Macy’s shares surged 18% as the department store chain signaled its turnaround is working – hiking its annual sales and profit forecasts despite widespread tariff uncertainty.
CEO Tony Spring launched the turnaround effort last February, encouraging the company to focus on its luxury Bloomingdale’s and Bluemercury brands, invest in remodeled stores and shutter 150 struggling locations.
“I like the early read of August and what the customer is buying because that is not markdown related,” Spring said during a post-earnings call.
“It’s newness related, it is back-to-school related, it’s early fall product and winter categories. So all of that is very positive.”
Macy’s now expects annual adjusted profit per share of $1.70 to $2.05 – above previous expectations of $1.60 to $2.00.
It also hiked its annual net sales forecast to $21.15 billion to $21.45 billion, up from $21 billion to $21.4 billion.
That comes as other retailers have slashed or maintained their forecasts, warning of heightened economic uncertainty.
Even Macy’s raised its estimated tariff impact to 40 to 60 basis points off its full-year gross margins, compared with 20 to 40 basis points it had projected earlier in the year.
The company has been making “surgical” price increases across the chain to offset the tariff costs, Macy’s CFO Thomas Edwards said.
EMarketer analyst Suzy Davidkhanian said Macy’s raising its forecasts was a “bold move” as “an overcrowded retail landscape and tighter budgets intensify competition.”
In the second quarter, Macy’s reported comparable sales growth of 0.8% – its best reading in 12 quarters.
Meanwhile, a group of 125 stores that Macy’s remodeled with more staffing, improved displays and a new mix of merchandise outperformed with comparable sales growth of 1.1% on an owned basis.
Bloomingdale’s reported comparable sales growth of 3.6% on an owned basis while Bluemercury saw comparable sales rise 1.2%.
These brands cater to higher-income customers and consistently perform better than Macy’s namesake stores.
Macy’s reported $4.81 billion in net sales, above estimates of $4.76 billion, according to LSEG data.
Adjusted earnings per share of 41 cents also beat projections of 18 cents.
Net income was $87 million, or 31 cents per share, down from $150 million, or 53 cents per share, the year before.
The company also reported a $28 million increase in credit card net revenue to $153 million.
