Macy’s shares jumped 13% in premarket trading after the company reported stronger-than-expected second-quarter earnings on Wednesday, with management crediting store renovations and strategic shifts for improved sales trends.
The department store operator also raised its full-year outlook, signaling renewed confidence after a period of caution tied to tariffs and economic uncertainty.
Earnings and guidance lift
For the quarter ended August 2, Macy’s posted adjusted earnings per share of $0.41, well ahead of the $0.18 expected by Wall Street analysts surveyed by LSEG.
Revenue came in at $4.81 billion, also above expectations of $4.76 billion, though slightly below the $4.94 billion recorded in the year-ago period.
Net income was $87 million, or $0.31 per share, compared with $150 million, or $0.53 per share, a year earlier.
Despite the decline in profit, the company’s operational performance exceeded forecasts, lifting investor sentiment.
Macy’s also raised its full-year guidance. The retailer now anticipates adjusted earnings between $1.70 and $2.05 per share, compared with the previous range of $1.60 to $2.00.
Revenue expectations were revised to between $21.15 billion and $21.45 billion, slightly higher than the earlier projection of $21.0 billion to $21.4 billion.
Store revamps and portfolio performance
A key driver of Macy’s performance has been the group of 125 stores the company has targeted for higher staffing levels and renovations.
These locations outperformed the broader Macy’s brand, delivering comparable sales growth of 1.1% on an owned basis.
CEO Tony Spring told CNBC that the retailer is leaning into business areas that show strong momentum, including denim, women’s contemporary apparel, and watches.
“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,” Spring said.
Macy’s portfolio brands continued to show resilience. Bloomingdale’s reported comparable sales growth of 3.6% on an owned basis, while Bluemercury saw a 1.2% increase.
Both banners have consistently outperformed Macy’s namesake stores.
The company also benefited from a $28 million increase in credit card net revenues, which rose to $153 million in the quarter.
Tariff pressures and consumer outlook
Macy’s performance comes against the backdrop of continued US tariffs, which the company has previously flagged as a source of uncertainty.
Last quarter, Macy’s raised prices on some products to offset these costs.
Spring said Wednesday that tariff impacts are now included in the company’s outlook and that management remains cautiously optimistic.
“Tariffs are real. It’s a component of the business, but we have tailwinds that we are trying to mitigate against those headwinds,” Spring explained.
He pointed to improvements in customer experience, a refreshed product assortment, reduced redundancy in offerings, and a healthier inventory position heading into the fall season.
Spring emphasized that consumers remain resilient, continuing to spend on fashion and new products.
He said Macy’s strategy focuses on aligning with those preferences while strengthening core categories.
Macy’s second-quarter results mark its best comparable sales growth in 12 quarters, suggesting that its turnaround efforts are beginning to gain traction.
With raised guidance and targeted investments in store upgrades and product categories, the retailer aims to sustain momentum into the key holiday season.
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