million and asset sale gains of about $250 million to $350 million. We will make sure the economics of each closure and monetization transaction makes sense.
Working together with our real estate advisors, our team has generated over $2.4 billion of real estate monetization proceeds from 2015 to 2023, and we will leverage that expertise and those relationships as we continue to refine and assess our base. Importantly, our healthy balance sheet allows us to be opportunistic on timing of the closures to deliver the highest value for our shareholders. We have recently stopped all but required maintenance investments in our non-go-forward locations. We plan to reallocate some of the capital to our go-forward fleet, and we'll work closely with our vendor partners on joint business plans.
We will also work with non-go-forward location colleagues to support and place them into open roles and nearby locations whenever possible. In addition, we'll educate our customers on the proximity of our go-forward stores and access to our digital platforms. Exiting stores allows us to prioritize our highest return on all opportunities and open more small format off-mall Macy's. At the end of the year, we operated 12 small formats.
As previously disclosed, we plan to open up 30 more in the next two years, including 12 this year, informed by the real estate analysis discussed earlier. With these additional stores, we will have a better understanding of our competitive positioning and long-term potential. Having the right footprint and location is important, but we must also have the right product that has value that we know appeals to our customer. That is why we are revitalizing the Macy's assortment.
Recently, we shifted our merchant responsibilities to a full category approach rather than a separate teams for owned and licensed. Consolidating roles creates more accountability. There is increased focus on the nuances that make each category thrive. With increased visibility and awareness across the entire categories, merchants should be able to provide more consistency in product and experience and reduce duplication.
Bloomingdale's successfully adopted this model several years ago. It resulted in stronger relationships with our partners, diversified product and choice across price points, and helped us grow market share. We also continue to rebuild our private brand portfolio, which capitalizes on white space opportunities that complement market brands and give customers more reasons to shop with us. Private brands have higher merchandise margins and profit contributions relative to market brands.
In fiscal 2023, private brands represented about 15% of Macy's sales versus 16% in 2022, reflecting the exit of several heritage women's brands, including Alfani and Karen Scott. We expect to complete all private brand exits this year. Longer term, we expect private brand volumes to grow as we reimagine existing brands and introduce others, including our latest, State of Day. With a rationalized and focused existing store fleet and better product, we also want to improve the omnichannel experience.
Reflecting learnings from our research, we know we can better serve our customer. We plan to increase resources and investments to improve the experience in our roughly 350 remaining go-forward Macy's locations. We will test and learn and not bite off more than we can chew. We'll be thoughtful, methodical, and unemotional in our approach.
In fiscal 2023, we had a small number of incubator stores which tested new ideas that were based on customer feedback and prioritized conversion. Comps outperformed the broader Macy's fleet by over 350 basis points. That's given us confidence to expand the pilot to 50 doors, which we refer to as our First 50 program. The First 50 program is purposely different from past pilots.
It centers on the customer and is representative of our go-forward geographic footprint, balanced across volume tiers, in stores with strong vendor engagement, supported by more associates on the floor to serve customers, and focused on merchandising and visual presentation. We are conducting additional tests in the first 50 doors this year and plan to apply pertinent learnings to a broader set of go-forward locations beginning in fiscal 2025. Now, let's turn to digital, which is also an important part of the Macy's current and future customer experience. We view digital as the gateway for customers to research, discover, connect, and transact with Macy's.
It's imperative that we show up with inspiring content at the right place, time, and value. Our digital team is relentlessly seeking to better understand our customers' pain points across mobile, app, and desktop platforms. We have reevaluated our foundation to improve search and navigation tools. Customers will be offered personalized communications and recommendations that have a definitive Macy's point of view, culminating in an efficient and speedy checkout.
Rewriting this digital journey should generate greater loyalty and increased conversion. We also expect growth of Marketplace and Macy's Media Network, both of which were designed to improve profitability and increase customer engagement. To conclude on the Macy's nameplate, our focused omnichannel portfolio will empower us to provide a better customer experience. We intend to fuel go-forward locations and our digital channels with curated and compelling assortments, have a better in-stock position and appropriate investments to create a more welcoming environment and enhanced service.
Our new chief marketing officer, who joined us in December, is working closely across teams to align omni touch points to customer expectations and create a modern brand platform for all of our communications. More to come as the year progresses. As I shared earlier, we view fiscal 2024 as a transition and investment year, and we expect to return Macy's, Inc. to consistent comp sales and EBITDA dollar growth beginning in 2025.
Longer term, we aspire to have a compelling physical and digital portfolio in the strongest markets. We are one Macy's, Inc., and our future relies on our ability to offer customers the optionality to shop how, where, when, and for what they desire. As Macy's rebuilds, our luxury nameplates, Bloomingdale's and Bluemercury, are poised for acceleration, which brings us to the second component of our Bold New Chapter, luxury growth. During my 10-year leading Bloomingdale's and Bluemercury, we strengthened relationships with our customers and vendor partners.
Both nameplates have been outperformers within our portfolio and are viewed as leaders in identifying up-and-coming trends and brands. They provide a mix of accessible and aspirational product, top-notch customer service, and an elevated omnichannel shopping experience that's warm and inviting but doesn't take itself too seriously. Over the next three years, we plan to take advantage of our leadership position to more aggressively grow our luxury nameplates. While cognizant of luxury brand headwinds with the aspirational customer stepping back, we believe Bloomingdale's and Bluemercury are uniquely positioned within the broader retail landscape.
Today, Bloomingdale's current foothold is predominantly coastal. The adage that fashion trends begin in L.A., New York, or Miami and then migrate no longer holds true. With the rapid growth of social media and recent population shifts, the fashion playing field has leveled and psychographics have moved. Of the top 50 designated market areas in the U.S., the Bloomingdale's nameplate is physically only in 14.
This morning, we're announcing the accelerated rollout of our small format Bloomingdale's, which we call Bloomies, and our outlets. At the end of fiscal 2023, we operated just 33 Bloomingdale's, three Bloomies, and 21 outlets, which we refer to collectively as the Bloomingdale's nameplate. Over the next three years, we plan to open a combined 15 Bloomies and outlets across new and existing markets. Bloomingdale's also has a strong digital presence, offering compelling content updated regularly in a highly curated marketplace.
Currently, about 80% of Bloomingdale's digital sales are in markets where we have physical stores. We believe that entering new markets should only benefit the digital business further. We have taken the time to prove out the Bloomies and Bloomingdale's outlet concept before committing capital to this accelerated rollout. We are doing the same at Bluemercury, where we have the opportunity to be the fastest-growing luxury beauty retailer and own a greater piece of the approximately $90 billion North American beauty market.
Customers love Bluemercury's elevated skincare, beauty, spa offerings, and high-touch customer service. We operated 159 locations at the end of the fiscal year. Our latest remodels located in Bronxville, New York and New Caney, Connecticut have been well received and will serve as the foundation for the New Blue, which encompasses our total omni evolution, inclusive of updated branding. They'll have an expanded assortment, elevated aesthetics, centralized customer service hubs, integrated spa facilities, and technology to support relationship selling.
Over the next three years, we anticipate at least 30 Bluemercury store openings and remodeling roughly 30 others. Learnings from these doors will guide long-term expansion plans. Similar to other nameplates, digital remains a meaningful opportunity for Bluemercury. To close out the discussion on luxury, we have a high degree of confidence in the Bloomingdale's and Bluemercury and nameplates, which are healthy, accretive, and have strong investment profiles.
Now is the time to capitalize on this momentum, and we expect these investments that we are making will fuel sales growth and margin expansion. Turning to the third and final component of our Bold New Chapter strategy, simplifying and modernizing end-to-end operations. We are committed to delivering a more efficient operating model that better serves our customers. Over the next three years, we have plans to rationalize and monetize our supply chain asset portfolio, streamline fulfillment, improve inventory planning and allocation, and deliver a more scalable technology platform.
A modern operation is our objective throughout the company. Aligning to the anticipated future omni demand provides synergistic cost savings and allows us to improve our ways of working. To support that, in January, we reduced our corporate workforce by 13%. We took out layers of management, consolidated positions, and offshore selected roles.
At the same time, we remain focused on hiring the best talent to support our view of the future. Adrian is leading the end-to-end operations work. He will now provide more detail before discussing our fourth-quarter results and forward outlook. Adrian?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you, Tony, and good morning, everyone. Over the past several years, we've taken proactive steps to fortify our operations, including strengthening our balance sheet, managing expenses, and tightening inventory controls. This provides the foundation for our Bold New Chapter, which is designed to return Macy's, Inc. to sustainable, profitable growth, provide meaningful free cash flow generation, and enhance shareholder value.
Our new strategy gives us the opportunity to simplify and modernize our supply chain, planning and allocation, and technology operations, which should drive improved inventory productivity and, ultimately, better sales. Efforts should result in about $100 million of cost savings this fiscal year, an increase to an annual run rate savings of approximately $235 million by 2026. Savings will fund the investments necessary to support our strategy, offset inflationary cost pressures and constrained fulfillment expense and SG&A dollar growth, and are factored in our near- and longer-term outlook. For supply chain, we should benefit from consolidating capacity as we close centers with higher processing costs and monetize select assets.
In addition, we plan to further reduce fulfillment costs by increasing automation across several facilities. Our efforts should result in faster and more reliable deliveries, greater efficiencies, and a rightsized distribution center network. The inventory planning and allocation changes underway should help improve how we flow products from vendors to customers. They should provide quick replenishment in stores and fulfillment centers, reduce split shipments, and lead to higher in-stocks, particularly for best-selling items.
We also plan to streamline and automate business processes. We will leverage this across the Macy's Inc. portfolio. These efforts are already underway and encompass reducing dependency on expensive software and hardware by consolidating our vendor base, simplifying our application portfolio by moving over 90% from on-premise to the cloud, and eliminating mainframe applications, which reduces expensive consumption.
Embedded in our end-to-end operations is AI, which helps speed up decision-making through access to real-time data and tools. As an organization, we continue to build our data science and AI capabilities in areas such as forecasting, inventory allocation, workload optimization, and pricing. We are also experimenting with generative AI that should help improve customer and colleague experiences. With that, let's turn to our fourth-quarter results.
Let's start with omnichannel sales. Net sales of $8.12 billion were down 1.7% to last year with comparable owned-plus-licensed sales down 4.2%. The 53rd week contributed $252 million to net sales. For the quarter, owned AUR rose 5.5%, driven primarily by changes in product and category mix.
Other revenue, which is comprised of net credit card revenues and Macy's Media Network was $255 million, down 20% from the prior year and better than expectations. Parsing that out, credit card revenues decreased 26% from prior year to $195 million, and Macy's Media Network rose 5% to $60 million. By nameplate, Macy's net sales declined 2.5%, and comparable sales declined 4.7% on an owned-plus-licensed basis. Go-forward locations' owned-plus-licensed comparable sales outperformed non-go-forward by about 500 basis points.
Both backstage store within stores and off-mall small formats continue to outperform full-line stores. Within private brands, I.N.C. outperformed the Macy's women's apparel segment on a year-over-year basis, and On 34th is now one of our top 10 ready-to-wear brands. And marketplace GMV on a 13-week basis grew by 145% from last quarter.
At Bloomingdale's, net sales were up 3.5%, and comparable sales were down 1.6% on an owned-plus-licensed basis. Marketplace GMV on a 13-week basis grew by roughly 770% on a sequential basis. Bluemercury posted its 12th consecutive quarter of comparable sales growth with net sales up 7.8% and comparable sales up 2.3%. Turning to gross margin.
Our fourth-quarter gross margin rate was well ahead of expectations, rising 340 basis points to 37.5%. Merchandise margin was up 260 basis points to last year. We were disciplined in our approach to markdowns and clearance. Delivery expense as a percent of sales improved 80 basis points as better inventory allocation led to reductions in packages per order and delivery distance.
Now, let's discuss inventory productivity. Year-end inventories were up 2% to last year and down 16% to 2019, reflecting our desire to own more seasonally appropriate transitional product. We had more open to buy than the prior quarter and comparable period last year with improved composition, freshness, and volume. Next, expense discipline.
SG&A expense was $2.4 billion, down 2% from the prior year, driven by ongoing expense management, partially offset by investments in our business. As a percent of total revenue, SG&A was 28.7%, 10 basis points higher than last year, driven by the decline in total revenue. Adjusted diluted EPS was $2.45 versus $1.88 in the prior year. In the fourth quarter, we recognized approximately $1 billion of impairment, restructuring, and other costs, which were excluded from adjusted diluted EPS.
Included in the $1 billion was roughly a $950 million noncash asset impairment charge, primarily related to the approximately 150 locations planned for closure over the next three years and the remaining associated with corporate assets. Turning to cash and capital allocation. We ended the year with over $1 billion of cash in our balance sheet. We generated $1.3 billion of operating cash flow and had $993 million of capital expenditures; free cash flow, inclusive of proceeds from real estate sales, with an inflow of $398 million.
And we paid $181 million in dividends. Now, turning to our fiscal 2024 outlook. As a reminder, we view 2024 as a transition and investment year for Macy's Inc. The improvements in first 50, small format, digital, and luxury are not expected to offset the anticipated deceleration in non-go-forward location performance as we limit investments in these stores.
Before we get into the details of our outlook, there are several important elements to consider, including that we are renaming owned-plus-license sales comp or O+L, to owned-plus-license plus marketplace or O+L+M. Marketplace has been included in O+L results since its introduction, so there is no historical restatement. Going forward, we will provide relative performance of Macy's nameplate sales performance for go-forward versus non-go-forward stores. In addition, Macy's nameplate has fully converted to cost accounting.
We do not expect any material financial impact as a result of this transition. And lastly, the proposed credit card late fee ruling is not embedded in our outlook. We will incorporate if and when the ruling is finalized and the timing of implementation and changes are known. With that, let's turn to our annual guidance for fiscal 2024.
Please note the heightened clearance markdowns taken in the second quarter of last year on seasonal products are not expected to be repeated, and all asset sale gains are anticipated to occur in the fourth quarter. With that, we expect net sales of $22.2 billion to $22.9 billion. We are modeling a 1% to 4% decline in Macy's Inc. net sales with the disparity between the performance of go-forward and non-go-forward locations widening.
We expect Macy's Inc. O+L+M comp sales, inclusive of non-go-forward locations and digital, to be down approximately 1.5% to up approximately 1.5%. Macy's nameplate, excluding non-go-forward locations, comparable O+L+M sales to be down 1% to up 2.5%. And luxury nameplates comparable O+L+M sales to be about flat to up 2.5%.
We expect total revenues of $22.9 billion to $23.6 billion, with other revenue at about 2.9% of net sales. We expect credit card revenues, excluding any impact for the proposed late fee ruling, to be approximately 74% of other revenue or about $475 million to $490 million, compared to 80% or $619 million last year. We also expect gross margin rate as a percent of net sales to be 39.2% to 39.5%, benefiting from ongoing inventory controls, higher full price sell-throughs, lower promotions, and private brand expansion. SG&A to be 36.6% to 36.8% of total revenue.
With our heightened focus on experience, we are allocating spend to customer-facing investments designed to fuel future sales growth across the portfolio. And we expect full-year adjusted EBITDA as a percent of total revenues of 8.5% to 8.9%. We are also planning a reduction in overall capital spend to approximately $875 million. After interest and taxes, we expect adjusted diluted EPS of $2.45 to $2.85, which does not assume any share repurchases.
And we anticipate $130 million to $150 million of asset sale proceeds and $90 million to $115 million of asset sale gains, primarily reflecting the at least 50 plant closures this year. We will continue to deploy capital prudently to ensure financial flexibility and invest in long-term profitable growth. For the first quarter of 2024, we expect net sales of $4.72 billion to $4.87 billion. As a reminder, we are anniversarying a change in our Macy's return policy, which benefited the first quarter of 2023 by approximately $80 million relative to the current quarter.
Total revenues of $4.85 billion to $5 billion with other revenue at about 3% of net sales. We expect credit card revenues, excluding any impact for the proposed late fee ruling, to be approximately 77% of other revenue or about $110 million, compared to 85% or $162 million last year. We expect gross margin rate to be down no more than 40 basis points to last year, reflecting a normalized clearance and promotional cycle compared to the first quarter of last year when we did not have enough spring transitional product; adjusted EPS to be between $0.10 and $0.16, which assumes no asset sale gains. Please note, last year's change in return policy benefited EPS by $0.07 in the first quarter relative to the current quarter.
And finally, end-of-quarter inventories to be relatively flat to last year. Beginning in fiscal 2025 on our Bold New Chapter strategy, we expect Macy's, Inc. inclusive of the remaining non-go-forward locations that have not yet closed, to achieve annual O+L+M comp sales growth in the low single-digit range; annual SG&A dollar growth below the historic rate of inflation of 2% to 3%; annual adjusted EBITDA dollar growth in the mid single-digit range; capital spend to be below 2024 levels as we remain disciplined with our uses of capital; and free cash flow to return to pre-pandemic levels, allowing us to provide meaningful value for our shareholders. In summary, we end fiscal 2023 with momentum and in a position of financial strength with over $1 billion of cash in our balance sheet.
We entered this year committed to making the tough decisions necessary to return to sustainable and profitable sales growth. While 2024 is a transition and investment year, our plan for future value creation is clear. We have the wherewithal to invest in growth and the team to pursue the transformative actions required to strengthen Macy's, Inc. We are confident this will result in top- and bottom-line expansion, meaningful cash flow generation, and shareholder value creation.
We will keep you updated on our progress against the financial and operational goals we set out today. With that, I would like to hand it back over to Tony.
Tony Spring -- Chief Executive Officer
Thanks, Adrian. Let me briefly touch on the announcement that Arkhouse Management has nominated nine individuals to stand for election to the Macy's Inc. Board of Directors at our annual 2024 meeting. As we have shared, our board is evaluating these candidates and will present it's recommendation in our proxy statement.
These nominations followed the December 1st, 2023 unsolicited nonbinding proposal from Arkhouse and Brigade. And for additional details, we refer you to the two press releases that we have already issued on this matter. As the purpose of today's call is to discuss our financial results and outlook, as well as our Bold New Chapter strategy, we ask that you keep your questions and comments focused here. Before turning to Q&A, I'd like to end with this.
Evolution is in our DNA. In 1858, R.H. Macy opened a dry goods store on 14th Street and 6th Avenue. In 1902, he created a new shopping district with Herald Square, and we've been a cultural touch point ever since.
We are leaders not followers. While we have missed the mark in some years, we're self-aware and have developed a bold strategy to deliver a better experience for our customers. As an organization, we are fully aligned on returning Macy's, Inc. to top- and bottom-line growth, accelerating free cash flow generation, and unlocking shareholder value.
We have the team in place to execute. Our senior leaders are a powerful group, a recently hired external and internal talent with years of institutional knowledge. This team, with their diverse backgrounds and viewpoints, are emblematic of our vision for the new modern Macy's, Inc. With Adrian and I, they are leading our people and evolving our culture to bring our vision to reality.
As we embark on our pivotal new chapter, we are confident that we are building a stronger Macy's, Inc. that is well positioned to thrive and create meaningful value for all of our stakeholders. With that, operator, we are ready for questions.
Questions & Answers:
Operator
Thank you. We will now be conducting a question-and-answer session. [Operator instructions] Please limit yourselves to one question and one follow-up. Our first question comes from the line of Matthew Boss with JPMorgan.
Please proceed with your question.
Matt Boss -- JPMorgan Chase and Company -- Analyst
Great, thanks. So, Tony, on the Bold New strategy -- the Bold New Chapter strategy, could you walk through near-term actions that you're prioritizing to strengthen the Macy's nameplate and just elaborate on the competitive advantage you see from executing your portfolio company approach multi-year? And then for Adrian, could you just help speak to sales trends post holiday, what you're seeing out there, and how best to think about comps in the first half versus back half of the year?
Tony Spring -- Chief Executive Officer
Thanks, Matt. The focus on the Macy's nameplate is threefold. One is to address the underproductive assets within the franchise. Hopefully, that will be about 50 assets monetized this year.
If you recall from the comments in the opening remarks, there's a big delta in sales performance between the go-forward fleet and the non-go-forward fleet on both comp store sales and four-wall EBITDA. In terms of actions that we're taking, we have focused ourselves on the first 50 to make sure that those stores are emblematic of what the future of Macy's brand will be, and that's elevated merchandise assortments, more powerful visual presentations, additional staffing in areas like women's shoes and ready-to-wear. The other piece I would say is ensuring that our digital experience is more consistent. It's providing product pools that allow you to have selection and choice without fatigue and making sure that there's a level of inspiration throughout the brand touch points with the consumer.
And finally, it's leaning into the breadth of our portfolio. So, it's opening stores while we're closing stores, looking at Macy's small-format opportunities, expanding the reach of Bloomingdale's, and leaning into the growth opportunity in Bluemercury. Adrian?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Good morning, Matt. Thank you, Tony, and good morning, Matt. Good to be with you. In terms of the sales trend, let me frame it this way.
When we think about our performance in the fourth quarter, our sales were very much in line with our expectations. And when we think about some of the testing and investment that we did in the fourth quarter, we believe that brings us into momentum into this transition and investment year 2024. As we think about the first quarter, there are a few things that I think is important to note. The first is that there's about an $80 million benefit last year from our return policy change from 90 days to 30 days.
So, we're lapping that this year in terms of first quarter. From a bottom-line standpoint, just reiterate that there aren't any asset sale gains expected in the first quarter, but we had asset sales gains in the first quarter of last year. As we think about the second quarter, we will not -- we do not plan to repeat the elevated levels of clearance markdowns that we had last year. So, from that perspective, we will not be lapping that.
But from a sales standpoint, we're making the investments necessary for growth. We've done a number of testing coming out of last year that have been scaled as 2022 and the first 50, which gives us confidence and conviction of the traction around the top-line sales that we actually have provided in our guidance. The key thing to keep in mind is as we think about 2025, we expect to get back to low single-digit comp sales growth. In the fourth quarter, when we tested our assortment changes, we saw a 350-basis-point improvement in trend in those stores.
Our staffing changes also showed and yielded favorable results, and we expect to have more traction on our Bold New strategy or Bold New Chapter strategy initiatives as we progress through the year in stores, in digital, and marketing in different parts of our business. Quarter to date, without providing any update on quarter-to-date performance, we have a lot of the quarter still ahead of us. We're reporting a little bit earlier this year than we did last year than prior years. So, we look forward to sharing with you our updated view on first quarter later in the year.
Matt Boss -- JPMorgan Chase and Company -- Analyst
Great. Thanks for all the color. Best of luck.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you.
Tony Spring -- Chief Executive Officer
Thanks, Matt.
Operator
Thank you. Our next question comes from the line of Oliver Chen with TD Cowen. Please proceed with your question.
Oliver Chen -- TD Cowen -- Analyst
Hi, Tony and Adrian. As we think about the guidance on the negative to positive comp, what are key factors that could drive upside or downside as you monitor a fairly volatile environment? And, Adrian, what's incorporated for merchandise margin? You've done a very good job managing inventories tightly and merchandise margin. Would love to know on the guidance what you're thinking. And then as we look forward to follow up, there's a lot of things happening quite positively with marketplace and advertising, as well as luxury, as you think about Bloomingdale's and Bluemercury and seeing the momentum there.
How do we dimensionalize how those factors will contribute to sales and margins? And if they can help -- how they'll contribute to both of those to generate more consistently positive revenue growth? Thank you.
Tony Spring -- Chief Executive Officer
Thanks, Oliver. I'll take the first piece of it. So, I think in terms of the range on our sales forecast, we have a lot of newness in the spring season, whether that be the composition of our inventory in the first quarter, more seasonally appropriate, the right mix of both newness as well as transitional product. I think it's the lapping of the expansion of Nike.
So, we were not up against Nike until the third quarter of this year. It's the introduction of Under Armour into more stores. I think it's the -- being up against less exiting of the private brand portfolio and the full year of On 34th and the reimagination of I.N.C. So, I think that from within the Macy's construct on both private brand and new market brands, we feel like we're entering 2024 with more upside, and the headwinds come down a little bit.
As it relates to the contribution of Bloomingdale's and Bluemercury, they're clearly smaller parts of our portfolio today. They have ample opportunity for growth. Both are leaders within their categories. The beauty market is obviously far bigger than our fair share today.
And Bloomingdale's is coming off of several years of good performance and has the opportunity to capitalize on the disruption in the marketplace. They are not solely a luxury brand, which means they have growth potential across a number of different categories with a very loyal multi-generational customer.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Oliver, it's great to be with you this morning. Let me speak to your comments around merchandise margin and gross margin. We've been very disciplined on inventory management over the years, and that continues to serve us quite well. With the 340-basis-point improvement over last year in the fourth-quarter merchandise margin, it's a combination of managing our inventory well.
And we've talked a lot about volume, about freshness, and about composition, but also it's about managing our gross margin expense appropriately like delivery expense. We spoke to a number of the initiatives that we're doing as we look at our end-to-end operations. And what you see with the 80-basis-point improvement in delivery expense, it's really around better allocation and simplifying our fulfillment processes, so we're benefiting from that. As we continue to think about these disciplines going forward, I'm really excited about what it means on the cost accounting.
We are now fully on cost accounting. From an inventory management standpoint, we're now able to focus our energies less on markdown management, but much more so on the demand and selling of our products more than ever before. From a margin standpoint, by having SKU level profitability, we can make really good decisions about the SKUs we keep versus the SKU we edit, and for the SKUs we keep, what's the most profitable subchannel to place it? Should it be owned in our network? Should it be licensed, or should it be marketplaced? And then the third piece is just the cultural change that Tony and I talked a lot about, shifting from away from a focus of markdown management to really selling and serving the customer well. So, we're very, very pleased with that.
When we think about marketplace, we're excited about it from two dimensions. One is just the customer experience, broader assortment, great styles, edited selection, but also again, from a profit pool standpoint, being able to have that additional flexibility and that additional dimension of carrying assortment that may be more profitable for us on marketplace versus in our own distribution channel. So, merchandise margin, gross margin will continue to be a focus for us, and we're excited about the additional initiatives we plan to bring online within the operations of the organization across the portfolio for the next several years.
Oliver Chen -- TD Cowen -- Analyst
Best regards. Thanks.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you, Oliver.
Tony Spring -- Chief Executive Officer
Thanks, Oliver.
Operator
Thank you. Our next question comes from the line of Brooke Roach with Goldman Sachs. Please proceed with your question.
Brooke Roach -- Goldman Sachs -- Analyst
Good morning, and thank you for taking our question. I was hoping you could provide a little bit more context on the plan to close the 150 Macy's stores and invest in first 50. What actions are you taking to protect the e-commerce sales and retain customers that may be impacted by these closures? And within the first 50, can you speak to how this plan compares to previous top-door strategies such as the Growth Fifty strategy, which we saw a few years ago? Thank you.
Tony Spring -- Chief Executive Officer
Thank you, Brooke, for the question. First, as it relates to the decision on the closure of the 150, I really just want to underscore the dimension and difference between the go-forward fleet and the non-go-forward fleet. The 150 these stores represent 25% of our gross square footage at Macy's, Inc., but less than 10% of our sales. It was a 500-basis-point difference between the sales performance in 2023 between those stores and our go-forward stores and over 950 basis points difference in our EBITDA performance on a four-wall basis between the go-forward fleet and the non-go-forward fleet.
So, the economics obviously makes sense. But what I would say is the team spent greater part at 6.5, seven months doing a complete diagnostic on our entire portfolio looking at demographic, psychographics, digital demand, the condition of the center, the condition of our store, capital required to bring the stores to standard. And I think we made a decision on our go-forward fleet that was far more comprehensive than it would have been in the past. So, I feel good about the go-forward fleet, the decisions we've made.
And the value to monetize is greater than the value to operate in these stores. So, relative to the differences between the first 50 and any other focused store plan previously, this one is rooted in the customer feedback. We talked to 60,000 customers to understand what they were looking for from the Macy's brand. It was an enjoyable shopping experience.
It was clear and easy to understand value, and it was a compelling product. So, these first 50 stores are going to have elevated merchandise assortments. They're going to have better visual presentations. They're going to have additional staffing in important areas like women's shoes and women's ready-to-wear.
They're going to have the kind of eventing that a local store is looking for. And then finally, your question about digital demand recapture. We have stores in these markets beyond the stores we're closing, not every market, but most markets. So, we'll be looking at neighboring stores to capture that demand as well as digital outreach to make sure that we lose as little as possible.
Adrian?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Just to build on Tony's point, I would just add a few more things. The first thing is with regards to the monetization, we expect to close these stores as soon as possible without compromising value for our shareholders. And as you know, we have a track record over the past several years since 2015 of over $2.4 billion of sales proceeds. We've monetized real estate last year.
We had a few real estates, so we're encouraged by that. The second thing, just building on Tony's point, is the ability to distort investments and our energy of our leadership team on the 350 go-forward fleet, which we believe have the capacity to grow. They're in solid locations. Customers are shopping them.
We've done the research. But more importantly, as we think about this combination of really optimizing our fleet, which includes the omni market, not just the stores, we believe that we can unlock value for our shareholders with the strategy.
Brooke Roach -- Goldman Sachs -- Analyst
Great. Thanks so much.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you, Brooke.
Tony Spring -- Chief Executive Officer
Thank you.
Operator
Thank you. Our next question comes from the line of Ashley Helgans with Jefferies. Please proceed with your question.
Blake Anderson -- Jefferies -- Analyst
Hi. This is Blake on for Ashley. Thanks for taking our question. I wanted to ask on the evolution of the medium-term EBITDA guide? I know previously, you had mentioned low double-digit margin range.
Now, it's a mid single-digit growth, which is above comp growth. Just wondering about that evolution, how much the store closures impact is having on it? And then talk about the factors that would still be able to get you maybe to that low double-digit range if possible.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Good morning, Blake. It's great to be with you. The important thing that we would say here is that we're pursuing A Bold New Chapter strategy, which is designed for profitable growth. That's what we expect of ourselves, and that's what our shareholders and our board expect of us.
We are committed to driving EBITDA expansion under the strategy. But with this strategy, we've effectively changed how we're measuring our progress. What Tony and I have spoken to on this call are the financial and operating outcomes that we expect and are holding ourselves accountable to track our progress, but we remain very committed to EBITDA expansion and very committed to that growth. As we talked about, starting next year, we expect EBITDA to expand at the mid single-digit range.
And that's about a better customer experience, the cost disciplines that we're putting in place, the healthy and elevated gross margin profile that we continue to sustain because of our inventory discipline, our inventory discipline as well as our cost accounting practices that are coming online this year. So, we are very pleased with how we're approaching it, but we expect and commit to continued EBITDA expansion going forward.
Blake Anderson -- Jefferies -- Analyst
Got it. Thank you. That's very helpful. And then our follow-up is on the increased focus on just having a relevant merchandise assortment.
I was wondering if you could talk about how much you're maybe leaning into existing brands versus adding entirely new brands versus private label? And maybe just talk about any other structural or organizational changes you're making to really kind of ramp up that assortment relevance.
Tony Spring -- Chief Executive Officer
Sure, Blake. I think the importance of the merchandise assortment is the right combination of work on refreshing and modernizing our private brands, which I think we've spoken to a good amount over the last few quarters. We feel like we are making solid progress. The go-forward performance of our private brand fleet is well performing to our plan, and we just need to get through the remaining disposition of the private brands that are not go-forward.
So, so far, I feel good about the work that we've done in private brand, have a little more work to do to exit the remaining private brands, but that should be a growth vehicle for us in the years to come. In terms of market brands, we're excited about Nike. We're excited about the additional launch or expansion of Under Armour. We have a number of other brands that we'll be launching over the course of the year.
But this is an exercise that exists within the merchant organization now that we have a full category responsibility and looking at both owned and licensed, inclusive of how we capitalize on the growth of Marketplace. We want to have an assortment that offers a range and variety but doesn't have the level of redundancy. There's a level of SKU rationalization that we're going through to make sure that in every category, we are offering the customer something that we can both be in stock on and the size and color basis but offer them also compelling value and relevancy. So, I would say more work to come but very pleased with the initial results in private brand and the work we're beginning now in earnest in market brands.
Blake Anderson -- Jefferies -- Analyst
Understood. Thank you, both.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you, Blake.
Operator
Thank you. Our next question comes from the line of Paul Lejuez with Citi. Please proceed with your question.
Paul Lejuez -- Citi -- Analyst
Hey, thanks, guys. Just a couple quick ones. Curious about your transaction versus ticket assumptions within your comp expectations both for this year and as you think about the longer-term dynamic. Second, Backstage, just curious what these this new plan, this new restructuring plan, what does it mean for the Backstage business? And then last, Adrian, probably for you.
Marketplace -- the accounting on marketplace sales, how does that work? What are you recording in terms of sales? How does that flow through the P&L? Thanks.
Tony Spring -- Chief Executive Officer
Thanks, Paul, for the questions. As it relates to the opportunity in off-price, we see Backstage as being an important vehicle, not just for productivity, but also capturing the value-conscious consumer at Macy's. And obviously, Bloomingdale's off-price continues to outperform, but we see that as a growth vehicle for that brand as well. So, off-price to luxury, Backstage remains an important ingredient in our overall value equation.
In terms of transaction and ticket assumptions for 2024, we see a low single-digit growth in AUR. The traffic being slightly down to a year ago and conversion holding somewhat stable. So, the consumer remains under pressure, I'm not going to worry about what we can control. But the team is highly focused on leaning into the things that we've worked on over the last several months, which is creating a better and more compelling assortment, making sure that we're working much harder to modernize our marketing and digital exposure and working in-store to make sure that the presentation is better than it's been in the past.
I'm excited about the visual investments we've made and certainly the focus we have on our first 50.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Paul, just let me give you three metrics, and then I'll walk through kind of how it flows through with marketplace, comp sales growth, net sales, and EBITDA. When we look at our comp sales growth, we call it O+L+M, that is reflected from a marketplace GMV standpoint in our comp sales number. For every dollar of GMV, we get what we call a take rate or commission rate, which we call kind of marketplace revenue. And that is actually reflected in our net sales.
The operation there operates a lot like our license sales business. So, that take rate is a percentage of the GMV the EBITDA pretty much flows through. There are some expenses of our team and our licensing around the marketplace platform. But what's nice about the EBITDA benefit is with scale assortment on the marketplace, the rate of EBITDA increases pretty rapidly.
And again, our focus on marketplace is about the experience. But what we're seeing is a lot of opportunity for growth as we've seen Q3 to Q4 and as we think about future years.
Tony Spring -- Chief Executive Officer
I guess, I would also add -- I would add, Paul, that the team is highly focused on the incrementality in marketplace. So, the opportunity to pursue brands in categories where we don't have an existing assortment, and we're seeing the best build on those areas in particular.
Paul Lejuez -- Citi -- Analyst
Thank you. Good luck.
Tony Spring -- Chief Executive Officer
Thank you, Paul.
Operator
Thank you. Our next question comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.
Dana Telsey -- Telsey Advisory Group -- Analyst
Hi. Good morning, Tony and Adrian. As you think about the store closures that you're doing, is there any -- as you think on the remaining base, what's the geographic spread? How do you think of off-mall and on-mall? What does the portfolio look like? And then on the private brand expansion and extension saw State of Day this week or last week, how are you thinking about the growth of that going forward and the potential accretion to gross margin? Thank you.
Tony Spring -- Chief Executive Officer
Thanks, Dana, for the questions. We believe in store. So, I think these are always tough conversations, not only for the colleagues affected and for our brand partners. But when these stores, 25% of our gross square footage only 10% -- a little less than 10% of our sales, they're underproductive.
And we have to focus on making sure that we have the best stores, not the largest number of stores. So, yes, we want to have both strong on-mall presence, some of the best stores in the country. We want to also pursue off-mall to make sure that we have availability and convenience and where a lot of footsteps are going today. But we're going to remain a majority mall-based freestanding store company with the right complement of off-mall stores to make Macy's and Bloomingdale's more convenient.
We're excited about the launches day to day. It's gotten a nice early response from the consumer. It's only 2.5 weeks on the floor. So, pleased there.
And I think as we've stated on private brand, this is our opportunity to make sure we're filling in white space, make sure that we are complementing our market brands. It obviously offers greater margin and greater profit contribution than our market brands. But we also know that our market brands are the majority of our business. So, this is a healthy balance that we, as merchants, need to make sure that we maintain, the right relevant market brands, the right range and variety of price points.
And we complement that with the missing elements in white space and price points and value with what we do in private brands.
Dana Telsey -- Telsey Advisory Group -- Analyst
Thank you.
Tony Spring -- Chief Executive Officer
Thanks, Dana.
Operator
Thank you. Our next question comes from the line of Michael Binetti with Evercore ISI. Please proceed with your question.
Mike Binetti -- Evercore ISI -- Analyst
Hey, guys. Tony, Adrian, thanks for taking our question. Congrats on a nice holiday. I just want to ask on, I guess, on the gross margin for first quarter guided down after a pretty impressive beat in fourth quarter.
Could you walk us through the puts and takes a little bit? I get the transition from fourth quarter to first quarter with the return policy change. Adrian, I think you might have said there's no impact from the revenue recognition change. But then the transition from gross margins being down in first quarter to being up for the rest of the year and I think up pretty meaningfully, maybe you could just help walk us through that transition a little?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Absolutely. And great to be with you, Mike. Let me just talk a little bit about expectations for the first quarter versus full year. First, the prior-year first quarter relative to this year included the $80 million that I referenced a little bit earlier.
And that equates to about $0.07 of EPS as I mentioned a little bit earlier in my opening comments. The second thing is our expected Q1 gross margin reflects a more normalized clearance and markdown cycle compared to the first quarter of last year when we remember they did not have enough spring seasonal products. So, that's important to mention as we think about a little bit higher inventory coming into the quarter but having that transitional product to drive both top and bottom line. The third thing I would say is, look, we're investing in our customer experience.
So, based on the research and the test that we've run, both Tony and I have spoken to that quite a bit in our opening remarks, we believe that we have to invest in the customer experience to grow and grow profitably. And so, as we think about also one last thing about asset sale gains, we don't anticipate asset sale gains in the first quarter. We expect that to be all in the fourth quarter of this year, but we did have asset sale gains in the first quarter last year. So, that's kind of the composition of how we think about kind of the margin profile in the first quarter relative to the full year.
Mike Binetti -- Evercore ISI -- Analyst
Is that specific to the gross margins up as much as they are in 2Q through 4Q?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Well, I think what you'll see with regards to gross margin specifically, we continue to expect to have a healthy level of gross margin. As I mentioned a bit earlier, inventory disciplines are very mature within our business now. The new capabilities that we're bringing online with regards to cost accounting, we're excited about. We have a number of process and simplification initiatives as part of our end-to-end work to manage and bring down our delivery expense.
You saw some of that benefit in our early testing in Q4 when you saw a 80-basis-point difference. So, the disciplines in gross margin and the disciplines in delivery expense as part of that, that will continue and only continue to get better. But we do want to recognize that as we think about bottom-line margin and EBITDA that we're investing in the customer experience to grow. So, I wanted to make sure that you had kind of a full view of our margin profile.
Mike Binetti -- Evercore ISI -- Analyst
OK. If I could sneak in a second one. On the credit income, you're guiding it down to 30 for the year that excludes the potential regulation change on late fees, but it was down 30 in the fourth quarter. I'm trying to figure out why it would still be down as much or if that's just a conservative assumption on your part.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Well, if you look at what's happening in the broader industry in retail, what you see are a combination of things. The first thing is that the consumer remains under pressure. And as a result, what we're seeing across the industry are higher credit card balances and higher delinquencies really returning to more normalized levels. As you know, Mike, the last few years had an abnormally low or historically low level of net credit losses, delinquencies as folks were flushed with cash.
But now, we're back to more normal times. And so, what's reflected in our credit card revenues, which does exclude the impact from late fee ruling, is really the increase in net credit losses as we are more in a normalized environment.
Mike Binetti -- Evercore ISI -- Analyst
OK. Thanks a lot, guys. Congrats again on a nice holiday.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you so much, Mike.
Operator
Thank you. Our next question comes from the line of Bob Drbul with Guggenheim Securities. Please proceed with your question.
Bob Drbul -- Guggenheim Partners -- Analyst
Hi, good morning. Can you spend a little bit more time on the inventory, I guess, the plans around the inventory and how you're thinking about inventory throughout the year? Just -- I guess, I'm just curious if you think that with some of the newness that you're bringing in, will that be the plan for the full year as you think about fall and into holiday, just especially as it relates to sales? Thanks.
Tony Spring -- Chief Executive Officer
Bob, let me take the first part of that, and I'm sure Adrian will add. Our plans incorporate the liquidity to buy into the newness that we've described and to be able to chase into opportunities as they occur. So, we retain an inventory reserve in each of our areas of business to make sure that we both have made commitments to brands that require that, and at the same time, hold back the flexibility to should opportunities arise or should softness occur that we can pull back as necessary. But all of that has been incorporated into our forecast.
And I think that inventory should be on or around flat to last year as we begin to improve sales.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Just to build on Tony's comments, there's another dimension of inventory that we're focused on this year with our data science tools, and that's really around continuing to get better on the allocation side. So, as we think about the style, the brand, the color and size, allocated by market, allocated by channel, allocated by store, we see that there are opportunities to drive the top line by actually increasing product availability and stocks by putting in some new procedures. And this is one of those places where the data science and being able to scale that data science with some new capabilities is something that we're leaning into. But we believe, with all the work that's being done to have the right product in the assortment, we also want to make sure it's in the right place.
And that will also complement our ability to grow the top line as well.
Bob Drbul -- Guggenheim Partners -- Analyst
Great. Can I just credit -- a credit question as well? In this quarter, there was a note around the impact of sort of better contractual profit sharing within your partner. Can you just talk about how you're positioning? I guess, what drove the better-than-expected sort of contractual profit? And then as you think about the prospects of the credit filing, the late fee filing proposal, just where you think there might be opportunities if something were to be implemented negatively?
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Absolutely, Bob. It's a good question. So, the terms of our CD agreement is pretty much predetermined. So, there's clearly a little bit of benefit in terms of how we think about the profit sharing based on the level of credit card revenues and receivables that we actually build.
I think the more important conversation is how do we actually increase usage of our credit card. And there's a lot of work that's happening around our loyalty program, around the use of our credit card to drive engagement with our customer, and just thinking about that program more broadly. There's real opportunity there. We don't have customers that are tapping out on their spend on average.
We actually see that our customers do have capacity to spend and do have capacity to use our card because they are already shoppers at Macy's or Bloomingdale's. From a mitigation standpoint, we're already thinking through and partnering with Citi on mitigation factors for if and when the late fee ruling is actually implemented. As I mentioned a bit earlier with Mike, we have not included the late fee impact in our outlook for this year, but we're working on mitigation factors in case that were to happen. And so, that's something that we're very thoughtful about working through and trying to get ahead of us.
Bob Drbul -- Guggenheim Partners -- Analyst
Great. Thank you.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you, Bob.
Operator
Thank you. Our next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question.
Alex Straton -- Morgan Stanley -- Analyst
Perfect. Thanks a lot for taking the question. Just a couple from me. Just first, can you walk us through how maybe you factored in the 53rd week reversal into your guidance just so we can understand how that flows through the year? And then secondly, just on the long-term targets, can you break down that low single-digit comparable sales growth number for me in terms of kind of how you arrived at that level as comfortable? Thanks a lot.
Tony Spring -- Chief Executive Officer
Let me take the second part of the question first, Alex. In terms of our low single-digit sales target, it reflects the delta that we see today between our go-forward fleet versus our non-go forward fleet. So, first, it's based on store sales. There's an opportunity in our existing Macy's and Bloomingdale's and Bluemercury fleet to grow comp sales starting in 2025 when you exclude the non-go-forward locations.
Second, it's the return of growth in digital, which is a breakdown between lower growth in our own digital business and accelerated growth in the marketplace business. And then finally, it's beginning to add versus delete from our private brand portfolio or making sure that all the work that we've done in analytics on our assortments with SKU rationalization and the pursuit of brands that are missing from our portfolio begin to take hold. So, there's an ample opportunity to grow across all three nameplates by making sure that our assortments are appropriate, as Adrian talked about, making sure that our inventory is accurately allocated between the channels, and getting into a more normalized environment where we're not up against as many discontinued private brands.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Good to be with you this morning, Alex. So, the 53rd week last year was about $252 million of our sales coming out of the fourth quarter. As we think about 2024, we're making the adjustments with regards to the calendar and promotional shifts given that 53rd week. I think the way to think about it from our perspective, from a comp standpoint, is we're focused on more full price sell-through getting the right combination of assortment in terms of variety, breadth, and depth and also making sure that we're actually positioning our content to the customer across channels in a way that allows us to have more full price sell-through and less discounts.
And so, we're navigating that throughout the year, but we're encouraged with the traction that we're seeing, particularly in the test and first 50 stores. We're pleased with the traction that we're seeing, and we'll continue to keep you updated as that evolves throughout the year.
Alex Straton -- Morgan Stanley -- Analyst
Thanks a lot. Good luck.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Thank you.
Operator
Thank you. Ladies and gentlemen, our final question this morning comes from the line of Chuck Grom with Gordon Haskett. Please proceed with your question.
Chuck Grom -- Gordon Haskett Research Advisors -- Analyst
Hey, thanks. Congrats, Tony, on the new position again. Just on the transaction decline in the fourth quarter. I was wondering if you could parse that out across your various income cohorts that you cater to.
And then, Adrian, on the first-quarter comp guide, is that on a shifted basis or a non-shifted basis, given the 53rd week last year?
Tony Spring -- Chief Executive Officer
Good to be with you, Chuck. I think the comment about the decline in fourth-quarter transactions, was more pronounced at Macy's than had Bloomingdale's or Bluemercury, although all segments are under pressure. And the decision is more today about buying those things that people are looking for that sometimes are a higher AUR and then we get fewer units versus customers not shopping. So, we're really trying to follow the customer in this regard, make sure that the inventories are shifted to where we see the business happening.
It's always one of the advantages, I think, of being a multi-category and multi-brand retailer is that we have the opportunity to have content, where, when, and how the customer shops as long as we're paying attention to the most important signals.
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
As we think about the first-quarter comp, it really just reflects the calendar shifts that we're doing with regards to our promotions and the calendar coming out of a 53rd week. We're encouraged with some of the traction that we're seeing with regards to test coming out of the fourth quarter. But from our perspective, the number of the shifts that I mentioned earlier is how we're approaching it.
Chuck Grom -- Gordon Haskett Research Advisors -- Analyst
OK. I'll sort it back later with you, Adrian. And then just bigger picture, on revitalizing the assortment and your comment earlier, Tony, on duplication, I think it's pretty interesting. Just wondering if you could maybe size up the opportunity, what you learned at Bloomingdale's with this endeavor, how long it took to take to start to see some of the benefits?
Tony Spring -- Chief Executive Officer
Look, it's a process that every merchant and every planning partner has to go through in order to have the most compelling assortment in every category. We work in multiple seasons at one time. We're obviously executing the spring season, planning the fall season, and in some areas are beginning to be an exercise. But it's not a multiyear exercise.
It starts with the ability to kind of ebb and flow or shrink or grow depending on what's happening in the particular business segment. When something occurs where jackets are important or blazers are important, you want to have a more robust assortment of blazers. And when you return to a moment where sweaters are more important, you need to downsize the amount of blazers you carry and augment the amount of sweaters. And you don't want to have all black sweaters, and you don't want all of them to be embellished.
So, the ability to kind of look at your assortment as the customer will see it, make sure that you're serving a multigenerational customer with a variety of price points, understanding where brand is important, where price is important, and where style may be important. And sometimes it's all three. I think in my kind of learning and listening with the Macy's team over the last six to eight months, the team is really leaning into this. I think you'll see the assortments improve as we move sequentially through the quarters this year and then make meaningful improvement as we get into 2025.
Operator
Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Spring for any final comments.
Tony Spring -- Chief Executive Officer
Thank you, operator. We look forward to updating all of you on our Bold New Chapter strategy progress in the coming quarters. I hope everyone has a great day.
Operator
[Operator signoff]
Duration: 0 minutes
Call participants:
Pam Quintiliano -- Vice President, Investor Relations
Tony Spring -- Chief Executive Officer
Adrian Mitchell -- Chief Financial Officer and Chief Operating Officer
Matt Boss -- JPMorgan Chase and Company -- Analyst
Oliver Chen -- TD Cowen -- Analyst
Brooke Roach -- Goldman Sachs -- Analyst
Blake Anderson -- Jefferies -- Analyst
Paul Lejuez -- Citi -- Analyst
Dana Telsey -- Telsey Advisory Group -- Analyst
Mike Binetti -- Evercore ISI -- Analyst
Bob Drbul -- Guggenheim Partners -- Analyst
Alex Straton -- Morgan Stanley -- Analyst
Chuck Grom -- Gordon Haskett Research Advisors -- Analyst
