Macy’s reported fiscal second-quarter earnings on Wednesday that surpassed Wall Street’s expectations, as the department store chain credited its store revamp strategy and stronger category performance for improved sales. Macy’s stock responded positively as the company also lifted its full-year earnings and revenue guidance, signaling growing confidence heading into the crucial fall and holiday seasons.
The results sent Macy’s stock up 20% by market close, marking one of its strongest single-day rallies in years.
Stronger Earnings and Revised Guidance
For the quarter ended August 2, Macy’s posted adjusted earnings of 41 cents per share, far exceeding analyst expectations of 18 cents per share. Revenue came in at $4.81 billion, slightly ahead of the $4.76 billion forecast, though down from $4.94 billion in the same quarter last year. Macy’s stock reflected investor optimism following the stronger-than-expected earnings and revenue performance.
Net income stood at $87 million, or 31 cents per share, compared with $150 million, or 53 cents per share, in the prior-year period. While total sales slipped, the profitability beat reflected operational improvements, disciplined inventory management, and strategic focus on select stores.
The company now projects adjusted full-year earnings of $1.70 to $2.05 per share, up from its previous estimate of $1.60 to $2.00. Revenue is forecast between $21.15 billion and $21.45 billion, slightly higher than the prior range of $21.0 billion to $21.4 billion.
CEO Tony Spring said the updated outlook reflects Macy’s improved positioning. “We’re just well positioned right now for the environment we’re in—to take share, deliver for our customers, and provide a better experience,” he told CNBC.
Revamped Stores Driving Growth
Macy’s highlighted that its 125 priority stores, which have been renovated and staffed at higher levels, are outperforming the broader portfolio. These locations posted a 1.1% increase in comparable sales on an owned basis, compared with softer results across the wider Macy’s brand. Macy’s stock could see continued support if this trend of outperforming store performance persists.
The company’s luxury banners continued to shine. Bloomingdale’s saw comparable sales growth of 3.6% on an owned basis, while beauty retailer Bluemercury rose 1.2%. Both banners have consistently outpaced the namesake chain, demonstrating strength in higher-margin categories.
Spring emphasized that product mix and merchandising strategies are supporting momentum. Denim, women’s contemporary apparel, and watches were among the fastest-growing categories during the quarter. “When you think about the strength of a department store or a marketplace, it’s when multiple categories are working,” Spring noted.
The company acknowledged ongoing challenges from import tariffs, which had previously pressured margins. Last quarter, Macy’s raised prices on select items to offset costs. CFO Tom Edwards said on an analyst call that more price adjustments are under review, though the company is being selective.
“We’re adjusting prices, but as appropriate—not broad-based—and really assessing it with our partners in an effort to remain competitive,” Edwards said. He added that Macy’s healthy inventory position and diversification across categories will help the retailer remain resilient.
Spring added that while tariffs remain a headwind, consumer spending has held up. “Tariffs are real. It’s a component of the business, but we have tailwinds we are leveraging against those headwinds. That’s a better customer experience, a newer assortment, less redundancy in our assortment, and a healthy inventory position going into the fall season,” he said.
Additional Revenue Growth
Macy’s also reported a $28 million year-over-year increase in credit card net revenue, which totaled $153 million in the quarter. This ancillary income stream continues to provide steady support as the retailer refines its broader sales strategy.
The company is now entering the second half of the year with cautious optimism. With consumer demand showing resilience in categories like fashion and beauty, and with renovated stores demonstrating stronger returns, Macy’s believes it is better positioned than in prior years to capture spending in a competitive retail environment. Macy’s stock may benefit from this strategic momentum as investor confidence builds.
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Sources:
https://finance.yahoo.com/news/macys-stock-soars-omni-channel-140751950.html
