Macy's, Inc.

Second quarter net sales increased 1.1% to $4.9 billion, while total revenue rose 1.2% to $5.1 billion. Comparable sales increased 2.7% on a reported basis and 2.8% on a go-forward basis; by banner, Macy’s comp sales were up 1.1%, Bloomingdale’s up 11.3%, and Bluemercury up 6.2%. Gross margin was $2.0 billion, or 41.5% of net sales, versus 39.7% last year; adjusted EPS was $0.63 versus $0.35 last year, including about $0.23 of net tariff refund benefit. For the first half, operating cash flow was an inflow of $586 million and free cash flow was an inflow of $262 million; cash ended at $1.3 billion. For the full year, Macy’s raised net sales guidance to $21.675 billion to $21.825 billion, comp sales to up 1.0% to up 1.5%, gross margin to 38.5% to 38.7%, adjusted EBITDA margin to 7.8% to 8.0%, and adjusted diluted EPS to $2.15 to $2.35. Third-quarter guidance calls for net sales of $4.65 billion to $4.7 billion, comp sales of down 0.5% to up 0.5%, adjusted EBITDA margin of 3.7% to 4.0%, and adjusted diluted EPS of a loss of $0.19 to $0.23.

Tony Spring framed the quarter as proof that the “Bold New Chapter” strategy is gaining traction, pointing to better-than-expected performance across all key metrics and growth across all three nameplates. He emphasized that product improvements, brand curation, omnichannel execution, and the reimagined store program are resonating with customers, with Macy’s Reimagined stores up 1.9% in the quarter and total Macy’s fleet NPS up 10 points since the strategy began. His tone was upbeat and confident, while still stressing that the company is taking a prudent approach to guidance and reinvesting part of tariff refunds into long-term growth initiatives.

Tom Edwards highlighted the financial outperformance: net sales of $4.9 billion, total revenue of $5.1 billion, gross margin of 41.5%, adjusted EBITDA of $457 million, and adjusted EPS of $0.63. He noted the quarter included roughly $0.23 of net tariff refund benefit, with underlying gross margin rate up about 10 basis points excluding tariff and fuel impacts, and said tariff/fuel gross margin headwind is now expected to be 5 to 15 basis points for the full year versus prior guidance of 20 to 30 basis points. He also cited strong cash generation, with first-half operating cash flow of $586 million, free cash flow of $262 million, inventory up 2.5% year over year, $201 million returned to shareholders in the first half, and $1.3 billion of cash on the balance sheet.

Analysts pressed on why second-half sales guidance was not raised more after the strong first half, and management said the third quarter faces the toughest comparison and that the company is staying prudent despite confidence in the business. Questions also focused on AUR, the pacing of Reimagined store expansion, tariff refund reinvestment, traffic versus conversion, and whether the company sees any change in the competitive or consumer backdrop. Management said AUR can still improve through better assortments and brand mix, that all Reimagined cohorts are growing and more stores will be added next year, and that traffic is steady while conversion is harder because higher-price purchases often take multiple visits. They also said promotional activity is expected to be in line with last year and they are not seeing anything dramatically different in the competitive environment.