Macy's, Inc.

Macy’s Inc. net sales rose 1.8% to $4.7 billion, compared with $4.6 billion last year; excluding about $40 million from 14 non-go-forward store closures, net sales grew 2.7%. Total revenue increased 2.1% to $4.9 billion. Comparable sales rose 3% versus guidance of 0.5% to 1.5% and negative 2% last year; go-forward comps were up 3.1%. Gross margin was $1.8 billion, or 38.9% of net sales, versus 39.2% last year; excluding about a 30-basis-point tariff impact, gross margin would have been flat. SG&A rate was 39.9%, flat year over year, and adjusted EBITDA was $290 million, or 5.9% of total revenue, versus $304 million last year. Adjusted EPS was $0.13 versus guidance for a loss of $0.01 to a gain of $0.01, with about a $0.04 tariff impact. For the quarter, operating cash flow was an inflow of $292 million and free cash flow was an inflow of $140 million; cash on hand ended at $1.3 billion. Full-year guidance was raised to net sales of about $21.5 billion to $21.75 billion, comparable sales up 0.5% to up 1.2%, gross margin of 38.4% to 38.6%, adjusted EBITDA of 7.7% to 7.9% of total revenue, and adjusted diluted EPS of $2 to $2.20. For Q2, Macy’s expects net sales of about $4.75 billion to $4.8 billion, comps roughly flat to up 1%, adjusted EBITDA of 6.9% to 7.2% of total revenue, and adjusted EPS of $0.29 to $0.34.

Tony Spring struck an upbeat but still disciplined tone, saying the Bold New Chapter strategy is gaining momentum and the quarter showed broad-based improvement across all three nameplates and channels. He emphasized that Macy’s is seeing better customer response to curated assortments, service, marketing events, and store investments, especially at Reimagine locations, while Bloomingdale’s and Bluemercury also continued to perform well. He framed the company’s strategy as being in year three and said the team is confident the initiatives can support long-term profitable growth.

Tom Edwards focused on the financial beat, noting stronger-than-expected top-line and bottom-line results, gross margin of 38.9%, and SG&A rate flat year over year at 39.9% despite higher sales. He highlighted healthy cash generation, with operating cash flow of $292 million, free cash flow of $140 million, $1.3 billion of cash on the balance sheet, and $100 million returned to shareholders in the quarter. On guidance, he said the company raised its outlook, lowered tariff assumptions, raised fuel assumptions, and expects the net annual impact of tariffs and fuel to be neutral.

Analysts focused on comp sustainability, especially whether the implied second-half guide suggests flattening, and management said the business has been consistent throughout the quarter and that they feel good about the factors within their control. Questions also centered on gross margin expansion, with management explaining that Q1 gross margin was flat excluding tariffs and that they still expect margin to build through the year through Reimagine expansion, better sell-through, inventory management, and AI-based forecasting. Analysts pressed on traffic, AUR, fuel, credit trends, and marketing; management said traffic improved sequentially, AUR is rising while basket size also increases, fuel is a full-year 10 to 20 basis point headwind, and credit remained healthy with 12% revenue growth and lower net credit losses.