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CALL PARTICIPANTS
Chief Executive Officer and Chairman — Tony Spring
Chief Operating Officer and Chief Financial Officer — Tom Edwards
Vice President, Investor Relations — Pamela Quintiliano
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RISKS
Management increased the expected full-year gross margin impact from tariffs to 40-60 basis points, up from the prior estimate of 20-40 basis points, equating to an EPS reduction of $0.25-$0.40 per share versus the previous $0.10-$0.25 per share estimate for fiscal 2024.
Net sales declined 2.5% in fiscal Q2 2025 (period ended Aug. 2, 2025), with $170 million of the decrease attributed to sales lost from 64 non-GoForward stores closed at the end of last year.
Gross margin rate decreased to 39.7% from 40.5% in fiscal Q2 2025, due to proactive markdowns and higher tariffs.
TAKEAWAYS
Comparable sales—Macy’s(M 16.90%) posted 1.9% comparable sales growth for the second quarter, its highest in 12 quarters, while GoForward businesses grew 2.2%.
Nameplate performance— Bloomingdale’s reported 5.7% comparable sales growth for the second quarter, and Bluemercury marked its 18th consecutive quarter of comp gains, with 1.2% growth.
Net sales— Reported at $4.8 billion for fiscal Q2 2025 (period ended Aug. 2, 2025), representing a 2.5% decrease; adjusted sales rose 0.9% when excluding closed stores.
Adjusted EPS— Adjusted EPS of $0.41 per share, above guidance of $0.15-$0.20 per share, driven by stronger sales, disciplined expense controls, and tariff mitigation.
SG&A expense— SG&A expense was $1.9 billion, down $29 million, reflecting benefits from store closures and ongoing cost actions, offset by GoForward business reinvestment.
Gross margin— $1.9 billion, or 39.7% of net sales, down from 40.5% year-over-year, impacted by markdowns and 145% tariffs on select categories.
Inventory— $4.3 billion, down 0.8%, with management expressing confidence in inventory quality.
Credit card revenue— $153 million, up $28 million, supported by portfolio health and prudent loss management.
Core adjusted EBITDA— $377 million, representing 7.5% of total revenue, surpassing guidance of 6.0%-6.2%.
Shareholder returns— $251 million returned via $100 million in dividends and $151 million in buybacks, including $50 million repurchased; $1.2 billion remains authorized for repurchases.
Debt and liquidity— Net long-term debt reduced by $340 million; no material maturities until 2030 after refinancing; $829 million in cash at quarter-end.
Guidance update— Full-year net sales forecast revised to $21.15-$21.45 billion, with adjusted EPS raised to $1.70-$2.05 per share, reflecting current tariff assumptions but excluding potential further buybacks.
Store portfolio strategy— Store closures and targeted investment are yielding a more focused and profitable retail footprint, especially in Reimagined 125 locations.
Private brand penetration— Currently in the lower teens, below the historical high of 20% of sales.
Third quarter outlook— Expected net sales of $4.5-$4.6 billion, comparable sales down 1.5% to up 0.5%, and adjusted EPS loss of $0.20-$0.15 per share, reflecting tariff expense and asset sale gains.
SUMMARY
Management attributed outperformance in key earnings measures to the execution of the Bold New Chapter strategy, with positive comparable sales across Macy’s GoForward, Bloomingdale’s, and Bluemercury banners. Significant SG&A reductions and disciplined cost containment offset pressures from store closures and tariffs. Expansion in premium and contemporary product partnerships, as well as increased customer net promoter scores, indicated momentum in brand perception and store experience initiatives. The updated guidance factors in increased tariff expense but assumes ongoing cost mitigation, continued resilience among higher-income consumers, and measured reinvestment of savings for long-term growth.
CEO Spring stressed, “Macy’s, our strategy of closing underperforming locations while investing in areas of opportunities will create a more focused and profitable store base.”
Management expects the most pronounced tariff impact on gross margin and EPS to occur primarily in fiscal Q4 2024 (period ended Feb. 1, 2025), given receipt timing, but is pursuing shared cost negotiations and selective ticket increases to offset these effects.
Tom Edwards, Chief Operating Officer and Chief Financial Officer, brings experience from consumer discretionary and hospitality companies, complementing the hospitality-oriented initiatives supporting the Bold New Chapter strategy.
Guidance maintains caution regarding possible further consumer pullback, but management cited a healthy start to the back-to-school season, especially among higher-income customer cohorts.
INDUSTRY GLOSSARY
GoForward Macy’s: Macy’s stores and digital properties designated as part of the ongoing strategic investment portfolio, including approximately 350 stores and digital channel.
Reimagined 125: The subset of GoForward Macy’s locations that have undergone specific operational and merchandising enhancements.
Core adjusted EBITDA: Adjusted EBITDA excluding gains from asset sales, reflecting normalized operating performance.
Macy’s Media Network: The company’s in-house retail media platform generating advertising revenue from brand partners.
Full Conference Call Transcript
Pamela Quintiliano: All references to comp sales throughout today’s prepared remarks represent comparable owned plus licensed plus marketplace sales and owned plus licensed sales for our store locations, unless otherwise noted. GoForward Macy’s Inc. comp sales include the approximately 350 Macy’s GoForward locations and digital, and Bloomingdale’s and Bluemercury nameplates inclusive of stores and digital. GoForward Macy’s comp sales include the approximately 350 Macy’s GoForward locations and Macy’s digital. 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 SEC. 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: Good morning, and thank you for joining us today. We’re encouraged by recent quarterly performance and the execution of our Bold New Chapter strategy. We’ve made substantive enterprise-wide improvements to our business, yielding meaningful results. For the second quarter, top line, bottom line, and core adjusted EBITDA exceeded our guidance. Macy’s Inc. and Macy’s nameplate both had their strongest comparable sales in 12 quarters. Macy’s GoForward comparable sales were positive, inclusive of growth in our Reimagined 125 locations and digital. Bloomingdale’s achieved its fourth consecutive quarter of comparable sales growth and continued to gain market share, and Bluemercury achieved its 18th consecutive quarter of comparable sales gains.
I want to thank our teams and our brand partners for helping us deliver improved product and omnichannel experiences for our customers. Turning to a more detailed view of the quarter, Macy’s Inc. achieved comparable sales growth of 1.9%, and our GoForward businesses delivered comparable sales growth of 2.2%. Adjusted EPS of $0.41 was above our guidance range of $0.15 to $0.20, reflecting comparable sales growth, disciplined expense controls, and tariff mitigation actions. End-of-quarter inventories were down 0.8%, and we feel good about our composition headed into the fall season. Our second quarter results highlight the benefit of being a portfolio of nameplates that are multi-brand, multi-category, and multi-channel.
This model provides sourcing optionality, economies of scale in negotiations, and product and price diversification. With our off-price to luxury offerings and strong financial position, we’re leaning into areas of opportunity, chasing important trends, and providing more reasons for the customer to shop with us. Now let’s discuss how each pillar of the Bold New Chapter strategy contributed to our results, beginning with strengthening and reimagining Macy’s.
Tony Spring: Our goal for Macy’s is simple: offer customers access to the brands and categories they’re looking for at a great value with a compelling omnichannel shopping experience. Macy’s achieved 1.2% comparable sales growth in the quarter. This was led by GoForward Macy’s, which rose 1.5%, inclusive of the Reimagined 125 that were up 1.4%. Macy’s off-price concept Backstage, along with Macy’s Marketplace, were both strong contributors. These fill whitespace in our assortments and help us retain customers seeking more price and brand variety. Recent results illustrate that improvements in our Macy’s omnichannel customer experience are resonating. We have shifted from being an operationally led to customer-led organization and are calibrating our assortments on both a brand and category basis.
Highlighting our progress, Macy’s delivered its strongest second quarter net promoter score on record. We view this as an important measure of customer sentiment and a leading indicator of future sales. I recently received a note from a customer who had just visited a store, and they said shopping at Macy’s was such a pleasant surprise. The store was clean and organized, and most importantly, the employees were joyed to interact with. The service has improved tremendously over what it was just a few years ago. I will definitely recommend shopping there, and I will return to shop there myself. I read every customer note that I receive.
Listening to feedback is one of the most important ways we can improve and grow our business. In addition to improving the shopping experience, we’ve also made strides in product curation. Our vendor relationships are strong, and we are viewed as a valued partner that helps broaden their reach and deliver against customer needs.
Tony Spring: Our balance sheet, large addressable market, and loyal customer base are attractive differentiators, and market brands are excited to work alongside our teams. As one of their largest partners, we receive compelling product from the brands our customers are asking for, including Coach, Donna Karan, Levi’s, and Ralph Lauren, just to name a few. As these brands thrive at Macy’s, other brands are taking notice. We’ve been attracting new partners, including Abercrombie Kids, expanding our distribution of existing labels such as Sam Edelman, Hugo Boss, Good American, and we’re continuing to update our private brand assortment. Turning to category performance, comparable sales of women’s contemporary and career, as well as men’s tailored clothing, outperformed.y, guys. This is Ryan Boldron here for Chuck. I wanted to ask a little bit about the traffic compensation, traffic versus ticket, both on an owned basis and an OLM basis. Also, broadly speaking, what are you seeing in the marketplace a little more in terms of pricing, in terms of pricing on, in terms of tariffs from Kiers, and then what you’re doing about that in response? Thanks very much.
Tony Spring: Ryan, let me take the first part, and then I’ll let Tom take the second part. Our improvement in business was broad-based, as I said, by category and was also driven by improvement in traffic, improvement in average order value, and like we’ve said, improvement in customer experience. The one pocket that was a little softer was unit demand. Obviously, I think that’s partly reflecting the consumer being choiceful and partly reflecting the beginning impacts of some pricing. I think we’ve bought it that way. We’ve got a good composition of inventory across a broad base of categories, and I think are well prepared for the fall season.
I like our inventory position being down 0.8% going into the fall season, having open to buy, and having the strength of a marketplace as well as our licensed businesses to support even more growth beyond what we’ve bought. Tom, what would you add relative to what you’re seeing in the marketplace for tariffs?
Tom Edwards: I’d just emphasize, Tony, your comment on beginning to see the impact. We have built in a more prudent outlook in the second half with a more choiceful consumer depending on tariff impact overall. We are in the early stages of seeing that as they are beginning to flow through. We are going to monitor it really carefully and adjust prices as appropriate, again, not do a broad-based approach and make sure we assess it down to a really granular level with our partners and remain competitive.
Tony Spring: I think to close, we have room in what we have guided to be able to be competitive, to be able to hold on to market share without buying the business. I think that’s the balance, how we satisfy the customer and how we return value to shareholders. Thanks for the question, Ryan.
Operator: Thank you. The next question is coming from Pamela Quintiliano of Citigroup. Please go ahead.
Tracy Kogan: Thanks. It’s Tracy Kogan filling in for Paul. I just wanted to follow up on the last question. I know you said you’re just starting to see some price increases, and I was wondering how that is falling out between your own private brands and national brands. Are you seeing already some increases in both? I’m just wondering, since you have seen some increases as of now, how has the elasticity been looking relative to what you expected? Is it kind of, are the unit changes in line with what you would expect so far? Thanks.
Tony Spring: Thanks for the question, Tracy. Yeah, I think it’s the early innings on how the consumer is responding to the changes in the marketplace. I think the good news is there’s a level of resiliency, there’s a level of interest in newness and fashion. We are not bought completely into the fall season. We have the leverage points of marketplace and our licensed businesses. I would say that in some cases where tickets were higher or costs were higher, we bought fewer units. In other cases, we remain consistent with units, and in other cases, we didn’t buy as much of a brand or category.
I think this is just such a wonderful example of being a multi-brand, multi-category, multi-channel, and multi-price point. I want to say again, multi-price point, because when you can go from off-price to luxury, you’re not reliant on one thing. If something wasn’t competitive, if we felt it was too big a reach for the consumer, we didn’t buy it or buy as much. I think that’s one of those moments where being this modern marketplace or department store is an absolute advantage in this environment.
Tom Edwards: Tracy, I’d just build on that. Regardless of the external environment, our Bold New Chapter initiatives are really positioned to support performance. What we saw in the second quarter was performance and improvement in traffic. People are buying more and coming in, and it’s really due to those base initiatives, which are going to continue through the second half regardless of what’s happening elsewhere.
Tracy Kogan: Gotcha. Thanks so much.
Tony Spring: Thank you.
Operator: Thank you. Our next question is coming from Michael Benetti of Evercore ISI. Please go ahead.
Michael Benetti: Hey, guys. Thanks for taking our question here. First one, just on adding to the Bloomingdale’s question from earlier, nice to see the comp there. We’ve seen continued pressures and even bankruptcies in the luxury market here lately. Just maybe speak to what you’re seeing in that market and where you’re seeing the accelerating opportunities to gain share there, as that category seems to be getting a little tougher, nicely counterintuitive there, I suppose. Tom, how much did tariffs impact the second quarter? Finally, I see it looks like you lowered the back half credit growth rate a little bit, maybe 11% to 15%, 20% in the first half.
Just any comment on, you made a comment on the health of the portfolio there. I’m just curious what you’re baking in on the deceleration as we think about the run rate into next year. Thanks.
Tony Spring: Let me start with Bloomingdale’s and I’ll let Tom cover the tariffs and the credit portfolio, which is healthy, and he can speak to that. Look, we see the Bloomingdale’s business has been terrific, and this is now four straight quarters of growth. They are taking market share. They are adding additional brands. We are seeing broad-based growth across ready-to-wear, denim, men’s, home, kids, beauty, fragrances. I think that this brand has done a terrific job. When you think of kind of continuity of leadership, continuity of strategy, continuity of partnerships in the market, paying our bills, strong balance sheet, the strong corporate support of Macy’s Inc., Bloomingdale’s is positioned for continuous growth.
I think we have the additional opportunities of obviously brand expansions, digital growth, additional door expansions with Bloomie’s and off-price. The Bloomingdale’s off-price business continues to grow, had a really good quarter. I don’t look at the marketplace as defining Bloomingdale’s opportunity. I look at Bloomingdale’s defining Bloomingdale’s opportunity.
Tom Edwards: Nice. Mike, regarding tariffs and credit, tariffs in the second quarter, we had provided a prior full-year guidance of 20 to 40 basis points or $0.10 to $0.25. That was a little bit more in the second quarter. We saw some of the higher tariffs coming in at the 145% level. We did see a GM impact related to that, and our gross margin rate was also a little lower than last year. Q1 we moved through inventory and really put us in a great position to start the fall and the back half of the year with a really clean inventory position. I would point out that our gross margin was better than our expectations in the second quarter.
All that considered, we’re doing better than we expected and coming into the second half in a great position. From a credit portfolio perspective, really pleased with the growth, the significant growth, $28 million in revenue in the second quarter, and we expect to see continued strong results. It’s really due to the credit portfolio strength and how we’re underwriting and managing that and really linking up with our store colleagues and across the business to support that, which is an integral part of the overall Macy’s ecosystem.
Tony Spring: Thanks a lot, guys. Appreciate it. Thank you, Mike.
Operator: Thank you. Our next question is coming from Paul Carney of Barclays. Please go ahead.
Paul Carney: Hey, good morning. Thanks for taking my question. On tariffs, how should we think about that impact as we look into next year? How much do you anticipate being able to mitigate? Should we anticipate a step up in mitigation in the spring season and then over time? Thank you.
Tony Spring: Let me take the first part, and then I’ll let Tom add his color. I think it’s a little early to be forecasting tariffs in 2026. We don’t know the magnitude of tariffs. We don’t know what tariffs that currently are in place are going to hold. We’re certainly going to have more opportunities to mitigate. We could have mitigated the second quarter better than we currently did. I think it’s early to comment on the tariff situation in 2026. I think what we are focused on as a team is how we continue to build on this momentum that is growing for Macy’s Inc.
How do we make sure that the things that we control, that we’re continuing to improve upon, whether that’s customer experience, newness in our assortments, variety within our pricing, better balance between our owned, licensed, and marketplace businesses, off-price, full-price businesses? I think those things we can continue to do a better job than we’ve done. We’ve got credit in the second quarter for the improvements that we’ve made, but we have plenty of room to continue to grow.
Tom Edwards: I just added and emphasize that right now we don’t have total clarity on levels of tariffs in 2026, and there is, on the other hand, more time to address. The key takeaway would be we’re really well positioned to navigate it. Our teams are doing an amazing job currently, and we’ll certainly talk more about it as we get towards the end of the year and provide guidance for next year as we normally do on our fourth quarter call.
Paul Carney: Thank you.
Tony Spring: Thanks, Paul.
Operator: Thank you. The next question is coming from Jay Sole of UBS. Please go ahead.
Jay Sole: Great. Thank you so much. This has come up a couple of times in the call, but Tony, I want to ask about the investments that you’re making. Obviously, you sound very pleased with the investments you’re making in service, especially across Macy’s Inc., but also the SG&A leverage you’re delivering. How do you find the right balance between leverage and growth? Are there opportunities that you see to maybe grow SG&A dollars more that could maybe get that comp growth rate a couple hundred basis points higher? How do you think about what to invest in versus what to maybe allow to flow through to the bottom line?
Tony Spring: Thanks, Jay, for the question. Let me take the first part, and I’m sure Tom would like to add some color as well. I think what you describe is how you balance your strategy. I think as the leader, we have to do a good job of managing a portfolio of investments. That means some things we’re going to put more money into. I’m a big believer in colleagues on the floor. Those customer-facing initiatives are really important to changing the character of the department store experience. We see it in letters on a daily basis on what we’re doing to change the experience for the customer in our stores. We need to add more stores next year.
We’ll talk about that on the fourth quarter call in terms of how many more stores. We’re obviously doing that also in our digital experience. I invite you to look at Macys.com today versus just three months ago. We’re providing a richer, product-driven, trend-driven storytelling experience. To your challenge, our job is to satisfy the customer and in turn satisfy the shareholder. We have to make sure we’re delivering a better experience, investing to grow the comp sales, and then leverage our structure so that we’re delivering more on the bottom line. Tom, what would you add?
Tom Edwards: I’d add that we are always on savings, and we have a large pipeline of savings from continued store closures, as we previously announced, and end-to-end initiatives, and just managing the business to be more efficient on a daily basis. As we do that, we’re reviewing initiatives, we’re testing, we’re learning, we’re improving. There is a process here, Jay, as we move forward to make sure we’re doing things that are impactful and creating a return for shareholders.
As part of that, that’s really the balance: generating savings, reinvesting some, and really getting to the point where we are leveraging based on driving sales growth, which we saw in this quarter across all of our banners, and we’re really pleased with that result, generating $30 million in SG&A savings versus the prior year.
Tony Spring: Got it. Thank you so much.
Tom Edwards: Thanks, Jay.
Operator: Thank you. Our next question is coming from Janet Kloppenburg of JJK Research Associates. Please go ahead.
Janet Kloppenburg: Good morning, Tony and Tom, and congratulations on a wonderful quarter. I have too many questions, so I’m going to get yelled at. Do you have any thoughts on what the incremental markdowns that you’ve carried into the second quarter, what influence that had on the comp performance, which was, of course, excellent? I also was wondering, I know it’s early, Tom, but have you seen any pushback from the consumer on the incremental pricing that you’ve delivered? For instance, I know that Levi’s has raised their prices. I am wondering about the wrap-around of the tariffs into the first and second quarter of next year. We’re hearing that from a lot of your competitors, and I wondered about that.
Thank you so much.
Tony Spring: Thanks, Janet. The question on markdowns impacting the comps in the second quarter, I would say there’s some, it’s a minor part of the improvement in our performance in the second quarter. The areas that had the strongest growth were not the areas that had the biggest markdowns or liabilities coming into the second quarter. We took those markdowns. The composition of our inventory is clean. I like the early read of August and what the customer is buying because that is not markdown related. It’s newness related. It’s back to school related. It’s early fall product and winter weight categories. All of that is very positive. You mentioned the Levi’s business.
I mentioned on the call, Levi’s continues to be a terrific business for us in all areas of the business, and they’re great partners. We’re getting top-tier products from them, and it’s the fashion in Levi’s that is really selling best for us. I think it underscores the customer is more concerned about value than they are about the price point. Is there a reason for something to be more expensive? That might be true in a piece of outerwear. That might be much harder to get on a t-shirt.
Janet Kloppenburg: Thank you.
Tom Edwards: Thank you. With regard to tariffs, Janet, I think it’s a little early to talk about the Q1, Q2 for next year. We’ll have a little more clarity on it in terms of the tariff levels. We do have more time to mitigate, and we’ll certainly be talking more about that on our Q4 call. As I mentioned before, I think we’re really well positioned to navigate through it and have been navigating through it across all our teams really effectively.
Janet Kloppenburg: What about the pricing and early indication from the consumer?
Tom Edwards: I would just state that the consumer has been resilient, and we’ve seen that in Q2, and we’ve seen it at the beginning of Q3. We are to be more prudent in the second half, forecasting a little more choiceful consumer, but what we’ve seen so far is resiliency.
Janet Kloppenburg: Thank you very much. Good luck.
Tony Spring: Thank you, Janet. Appreciate it.
Operator: Thank you. At this time, I would like to turn the floor back over to Mr. Spring for closing comments.
Tony Spring: Thank you all for joining us today. We look forward to providing an update on our progress on our next earnings call. Have a great day, everyone.
Operator: Ladies and gentlemen, this concludes today’s event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.
