Macy's Q2 2025 Earnings Call: Contradictions Emerge on Consumer Behavior, Tariff Strategy, and Cost Management

The above is the analysis of the conflicting points in this earnings call

Date of Call: September 03, 2025

Financials Results

• Revenue: $5.0B total revenue; net sales $4.8B, down 2.5% YOY
• EPS: $0.41 adjusted EPS, above guidance of $0.15–$0.20
• Gross Margin: 39.7% of net sales, compared to 40.5% last year

Guidance:

• FY net sales $21.15–$21.45B; comps down ~1.5% to down 0.5% (Go-Forward comps down ~1.5% to flat).
• FY other revenue $840–$850M (credit $635–$645M; MMN ~$205M).
• FY gross margin 60–100 bps below prior year; tariffs to impact GM 40–60 bps (EPS impact $0.25–$0.40), mostly in Q4.
• FY SG&A dollars down low-single digits; up 60–80 bps as % of revenue.
• FY adj. EBITDA margin 7.4%–7.9%; core adj. EBITDA 7.0%–7.5%; interest ~$100M; adj. EPS $1.70–$2.05.
• Q3 net sales $4.5–$4.6B; comps down 1.5% to up 0.5%; core adj. EBITDA margin 3.3%–3.7%; adj. EPS loss $0.20 to $0.15 (incl. ~$20M asset sale gains).

Business Commentary:

* Improved Financial Performance: - Macy's, Inc. reported comparable sales growth of 1.9% and an adjusted EPS of $0.41 in Q2 2025, exceeding their guidance. - The growth was driven by positive results across Go-Forward Macy's, Bloomingdale's, and Bluemercury, reflecting disciplined expense controls and tariff mitigation actions.

• Reimagined Store Concepts:
• The Reimagine 125 locations reported positive comparable sales results, with increases in both the first 50 and the next 75 locations.

• Growth was attributed to improved merchandise offerings, enhanced staffing, localized events, and local empowerment, which boosted customer satisfaction.

• Bloomingdale's Market Share Growth:

• Bloomingdale's achieved a positive comparable sales growth of 5.7% and its highest second-quarter sales and Net Promoter Score on record.

• The business expansion and focus on luxury positioning allowed Bloomingdale's to gain market share and differentiate itself in the competitive landscape.

• Tariff Impact and Pricing Strategy:

• Macy's adopted a surgical approach to price increases to mitigate tariff impacts, with an estimated tariff impact on gross margin of 40 to 60 basis points for the fiscal year.
• The company is assessing pricing adjustments by category and negotiating with vendors to maintain competitiveness without broad-based price increases.

Sentiment Analysis:

• “Top line, bottom line and core adjusted EBITDA exceeded our guidance.” “Strongest comparable sales in 12 quarters.” Bloomingdale’s comps +5.7%; Bluemercury +1.2%. “Momentum has continued third quarter to date.” Caution remains due to tariffs with FY gross margin expected 60–100 bps below last year, but teams pursuing mitigation.

Q&A:

• Question from Matthew Boss (JPMorgan): Rank drivers of sequential comp improvement, intra-quarter progression, and quarter-to-date trends; rationale for moderated comp outlook.
  Response: Broad-based category strength with July strongest; healthy back-to-school; early fall signs positive; guidance remains prudent due to tariff uncertainty.

• Question from Dana Telsey (Telsey Advisory Group): Reimagine 125 learnings/expansion; pricing strategy amid incremental tariffs.
  Response: Reimagine 125 delivered positive comps via staffing, visual, and local empowerment; tariffs to hit GM 40–60 bps, mitigated with selective price increases and vendor negotiations, majority impact in Q4.

• Question from Blake Anderson (Jefferies): Has consumer outlook improved versus last call despite tariffs and pricing actions?
  Response: Consumer remains resilient but choiceful; near-term view stays cautious given unknown full tariff impact.

• Question from Oliver Chen (TD Cowen): Private-brand catalysts; 3Q guidance range assumptions; comp needed to leverage fixed costs.
  Response: Private brands are a key growth/margin lever with penetration set to rise; SG&A leverage comes from ongoing savings; guidance remains prudent.

• Question from Alexandra Straton (Morgan Stanley): Sources of SG&A savings and back-half cadence; Bloomingdale’s comp acceleration drivers.
  Response: SG&A down ~$30M from closures and end-to-end efficiencies; further declines in H2; Bloomingdale’s momentum from new brands, digital growth, and collaborations.

• Question from Ryan Bulger (Gordon Haskett): Comp mix (traffic vs. ticket/units) and pricing response to tariffs vs. peers.
  Response: Traffic and AOV up; units softer amid select price increases; pricing actions are surgical and competitive.

• Question from Tracy Kogan (Citi): Where are price increases occurring (private vs. national) and observed elasticity so far?
  Response: Early stages; demand resilient; buys and pricing tailored by category/brand with flexibility from multi-price-point model.

• Question from Michael Binetti (Evercore ISI): Luxury market pressures vs. Bloomingdale’s gains; Q2 tariff impact; credit trend into H2.
  Response: Bloomingdale’s is taking share across categories; Q2 tariffs pressured GM but results beat plan; credit revenue strong (+$28M) with moderated H2 growth assumed.

• Question from Paul Kearney (Barclays): How to think about tariff impact and mitigation into next year?
  Response: Too early without tariff clarity; more time to mitigate; details to come with year-end guidance.

• Question from Jay Sole (UBS): Balancing SG&A investment to drive higher comps vs. delivering leverage.
  Response: Always-on savings fund targeted customer-facing investments; aim to grow top line while leveraging SG&A.

• Question from Janet Kloppenburg (JJK Research): Did incremental markdowns aid Q2 comps; any early price-pushback; tariff wrap into next year?
  Response: Markdowns were a minor comp driver; strength tied to newness/back-to-school; consumer resilient; too early to size next year’s tariff impact.