Macy's Q2 2026 Earnings Call: Contradictions Emerge on Consumer Resiliency, Tariff Impacts, and Pricing Strategies

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

Date of Call: None provided

Financials Results

• Revenue: $5.0B total revenue; net sales $4.8B, down 2.5% YOY (ex-closures +0.9%).
• EPS: Adjusted EPS $0.41, above guidance of $0.15–$0.20.
• Gross Margin: 39.7% of net sales, compared to 40.5% in the prior year; slightly above expectations.

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 card $635–$645M; Macy’s Media Network ~$205M).
• FY gross margin 60–100 bps below last year; tariffs to reduce GM 40–60 bps and EPS by $0.25–$0.40 (mostly Q4).
• FY SG&A dollars down low single digits; adj EBITDA margin 7.4%–7.9% (core 7.0%–7.5%); interest expense ~$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%; adjusted EPS loss $0.20 to loss $0.15 (inc. ~$20M asset gains).

Business Commentary:

* Comparable Sales Growth and Strategy Impact: - Macy's Inc. achieved comparable sales growth of 1.9% in Q2 2025, representing the strongest performance in twelve quarters. - The growth was driven by positive results across the Macy's nameplate, including strong performance in women's contemporary, men's tailored clothing, and luxury brands like Bloomingdale's and Blue Mercury. - This improvement was attributed to successful implementation of the Bold New Chapter strategy, focusing on customer-led improvements, product curation, and effective execution across channels.

• Bloomingdale's Market Share and Growth:
• Bloomingdale's reported comparable sales growth of 5.7%, marking its fourth consecutive quarter of improvement.

• The growth is attributed to Bloomingdale's strong heritage, premium positioning, and strategic brand additions, as well as increased digital business and expansion into new store formats.

• Inventory and Tariff Management:

• End-of-quarter inventories were down 0.8%, indicating a clean inventory position heading into the fall season.

• The company is managing the impact of tariffs, which are estimated to affect gross margin by 40 to 60 basis points, through mitigation actions like shared cost negotiations and vendor discounts.

• Cost Control and Profitability:

• SG&A expenses declined by $29 million compared to the previous year, reflecting benefits from closed Macy's locations and ongoing cost containment efforts.
• Earnings were supported by disciplined expense controls and an always-on approach to profit improvement, resulting in a core adjusted EBITDA margin of 7.5%.

Sentiment Analysis:

• Management said “top line, bottom line and core adjusted EBITDA exceeded our guidance,” with “the strongest comparable sales in twelve quarters.” They “raised and narrowed” full-year net sales and EPS guidance, noted momentum continued into Q3 to date, and gross margin was “slightly better than expectations.” They remain cautious on tariffs and a “choiceful” consumer.

Q&A:

• Question from Matthew Boss (JPMorgan): What drove the sequential comp improvement and how is momentum trending into Q3 versus your moderated comp outlook?
  Response: Broad-based category strength; July was strongest; solid back‑to‑school start into Q3, but guidance stays prudent due to tariff uncertainty.

• Question from Dana Telsey (Telsey Advisory Group): What are learnings from Reimagine 125 stores and how are you handling gross margin/pricing amid tariffs?
  Response: R125 comps positive, driven by staffing, visual storytelling, and local empowerment; tariffs addressed with targeted price increases and vendor negotiations, with most incremental impact in Q4.

• Question from Blake Anderson (Jefferies): Has your view on the consumer improved given pending tariffs and price adjustments?
  Response: Consumer is resilient but choiceful; Q2 beat and early Q3 solid; maintaining cautious guide until tariff effects are clearer; higher‑income mix supports demand.

• Question from Oliver Chen (TD Cowen): Private brand catalysts and Q3 comp assumptions; what comp is needed to leverage fixed costs longer term?
  Response: Private brands refreshed with launches/collabs; penetration below prior ~20% peak offers margin upside; Q3 guidance is prudent; leverage SG&A via ongoing savings and expand margin via private brands.

• Question from Alex Stratton (Morgan Stanley): Where are SG&A savings coming from and why more in the back half; what drove Bloomingdale’s acceleration?
  Response: Savings from closures, end‑to‑end efficiencies, and tight cost control, with more weighted to Q4; Bloomingdale’s growth from new brands, digital, collaborations, and outlet/small-format expansion.

• Question from Ryan Bulger (Gordon Haskett): Comp mix of traffic vs ticket and tariff-related pricing moves vs peers?
  Response: Comp gains from higher traffic and AOV; units softer; inventory lean with open-to-buy; pricing adjusted selectively as tariffs flow through to remain competitive.

• Question from Tracy Kogan (Citi): How are price increases split between private and national brands, and what are you seeing on elasticity?
  Response: Early days; demand resilient; adjusted unit buys and price points by category/brand; multi-price-point model provides flexibility to manage elasticity.

• Question from Michael Binetti (Evercore ISI): How are you gaining share in luxury amid pressures; what was Q2 tariff impact and credit outlook?
  Response: Bloomingdale’s is taking share across categories; elevated tariffs weighed on Q2 GM but results exceeded expectations; credit portfolio healthy with continued strong revenue.

• Question from Paul Carney (Barclays): How should we think about tariff impact next year and mitigation cadence?
  Response: Too early to quantify; mitigation via supplier terms, sourcing shifts, and targeted pricing will step up; more detail with year-ahead guidance on the Q4 call.

• Question from Jay Sole (UBS): How do you balance SG&A leverage with investments to lift comps?
  Response: Invest in frontline service and digital while driving ongoing savings; test/learn to fund growth and still leverage the P&L as sales build.

• Question from Janet Kloppenburg (JJK Research Associates): Impact of incremental markdowns on comp; any price pushback; tariff wraparound next year?
  Response: Markdowns were a minor comp driver; current strength from newness/back‑to‑school; consumer resilient; too early to size next year’s tariff effects.