M — Macy's, Inc.

Summary of Macy's, Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics:

• Net Sales: $4.7 billion, down 0.6% year-over-year, primarily due to the closure of 64 non-go-forward stores.
• Comparable Sales: Increased by 3.2%, with Go-Forward Macy's achieving 3.4% growth.
• Adjusted EPS: $0.09, significantly above guidance of a loss of $0.15 to $0.20 and last year’s $0.04.
• Core Adjusted EBITDA: $273 million, or 5.6% of total revenue, exceeding guidance of 3.3% to 3.7%.
• Gross Margin: 39.4%, slightly down from 39.6% last year, but better than expected due to effective tariff mitigation.
• SG&A Expenses: $2 billion, down $40 million from last year, reflecting cost containment and benefits from closed stores.
• Cash Position: Ended the quarter with $447 million in cash, up from $315 million last year.

2. Strategic Updates and Business Highlights:

• The "Bold New Chapter" strategy is gaining traction, leading to improved customer engagement and operational performance.
• Macy's recorded its strongest comparable sales growth in 13 quarters, with positive contributions from all nameplates (Macy's, Bloomingdale's, Bluemercury).
• The Reimagine 125 initiative is showing positive results, with a 2.7% comp growth in these locations.
• The new China Grove distribution center is operational, enhancing delivery efficiency and supporting both digital and physical sales.
• Bloomingdale's achieved a 9% comp growth, its best in 13 quarters, driven by strong brand partnerships and luxury offerings.

3. Forward Guidance and Outlook:

• For Q4 2025, Macy's expects net sales of approximately $7.35 billion to $7.5 billion, with comparable sales projected to be down 2.5% to flat.
• Adjusted EPS guidance for Q4 is set at $1.35 to $1.55.
• Full-year 2025 guidance revised to net sales of $21.475 billion to $21.625 billion, with comparable sales expected to be flat to up 0.5%.
• Anticipated gross margin for Q4 is 37.7% to 37.9%, reflecting ongoing tariff impacts but improved mitigation efforts.

4. Bad News, Challenges, or Points of Concern:

• The active category showed softness, which is concerning given its historical strength.
• The guidance for Q4 reflects a cautious approach due to a more discerning consumer and potential economic uncertainties.
• The impact of tariffs remains a concern, with an estimated 40 to 50 basis point headwind on gross margins.
• The company is navigating a competitive retail landscape, which may pressure margins and market share.

5. Notable Q&A Insights:

• CEO Tony Spring expressed increased confidence in the company's strategy compared to 90 days ago, despite a more cautious Q4 outlook.
• There was discussion on customer retention from closed stores, with positive retention rates noted.
• The company is focusing on maintaining a balance of product assortments across price points to cater to a broader customer base.
• The credit business is performing well, with a significant increase in applications and credit spend anticipated to continue into 2026.
• Spring highlighted the importance of social media trends in driving consumer interest in fashion, indicating a proactive approach to market demands.

Overall, Macy's Q3 2025 results reflect strong operational execution and strategic initiatives, though challenges remain in specific categories and external economic pressures.