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- Macy’s posted strong second fiscal quarter results on Thursday and raised its full-year guidance.
- The retailer hiked its outlook for net sales and comparable sales.
- The earnings come as Macy’s implements a turnaround strategy to try to return to growth against a challenging backdrop for department stores.
Shoppers carry Macy’s bags in San Francisco on July 25, 2024.David Paul Morris | Bloomberg | Getty Images
Macy’s on Thursday posted growth across the company in its second fiscal quarter and raised its guidance as it continues its turnaround.
The retailer said overall comparable sales rose 2.7% for the quarter, with comparable sales for its namesake brand up 1.1%. The company said that growth was largely driven by its so-called reimagined stores, locations it has revamped as one of the focuses of its turnaround.
Macy’s said its higher-end store line Bloomingdale’s saw an 11.3% increase in comparable sales, while beauty brand Bluemercury was up 6.2%.
“I think it’s a different Macy’s Inc. today,” CEO Tony Spring told CNBC. “We’re in a healthier position. We’re catering to our customers while we’re also becoming a more interesting investment option for our shareholders.”
Spring added that Bloomingdale’s has seen success by “doing innovative things” to remain “accessible and very differentiated” for a higher-end consumer. On the other side, Spring said the overhauled Macy’s stores have had better assortments, more customer assistance and stronger displays of merchandise to help improve the experience.
The company also raised its full-year guidance and now projects net sales to be between $21.68 billion and $21.83 billion, compared to a prior expectation of between $21.5 billion and $21.75 billion. It also raised its comparable sales outlook range from between 0.5% and 1.2% growth to a 1% to 1.5% increase.
Macy’s hiked its full-year earnings per share outlook to a range of $2.15 to $2.35, up from $2 to $2.20. It said that included a roughly 5 cent per share bump from tariff repayments it will apply to its bottom line.
The retailer reported that it has received a total of $116 million in tariff refunds, and will invest most of that — about $96 million — in the customer experience and its turnaround plan. Spring said Macy’s would rather put the money toward long-term improvements than temporary price reductions, a step some retailers have taken to cater to cash-strapped shoppers.
“There is great value being offered across all of our nameplates, and we just really wanted to make sure that the reinvestment of the tariff refunds were things that were beyond one-time benefits that really had lasting power to support the overarching intent of our strategy,” Spring told CNBC.
He added that the company is holding back a small portion of those refunds due to uncertainty around fuel costs to make sure Macy’s is “not surprised by anything else.”
Here’s how the company performed in its second fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: 40 cents adjusted; it was not immediately clear if that was comparable to the 37 cents expected
- Revenue: $4.87 billion vs. $4.83 billion expected
The company reported net income of $169 million, or 62 cents per share, compared to $87 million, or 31 cents per share, the year prior. Adjusting for one-time items, Macy’s reported earnings per share of 40 cents.
Sales rose to roughly $4.87 billion, up just slightly from $4.81 billion the year prior.
The company added that credit card revenue was up 2%, or $3 million, for the quarter, due to what it called a “healthy credit portfolio and stable net credit card losses.”
Spring said while the company is seeing a bifurcation among income cohorts, it’s still well-positioned to win both higher- and lower-income shoppers.
“For the people that have the discretionary income, they’re wanting to participate and enjoy the benefits of fashion and its accessibility to everyone to really create your own style,” he told CNBC. “At the same time, people that are navigating month-to-month or quarter-to-quarter based on interest rates or the price of food or the price of gas, they’re going to be leveraging more value and off-price in order to participate in the economy.”
Macy’s is nearing the end of a three-year turnaround plan under CEO Tony Spring that aims to spark growth and invest in locations that perform well against a challenging backdrop for department stores. Spring told CNBC last quarter that the company was seeing strong consumer behavior despite a challenging macroenvironment.
