Macy's reported impressive second-quarter earnings on Wednesday, significantly exceeding Wall Street's expectations. The department store operator attributed its positive sales trends to the successful revamping of its stores. In light of these results, Macy's has also raised its full-year earnings and sales guidance, indicating a strong outlook for the remainder of the fiscal year.
The retailer now anticipates adjusted earnings to be between $1.70 and $2.05 per share, an increase from the previous estimate of $1.60 to $2.00 per share. Additionally, Macy's expects revenue to fall between $21.15 billion and $21.45 billion, up from its earlier range of $21 billion to $21.4 billion. Following this announcement, Macy's stock surged by 10% in pre-market trading.
In the previous quarter, Macy's had cut its full-year guidance due to concerns over sales uncertainty stemming from President Donald Trump's tariffs. However, CEO Tony Spring expressed confidence in the company’s current positioning during an interview with CNBC. “We're just well-positioned right now for the environment we're in to take share, to deliver for our customers, and to provide a better experience,” he stated.
Spring further elaborated on the impact of tariffs, acknowledging that while they are a significant aspect of the business, the company is actively working to mitigate their effects. “Tariffs are real. It's a component of the business, but we have tailwinds that we are trying to mitigate against those headwinds,” he emphasized. Key strategies include enhancing customer experience, diversifying product offerings, and maintaining a healthy inventory as the fall season approaches.
Macy's has observed a resilient consumer base that continues to spend on new items and fashion trends. The company reported its best comparable sales growth in the last 12 months. Spring highlighted that the retailer's strategy focuses on business segments that are performing well, such as denim, women's contemporary apparel, and watches, to sustain this momentum.
During its second fiscal quarter, which concluded on August 2, Macy's financial performance was as follows, compared to analysts' expectations from a survey by LSEG:
Earnings per share: 41 cents adjusted vs. 18 cents expected Revenue: $4.81 billion vs. $4.76 billion expectedThe company's net income for the quarter was $87 million, or 31 cents per share, a decline from $150 million, or 53 cents per share, in the same period last year. Net sales also fell from $4.94 billion to $4.81 billion year-on-year, with adjusted earnings per share reported at 41 cents.
Macy's has concentrated its efforts on a select group of 125 stores that have been given higher staffing levels and renovations, which have outperformed the overall brand. These stores saw a comparable sales growth of 1.1% on an owned basis. Additionally, Macy's owns Bloomingdale's, which reported a robust comparable sales growth of 3.6%, and Bluemercury, which experienced a 1.2% increase in comparable sales. Both brands consistently outperform Macy's flagship stores.
The company also noted a significant increase in credit card net revenues, rising by $28 million to reach $153 million. Spring remarked, “When you think about the strength of a department store or a marketplace, it's when multiple categories are working.” This holistic approach continues to position Macy's for growth in an evolving retail landscape.
