Macy's Q2 Earnings Call Highlights

Key Points

• Macy’s delivered stronger second-quarter results: Net sales rose 1.1% to $4.9 billion, comparable sales increased 2.7%, adjusted EBITDA climbed to $457 million, and adjusted EPS rose to $0.63 from $0.35.
• Bloomingdale’s and Bluemercury led nameplate growth with comparable-sales gains of 11.3% and 6.2%, respectively, while Macy’s comparable sales increased 1.1%. The company also cited continued progress from its 200 reimagined Macy’s stores.
• The company raised its full-year outlook to net sales of $21.675 billion-$21.825 billion, comparable-sales growth of 1%-1.5%, and adjusted EPS of $2.15-$2.35, helped by better-than-expected performance and reduced tariff and fuel headwinds.

Macy's NYSE: M reported higher second-quarter sales and profitability, citing continued momentum from its A Bold New Chapter strategy across the Macy's, Bloomingdale's and Bluemercury nameplates. The company raised its full-year outlook after results exceeded its prior guidance, while maintaining its second-half sales assumptions.

Chairman and CEO Tony Spring said the retailer delivered revenue growth, comparable-sales gains across each nameplate and channel, and better-than-expected results on key financial measures. “These results reflect the substantive enterprise-wide improvements we are making in our business that are resonating with our customers,” Spring said.

Second-Quarter Results

Net sales increased 1.1% to $4.9 billion from $4.8 billion a year earlier. Adjusting for an approximately $35 million impact from 14 store closures completed at the end of last year, net sales rose 1.9%, according to COO and CFO Tom Edwards.

Comparable sales, including owned, licensed and marketplace sales, rose 2.7% on a reported basis, following 1.9% growth in the prior-year quarter. On a go-forward basis, comparable sales increased 2.8%.

• Macy's comparable sales rose 1.1%.
• Bloomingdale's comparable sales increased 11.3%.
• Bluemercury comparable sales grew 6.2%.

Total revenue rose 1.2% to $5.1 billion. Other revenue, including credit-card income and Macy's Media Network revenue, increased 3% to $193 million. Credit-card revenue grew 2% to $156 million, supported by what Edwards described as a healthy credit portfolio and stable net credit-card losses. Macy's Media Network revenue increased 9% to $37 million.

Gross margin was $2 billion, or 41.5% of net sales, compared with 39.7% a year earlier. Excluding tariff refunds and the impact of ongoing tariffs and fuel, the underlying gross-margin rate rose about 10 basis points, helped by favorable brand mix and benefits from the Reimagine 200 store program, partially offset by channel mix.

Adjusted EBITDA increased to $457 million, or 9% of total revenue, from $373 million, or 7.5% of revenue, in the prior-year period. Adjusted earnings per share were $0.63, compared with $0.35 a year earlier. The quarter included an approximately $0.23 net benefit from tariff refunds; excluding that benefit, adjusted EPS would have increased 14% from the prior year, Edwards said.

Store Strategy and Nameplate Performance

Spring said Macy's posted its fifth consecutive quarter of positive comparable-sales growth. The retailer’s 200 reimagined Macy's stores generated 1.9% comparable-sales growth during the quarter. Those locations now represent nearly 60% of go-forward Macy's stores and 75% of go-forward Macy's store sales.

The reimagined stores are supported by changes in staffing, local-market execution, events and assortment. Spring said Macy's total fleet net promoter score has risen 10 points since the strategy began. The company plans to pilot additional store initiatives late this year in preparation for further program expansion in 2027, though executives said they would provide detailed fleet-expansion plans during the fourth-quarter call.

Macy's digital channel also produced positive comparable-sales growth, aided by brand and assortment improvements and growth in the marketplace business. The company is expanding its AI-powered conversational shopping assistant, Ask Macy's, from digital platforms to store associates.

At the Macy's nameplate, the company said watches, dresses, petites, career sportswear, kids, handbags, fragrances and men’s and women’s shoes outperformed. Plus sizes, intimates and women’s sleepwear were softer. Big-ticket categories improved from the first quarter but remained below the prior year.

Bloomingdale's reported its highest second-quarter sales volume in its 154-year history. Growth occurred across channels, markets and categories, with particular strength in ready-to-wear, men’s apparel, fine jewelry, fragrances and tabletop. The company introduced Ulla Johnson, Proenza Schouler and Dries Van Noten, while expanding distribution of several other brands.

Bluemercury’s 6.2% comparable-sales increase was driven by its Summer Party marketing campaign and growth in dermatological skincare, makeup and fragrances. Spring also welcomed Alex Choueiri as Bluemercury’s new CEO.

Tariff Refunds, Inventory and Cash Flow

Macy's received $98 million of tariff-refund proceeds during the second quarter and another $18 million after quarter-end, for a total of $116 million. Edwards said the company has received all expected refunds.

Approximately $20 million, or $0.05 per share, of the proceeds will flow to the bottom line. Macy's plans to reinvest the remainder in brand building, Reimagine store pilots, its value proposition and mitigation of potential fuel headwinds. Executives said selective pricing investments will include furniture and fine jewelry, while the majority of reinvestment will support longer-term strategic initiatives.

The company now expects combined tariff and fuel costs to create a full-year gross-margin headwind of 5 to 15 basis points, an improvement from prior guidance for a 20- to 30-basis-point headwind. Macy's expects tariffs to be a year-over-year tailwind in the second half.

First-half operating cash flow was $586 million, compared with $255 million a year earlier, while free cash flow was an inflow of $262 million versus an $88 million outflow in the prior year. Inventory was up 2.5% at quarter-end, which Edwards said was in line with sales growth and positioned the company for fall with a balance of newness and evergreen products.

Macy's returned $201 million to shareholders during the first half through $101 million in dividends and $100 million in share repurchases. It ended the quarter with $1.3 billion in cash and about $1 billion remaining under its repurchase authorization.

Raised Full-Year Outlook

The company raised its full-year net-sales outlook to $21.675 billion to $21.825 billion and forecast comparable-sales growth of 1% to 1.5%. Macy's increased its adjusted EPS outlook to $2.15 to $2.35.

For the third quarter, Macy's expects net sales of $4.65 billion to $4.7 billion, comparable sales ranging from a decline of 0.5% to growth of 0.5%, adjusted EBITDA margin of 3.7% to 4%, and an adjusted loss per share of $0.19 to $0.23.

Spring said the company continues to see resilient engagement among its middle- and upper-income customers, while lower-income consumers remain more selective. He said the third quarter faces the company’s strongest comparable-sales comparison of the year, following 3.2% growth in the prior-year period.

“We are well positioned for the fall and holiday seasons,” Spring said, pointing to fall fashion initiatives and the company’s upcoming 100th Macy’s Thanksgiving Day Parade.

About Macy's (NYSE:M)

Macy's, Inc is a leading American omnichannel retailer operating under the Macy's brand, as well as specialty divisions Bloomingdale's and Bluemercury. The company's retail portfolio encompasses full-line department stores, fashion-focused specialty outlets and a high-end beauty chain, offering consumers a wide array of apparel, footwear, accessories, cosmetics and home furnishings. Through its integrated network of physical stores and digital platforms, Macy's seeks to deliver a seamless shopping experience that blends in-store service with online convenience.

The company's product assortment spans men's, women's and children's clothing, beauty and personal care products, housewares and home décor.

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