Macy's Inc. 2027 Q2 Earnings Call

Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our Chairman and CEO, and Tom Edwards, our COO and CFO. Along with our second quarter 2026 press release, a Form 8-K has been filed with the Securities and Exchange Commission and 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 2025. All references to our prior expectations, outlook, or guidance refer to information provided on our June 3rd, 2026 earnings call. On today's call, we will refer to certain non-GAAP financial measures. Reconciliations of these measures can be found in our earnings presentation and SEC filings available on the Investor Relations section of our website.

All references to comp sales throughout today's prepared remarks represent comparable owned, plus licensed, plus marketplace sales, unless otherwise noted. All reported nameplate comp sales results are on a go-forward basis. Go-forward Macy's, Inc. comp sales include the approximately 350 go-forward store locations and digital for Macy's, which represents the Macy's go-forward nameplate, and all stores and digital for Bloomingdale's and Bluemercury, which represent their respective nameplates. 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.

Good morning, and thank you for joining us today. First, I would like to welcome Caitlin, our new VP of Investor Relations, to the team. Over the coming months, she will meet with many of you on the call today. We are so excited to have her on board. Now on to the results. We are encouraged by our strong performance in the second quarter, which reflects our continued momentum of the A Bold New Chapter strategy. We delivered revenue growth, comparable sales increases across all nameplates and channels, and better-than-expected performance across all key financial metrics. These results reflect the substantive enterprise-wide improvements we are making in our business that are resonating with our customers. Combined with consistent execution of our A Bold New Chapter initiatives, we are building a durable foundation that delivered second quarter results ahead of expectations. Macy's, Inc. net sales, comparable sales, adjusted EBITDA, and adjusted diluted EPS all exceeded our guidance.

Macy's nameplate delivered its fifth consecutive quarter of positive comps, led by the Reimagine 200. Bloomingdale's achieved double-digit comparable sales growth for the second consecutive quarter and its best second quarter sales volume on record. Bluemercury delivered another quarter of solid comparable sales growth. Our talented colleagues are driving this performance, and I want to take a moment to recognize all of them. They are the heart of our customer-led focus, powering the A Bold New Chapter. Through meaningful customer engagement and strong execution, our teams are making a difference every day and delivering tangible results. Now turning to a more detailed view of the quarter. Macy's, Inc. delivered comparable sales growth of 2.7%, our fifth consecutive quarter of comp sales growth. On a go-forward basis, our business continued to outperform, with Macy's, Inc.

comparable sales rising 2.8%. Adjusted EPS at $0.63 reflects both higher sales as well as the net benefit of tariff refunds received in the quarter. When excluding the net tariff refund benefit, adjusted EPS was 14% above the prior year and above the high end of our guidance. Now let's discuss how each pillar of the strategy contributed to our results, beginning with strengthening and reimagining Macy's. Macy's nameplate achieved positive 1.1% comparable sales, posting its fifth consecutive quarter of increases. This reflects a steady multiyear improvement. Macy's comp sales grew 230 basis points on a two-year stack, driven by sustained progress, enhanced brand offerings, product assortments, and omnichannel shopping experience. Our reimagined stores continued to outperform in the second quarter, sustaining that lead over several years. Earlier this year, we expanded the program to 200 locations, which delivered comp growth of 1.9% in the second quarter.

This performance reflects our customer-led focus and purposeful changes around staffing, events, and local market strengths. The result is five consecutive quarters of reimagined comparable sales growth with increases in nine of the last 10 quarters. Year after year, quarter after quarter, reimagined stores consistently perform higher on our net promoter score, contributing to continued improvement in NPS for the entire Macy's fleet. Our total Macy's fleet NPS score is up 10 full points since the initiation of the strategy, underscoring the strength of our customer-first approach. As a reminder, the reimagined locations account for nearly 60% of our go-forward Macy's stores and 75% of our Macy's go-forward store sales, and are now delivering meaningful scale to our overall business. These stores represent a clear proof point of our ability to drive growth, and we are confident we can continue to expand these initiatives going forward.

Our digital channel also contributed to positive comparable sales growth in the quarter. Results benefited from the halo of brand and assortment improvements and a shift to fashion authority positioning. In addition, we saw continued growth in our marketplace business, which provides complementary offerings and fills whitespace opportunity. Digital is a central component of our omni-channel approach. We are creating a seamless customer experience across all touch points and continue to enhance our digital offerings and connections across channels. Our new AI-powered conversational shopping assistant, Ask Macy's, was introduced last quarter on digital platforms as a starting point for discovery. We are now expanding this capability to our in-store colleagues to help deliver the best Macy's at every touch point. Turning to brand offerings, we are increasingly viewed as a valued partner to market brands, which are excited to work alongside our teams.

Our strong balance sheet, large addressable market, and loyal customer base are attractive differentiators that further strengthen our vendor relationships. In the quarter, we continued to make progress on our brand curation, adding new brands and expanding distribution for others. One good example is Kiko Milano, a trendsetting Gen Z Italian beauty brand. Kiko Milano chose Macy's for its exclusive U.S. launch of their popular beauty line. We also introduced The Happy Camp3r junior apparel line and further expanded the store distribution of Reiss, Rodd & Gunn, and Boss, among others. Our multi-category model provides product and price optionality and diversification. It gives us the ability to lean into areas of opportunity and chase important trends, providing more reasons for customers to shop with us. In the second quarter, we continued to see outperformance in watches, dresses, petites, career sportswear, kids, handbags, fragrances, and men's and women's shoes.

We experienced softer trends in plus sizes, intimates, and women's sleepwear. We did see improvement for our big ticket category compared to the prior quarter, but it remains soft versus the prior year. From a marketing and event perspective, we continued to engage with customers and leverage the strength of our brand as part of Macy's year of celebrations. This summer, we hosted our biggest Macy's 4th of July Fireworks yet, celebrating the event's 50th anniversary with America's 250th. Over 11 million people tuned in to watch the live event, setting a new record, up nearly 60% from last year. The star-studded event featured performances by Noah Kahan, Post Malone, Salt-N-Pepa, Bebe Rexha, Shaboozey, and Blake Shelton. We also leveraged the reach of this national event to drive in-store traffic through local activations, celebration Saturdays, and fireworks-themed marketing.

Summing up the Macy's nameplate, we are pleased with our continued growth, reflecting the positive consumer response to our offerings and initiatives. Now, turning to the second pillar of our A Bold New Chapter strategy, accelerating and differentiating luxury. Bloomingdale's delivered another impressive quarter, achieving positive 11.3% comparable sales and the highest second quarter sales volume in its 154-year history. This performance was driven by growth in all channels, markets, and categories, and is a testament to the brand's progress as the omni-channel local leader in the markets we serve. In addition, Bloomingdale's performance highlights a significant step change with comp sales up almost 1,700 basis points on a two-year stack. These results reflect Bloomingdale's differentiated and unique positioning from premium contemporary to luxury. We continue to raise the bar on our curation with a clear emphasis on discovery, newness, and experiences.

Looking at the second quarter category performance, we saw growth in all areas with outperformance in ready-to-wear, men's apparel, fine jewelry, fragrances, and tabletop. We grew our customer base and continued to expand the reach of our very important client program, which focuses on our highest-spending customers. Bloomingdale's continues to deepen brand partnerships, expanding the breadth of our offerings during the second quarter. We introduced several new brands, including Ulla Johnson, Proenza Schouler, and Dries Van Noten. We also expanded distribution of James Perse, Chanel Fine Jewelry and Watches, Christian Louboutin, and Prada shoes. Our compelling brand assortment evolution continues to engage existing customers and attract new ones, strengthening Bloomingdale's cultural relevance. Looking at the customer experience, there are several initiatives to support our loyal customer base. First, we are expanding our widely popular in-store events, holding hundreds of events across the majority of our stores during the quarter.

In addition, we launched Bloomingdale's own AI-powered conversational shopping assistant for digital, which enhances how customers engage with the brand and discover products. This rollout also highlights the power of leveraging enterprise-wide capabilities across Macy's, Inc. to enhance the customer experience across nameplates. Summing up Bloomingdale's, we are encouraged by the brand momentum and the ongoing growth potential. Our strategic initiatives position us to continue to gain market share across brands, categories, and regions. Turning to Bluemercury, we are pleased to welcome Alex Choueiri as the new CEO. Alex brings extensive experience in beauty, luxury strategy, and retail to our team, and joins at an exciting time to help guide Bluemercury's next phase of growth. Bluemercury delivered another quarter of solid comparable sales with growth of 6.2%. Results were driven by our in-store marketing campaign, Summer Party, which drove strong customer engagement.