Summary of Macy's, Inc. Q2 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales: Increased by 1.1% to $4.9 billion compared to $4.8 billion in Q2 2025.

Comparable Sales: Grew by 2.7%, marking the fifth consecutive quarter of positive comps.

Adjusted EBITDA: Rose to $457 million (9% of total revenue), up from $373 million (7.5%).

Adjusted Diluted EPS: Reported at $0.63, significantly above the prior year’s $0.35, including a $0.23 net tariff refund benefit.

Gross Margin: Improved to 41.5% from 39.7% in the previous year, driven by favorable brand mix and reimagined store performance.

Operating Cash Flow: Increased to $586 million from $255 million in the prior year.

Free Cash Flow: Turned positive at $262 million compared to an outflow of $88 million last year.

2Strategic Updates and Business Highlights

Bold New Chapter Strategy: Continued momentum with positive sales across all nameplates and channels. Macy's achieved its fifth consecutive quarter of positive comps, while Bloomingdale's recorded double-digit growth.

Reimagined Stores: Expanded to 200 locations, contributing to a 1.9% comp growth. These stores account for 60% of Macy's go-forward locations and 75% of sales.

Digital Growth: Strong performance in the digital channel, aided by the introduction of the AI-powered shopping assistant, AskMacy's.

Brand Partnerships: Successful launches of new brands, including Kiko Milano and Happy Campers, enhancing product offerings.

Customer Engagement: Successful events, including the 50th anniversary of Macy's Fourth of July fireworks, which attracted over 11 million viewers.

3Forward Guidance and Outlook

Full Year Sales Guidance: Raised to $21.675 billion to $21.825 billion, reflecting confidence in the Bold New Chapter strategy.

Third Quarter Guidance: Expected net sales of $4.65 billion to $4.7 billion, with comparable sales projected to be flat to down 0.5%.

Adjusted Diluted EPS for Full Year: Increased to a range of $2.15 to $2.35.

Investment Strategy: A portion of tariff refunds will be reinvested to support long-term growth initiatives, including marketing and store enhancements.

4Bad News, Challenges, or Points of Concern

Mixed Category Performance: Softer trends in plus sizes, intimates, and women's sleepwear, with big-ticket items still underperforming compared to the previous year.

Consumer Behavior: While traffic remains steady, conversion rates have been a challenge, indicating potential difficulties in closing sales.

Competitive Pressures: The retail environment remains competitive, particularly at the lower end of the market, where performance has been more selective.

Economic Uncertainty: Ongoing macroeconomic and geopolitical factors could impact consumer behavior and spending.

5Notable Q&A Insights

Traffic vs. Conversion: The management acknowledged steady traffic but noted challenges in conversion rates, suggesting a need to enhance customer engagement and selling skills.

AUR Sustainability: There is potential for continued growth in Average Unit Retail (AUR), driven by improved product assortments and brand elevation.

Tariff Refunds: The strategy for deploying tariff refunds focuses on long-term brand health rather than immediate sales boosts, which may explain cautious sales guidance.

Tourism Impact: While there was some benefit from the World Cup, tourism levels are still below pre-pandemic figures, presenting a future growth opportunity. Overall, Macy's Q2 2026 results reflect a strong performance driven by strategic initiatives, though challenges in certain product categories and consumer conversion rates remain areas of focus. The company is optimistic about its growth trajectory while maintaining a cautious outlook for the upcoming quarters.