Macy's Q2 Revenue and EPS Top Estimates but Shares Fall 3% on Soft Profit Guidance

Macy's reported second-quarter revenue of $4.9 billion, beating the $4.83 billion analyst estimate and rising 1.1% year over year, while adjusted EPS came in at $0.63, well above the $0.37 consensus. However, $98 million in IEEPA tariff refunds received during the quarter, plus $18 million collected after quarter-end for a combined $116 million, heavily shaped the results. Stripping out the net pre-tax benefit of $84 million, or $0.23 per share after tax, adjusted EPS was $0.40, still ahead of the $0.37 estimate and up 14% year over year. GAAP EPS doubled year over year to $0.62. Gross margin came in at 41.5%, with 180 basis points attributable to the refunds; excluding them, gross margin was up just 10 basis points.

Comparable sales rose 2.7% overall, led by a standout 11.3% gain at Bloomingdale's and 6.2% at Bluemercury, while Macy's brand comps grew 1.1%. Go-forward business comps, which reflect the company's strategically prioritized store base, rose 2.8%. Adjusted EBITDA reached $457 million, inclusive of the tariff refunds.

Macy's raised its full-year net sales outlook to a range of $21.68 billion to $21.83 billion, up from its prior June guidance of $21.5 billion to $21.75 billion, though that revised range fell short of the $21.91 billion analyst estimate. Full-year adjusted EPS guidance was lifted to $2.15 to $2.35, from $2.00 to $2.20, broadly in line with the $2.25 consensus, and adjusted EBITDA margin guidance was raised to 7.8% to 8.0% from 7.7% to 7.9%, though still below the 8.1% estimate. The company noted it is reinvesting the majority of the tariff refund benefit, with only about $0.05 per share flowing through to the full-year adjusted EPS guide. Full-year comparable sales growth guidance was raised to a range of 1.0% to 1.5%, from the prior 0.5% to 1.2%.

Despite the beats on revenue and earnings, shares fell more than 3% in pre-market trading, as investors focused on the below-consensus full-year guidance and the implied softness in third-quarter profit expectations once the tariff refund tailwind fades.