Macy’s is back in the spotlight, and not for the usual reasons. The company recently announced its second-quarter earnings, and they blew past what analysts were expecting. This great news sent the stock soaring by 20% in early trading.
Just last quarter, Macy’s had lowered its full-year outlook, citing uncertainty due to tariffs. But now, it’s a completely different story. Macy’s not only beat expectations but also raised its financial guidance for the rest of the year. The company now projects adjusted earnings between $1.70 and $2.05 per share and revenue between $21.15 billion and $21.45 billion.
CEO Tony Spring credits the company’s turnaround to a better customer experience, a newer product mix, and a healthy inventory. While he acknowledged that tariffs are a real challenge, he said the company is well-positioned to handle them. “Tariffs are real. It’s a component of the business, but we have tailwinds that we are trying to mitigate against those headwinds,” Spring told CNBC. He also pointed out that customers are still spending, especially on new fashion items.
Digging into the Details
Macy’s saw its best comparable sales growth in 12 quarters, and a big part of that success comes from its revitalized store strategy. The company has been focusing on 125 key stores with renovations and increased staffing, and these locations are outperforming the broader Macy’s brand. They saw comparable sales growth of 1.1% on an owned basis.
The company’s other brands are also doing well. Bloomingdale’s reported an impressive 3.6% comparable sales growth, while Bluemercury saw a 1.2% rise. This performance has been consistent, with both brands generally doing better than the flagship Macy’s stores. The company also saw a nice boost in its credit card revenue, which increased by $28 million.
Looking ahead, Macy’s is keeping a close eye on tariffs and may consider more price increases on some items. However, CFO Tom Edwards said any adjustments would be strategic and not a broad-based move. He feels confident the company is well-equipped to handle the current economic climate, noting, “I believe that we are really well positioned to navigate through this time given our business model.”