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Macy's Q2 earnings and sales beat estimates despite y/y declines.
Comps grew 1.9% on an owned-plus-licensed-plus-marketplace basis, the strongest in 12 quarters.
The FY25 net sales outlook has been lifted to $21.15B-$21.45B, with higher EPS guidance.
Macy’s, Inc. (M - Free Report) has reported second-quarter fiscal 2025 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. However, both metrics decreased from the year-ago quarter. Comparable sales (comps) increased on an owned and owned-plus-licensed-plus-marketplace basis, marking the company’s strongest comps growth in 12 quarters. As a result, the company has raised its fiscal 2025 outlook.
In the fiscal second quarter, the company continued to advance the execution of its Bold New Chapter strategy, scaling key initiatives that enhanced the customer experience and drove stronger-than-expected performance across Macy’s, Bloomingdale’s and Bluemercury.
The company has reported adjusted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 19 cents. However, the bottom line decreased 22.6% from 53 cents in the year-ago period.
Net sales of $4,812 million beat the consensus estimate of $4,718 million. However, the top line dipped 2.5% from the year-ago quarter. Comps increased 0.8% on an owned basis and 1.9% on an owned-plus-licensed-plus-marketplace basis from the prior-year quarter, with all company nameplates delivering positive comps.
M’s go-forward business comps, including both go-forward locations and digital platforms across all nameplates, increased 1.1% on an owned basis and 2.2% on an owned-plus-licensed-plus-marketplace basis.
Net credit card revenues were $153 million, up 22.4% from the year-ago period. The metric represented 3.2% of sales, up 70 basis points from the year-ago quarter.
Macy’s Media Network revenues were $34 million, flat year over year. The metric represented 0.7% of sales, unchanged from the year-ago quarter.
Update on M’s Brand Performance
Comps across the Macy’s brand increased 0.4% year over year on an owned basis and 1.2% on an owned-plus-licensed-plus-marketplace basis.
At the Bloomingdale’s brand, comps increased 3.6% on an owned basis and 5.7% on an owned-plus-licensed-plus-marketplace basis, marking its fourth consecutive quarter of growth.
Comps at the Bluemercury brand rose 1.2% on an owned basis, its 18th consecutive quarter of comps growth.
Insight Into Macy’s Margins & Expenses
The gross margin in the second quarter was 39.7%, which met our estimate. This represented a decline of 80 basis points from last year, driven by proactive markdowns on remaining early Spring merchandise to support healthy inventory levels, as well as product purchased under prior tariff rates.
The Zacks Rank #3 (Hold) company reported selling, general and administrative (SG&A) expenses of $1.94 billion, down 1.5% year over year. Savings from store closures and cost-control initiatives were partially offset by investments in strategic growth, including the Reimagine 125 locations and Bloomingdale’s. We estimated SG&A expenses to be flat year over year in the second quarter.
However, SG&A expenses increased 20 basis points year over year to 38.9% of total revenues, reflecting the impacts of lower net sales.
Macy’s reported an adjusted EBITDA of $393 million, down 10.3% from $438 million in the year-ago quarter. The adjusted EBITDA margin was 7.9%, down 70 basis points year over year.
The company ended the fiscal second quarter with cash and cash equivalents of $829 million, long-term debt of $2.43 billion, and shareholders' equity of $4.45 billion. Merchandise inventories declined 0.8% on a year-over-year basis. In the first half of fiscal 2025, net cash provided by operating activities was $255 million.
Asset sale gains totaled $16 million, representing a $20-million decrease from the prior-year period. In the second quarter of fiscal 2025, the company repurchased 4 million shares for $50 million. As of the end of the quarter, $1.2 billion remained available under its $2-billion share repurchase authorization.
M Stock Past 3-Month Performance
Image Source: Zacks Investment Research
Peek Into Macy’s FY25 Guidance
For 2025, the company updated its annual guidance to reflect its second-quarter performance and the anticipated gross margin impact of current tariffs in the back half of the year. While Macy’s expects consumers to remain more discerning and the retail landscape to be competitive and promotional, the company remains confident in its ability to adapt. This confidence is supported by a strong financial foundation, a diverse portfolio of brands and categories, and positioning across the value spectrum, from off-price to luxury.
The company expects net sales between $21.15 billion and $21.45 billion, compared with the prior mentioned $21-$21.4 billion.
Comparable owned-plus-licensed-plus-marketplace sales are projected to decline 1.5% to 0.5% year over year, versus the earlier stated 2-0.5% decline. Go-forward business comparable owned-plus-licensed-plus-marketplace sales are expected to range from a 1.5% dip to flat, compared with the prior outlook of a 2% dip to flat.
Adjusted EBITDA as a percentage of total revenues is expected at 7.4-7.9%. Core adjusted EBITDA is projected at 7-7.5% of total revenues. Adjusted earnings per share are projected between $1.70 and $2.05, compared with the prior stated $1.60-$2.00. The guidance reflects the impacts of fiscal 2024 store closures, which contributed approximately $700 million to annual net sales.
M shares have gained 17.8% in the past three months compared with the industry’s 37.5% growth.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales suggests growth of 67% and 1.5%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.
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Macy's Q2 Earnings Beat Estimates, Comps Rise Y/Y, FY25 View Up
Key Takeaways
Macy’s, Inc. (M - Free Report) has reported second-quarter fiscal 2025 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. However, both metrics decreased from the year-ago quarter. Comparable sales (comps) increased on an owned and owned-plus-licensed-plus-marketplace basis, marking the company’s strongest comps growth in 12 quarters. As a result, the company has raised its fiscal 2025 outlook.
In the fiscal second quarter, the company continued to advance the execution of its Bold New Chapter strategy, scaling key initiatives that enhanced the customer experience and drove stronger-than-expected performance across Macy’s, Bloomingdale’s and Bluemercury.
Macy's, Inc. Price, Consensus and EPS Surprise
Macy's, Inc. price-consensus-eps-surprise-chart | Macy's, Inc. Quote
More on Macy’s Q2 Results
The company has reported adjusted earnings of 41 cents per share, surpassing the Zacks Consensus Estimate of 19 cents. However, the bottom line decreased 22.6% from 53 cents in the year-ago period.
Net sales of $4,812 million beat the consensus estimate of $4,718 million. However, the top line dipped 2.5% from the year-ago quarter. Comps increased 0.8% on an owned basis and 1.9% on an owned-plus-licensed-plus-marketplace basis from the prior-year quarter, with all company nameplates delivering positive comps.
M’s go-forward business comps, including both go-forward locations and digital platforms across all nameplates, increased 1.1% on an owned basis and 2.2% on an owned-plus-licensed-plus-marketplace basis.
Net credit card revenues were $153 million, up 22.4% from the year-ago period. The metric represented 3.2% of sales, up 70 basis points from the year-ago quarter.
Macy’s Media Network revenues were $34 million, flat year over year. The metric represented 0.7% of sales, unchanged from the year-ago quarter.
Update on M’s Brand Performance
Comps across the Macy’s brand increased 0.4% year over year on an owned basis and 1.2% on an owned-plus-licensed-plus-marketplace basis.
At the Bloomingdale’s brand, comps increased 3.6% on an owned basis and 5.7% on an owned-plus-licensed-plus-marketplace basis, marking its fourth consecutive quarter of growth.
Comps at the Bluemercury brand rose 1.2% on an owned basis, its 18th consecutive quarter of comps growth.
Insight Into Macy’s Margins & Expenses
The gross margin in the second quarter was 39.7%, which met our estimate. This represented a decline of 80 basis points from last year, driven by proactive markdowns on remaining early Spring merchandise to support healthy inventory levels, as well as product purchased under prior tariff rates.
The Zacks Rank #3 (Hold) company reported selling, general and administrative (SG&A) expenses of $1.94 billion, down 1.5% year over year. Savings from store closures and cost-control initiatives were partially offset by investments in strategic growth, including the Reimagine 125 locations and Bloomingdale’s. We estimated SG&A expenses to be flat year over year in the second quarter.
However, SG&A expenses increased 20 basis points year over year to 38.9% of total revenues, reflecting the impacts of lower net sales.
Macy’s reported an adjusted EBITDA of $393 million, down 10.3% from $438 million in the year-ago quarter. The adjusted EBITDA margin was 7.9%, down 70 basis points year over year.
M’s Financial Snapshot: Cash, Inventory & Equity Overview
The company ended the fiscal second quarter with cash and cash equivalents of $829 million, long-term debt of $2.43 billion, and shareholders' equity of $4.45 billion. Merchandise inventories declined 0.8% on a year-over-year basis. In the first half of fiscal 2025, net cash provided by operating activities was $255 million.
Asset sale gains totaled $16 million, representing a $20-million decrease from the prior-year period. In the second quarter of fiscal 2025, the company repurchased 4 million shares for $50 million. As of the end of the quarter, $1.2 billion remained available under its $2-billion share repurchase authorization.
M Stock Past 3-Month Performance
Image Source: Zacks Investment Research
Peek Into Macy’s FY25 Guidance
For 2025, the company updated its annual guidance to reflect its second-quarter performance and the anticipated gross margin impact of current tariffs in the back half of the year. While Macy’s expects consumers to remain more discerning and the retail landscape to be competitive and promotional, the company remains confident in its ability to adapt. This confidence is supported by a strong financial foundation, a diverse portfolio of brands and categories, and positioning across the value spectrum, from off-price to luxury.
The company expects net sales between $21.15 billion and $21.45 billion, compared with the prior mentioned $21-$21.4 billion.
Comparable owned-plus-licensed-plus-marketplace sales are projected to decline 1.5% to 0.5% year over year, versus the earlier stated 2-0.5% decline. Go-forward business comparable owned-plus-licensed-plus-marketplace sales are expected to range from a 1.5% dip to flat, compared with the prior outlook of a 2% dip to flat.
Adjusted EBITDA as a percentage of total revenues is expected at 7.4-7.9%. Core adjusted EBITDA is projected at 7-7.5% of total revenues. Adjusted earnings per share are projected between $1.70 and $2.05, compared with the prior stated $1.60-$2.00. The guidance reflects the impacts of fiscal 2024 store closures, which contributed approximately $700 million to annual net sales.
M shares have gained 17.8% in the past three months compared with the industry’s 37.5% growth.
Stocks to Consider
Some better-ranked stocks are Levi Strauss & Co. (LEVI - Free Report) , Genesco Inc. (GCO - Free Report) and The TJX Companies, Inc. (TJX - Free Report) .
Levi Strauss designs and markets jeans, casual wear and related accessories. It sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Levi Strauss’ current financial-year earnings indicates growth of 4% from the year-ago actual. LEVI delivered a trailing four-quarter average earnings surprise of 25.9%.
Genesco is a Nashville-based specialty retail and branded company that sells footwear and accessories in retail stores. It currently flaunts a Zacks Rank of 1.
The Zacks Consensus Estimate for GCO’s fiscal 2026 earnings and sales suggests growth of 67% and 1.5%, respectively, from the year-ago actuals. Genesco delivered a trailing four-quarter average earnings surprise of 28.1%.
The TJX Companies is a leading off-price retailer of apparel and home fashions. It carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for The TJX Companies’ current fiscal-year earnings and sales indicates growth of 7% and 5.4%, respectively, from the year-ago actuals. TJX delivered a trailing four-quarter average earnings surprise of 5.4%.