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- Exceeded profitability guidance for the quarter - Generated record-high third quarter free cash flow from operations of $268M, and adjusted free cash flow of $218M - Increased quarterly dividend NEWARK, Calif., Sept. 29, 2026 (GLOBE NEWSWIRE) -- Concentrix Corporation (NASDAQ: CNXC), a global technology and services leader, today announced financial results for the fiscal third quarter ended August 31, 2026. | Three Months Ended | | | August 31, 2026 | | August 31, 2025 | | Change Revenue ($M) | $ | 2,453.7 | | | $ | 2,483.3 | | | (1.2 | )% Operating income (loss) ($M) (1) | $ | (910.3 | ) | | $ | 147.0 | | | NM Non-GAAP operating income ($M) (2) | $ | 309.0 | | | $ | 305.1 | | | 1.3 | % Operating margin (1) | (37.1 | )% | | | 5.9 | % | | NM Non-GAAP operating margin (2) | | 12.6 | % | | | 12.3 | % | | 30 bps Net income (loss) ($M) (1) | $ | (988.1 | ) | | $ | 88.1 | | | NM Non-GAAP net income ($M) (2) | $ | 186.5 | | | $ | 183.2 | | | 1.8 | % Adjusted EBITDA ($M) (2) | $ | 363.0 | | | $ | 359.2 | | | 1.1 | % Adjusted EBITDA margin (2) | | 14.8 | % | | | 14.5 | % | | 30 bps Diluted earnings (loss) per common share (1) | $ | (16.24 | ) | | $ | 1.34 | | | NM Non-GAAP diluted earnings per common share (2) | $ | 2.92 | | | $ | 2.78 | | | 5.0 | % (1) Operating loss, operating margin, net loss and diluted loss per common share in the third quarter of 2026 include a non-cash goodwill impairment charge of $1,050.0 million primarily resulting from the trading range for the Company's stock price and market capitalization. (2) See non-GAAP reconciliations included in the accompanying financial tables for the reconciliation of each non-GAAP measure to its most directly comparable GAAP measure. NM Not Meaningful - Change greater than 100% or 1,000 bps. Third Quarter Fiscal 2026 Highlights: - Revenue of $2,453.7 million, a decrease of (1.2)% year-on-year on an as reported basis compared to revenue of $2,483.3 million in the prior year third quarter. The Company's revenue decreased by (0.5)% year-on-year on a constant currency basis. - Operating loss of $(910.3) million, or (37.1)% of revenue, compared to $147.0 million, or 5.9% of revenue, in the prior year third quarter. Operating loss for the quarter includes a non-cash goodwill impairment charge of $1,050.0 million primarily resulting from the recent trading range for the Company's stock price and market capitalization. - Non-GAAP operating income of $309.0 million, or 12.6% of revenue, compared with $305.1 million, or 12.3% of revenue in the prior year third quarter. - Adjusted EBITDA of $363.0 million, or 14.8% of revenue, compared with $359.2 million, or 14.5% of revenue in the prior year third quarter. - Cash flow provided by operations was $268.2 million in the quarter. Adjusted free cash flow(1) was $218.3 million in the quarter. - Diluted earnings (loss) per common share ("EPS") was $(16.24), inclusive of the goodwill impairment referenced above, compared to $1.34 in the prior year third quarter. - Non-GAAP diluted EPS was $2.92 compared to $2.78 in the prior year third quarter. "This quarter, we reached an inflection point where 50% of our revenue is coming from business we have won and deployed within the last 3 years since the introduction of AI," said Chris Caldwell, President and CEO of Concentrix. "While we are aggressively disrupting our own traditional business, the underlying new business is stronger and healthier as evidenced by our margin expansion, strong free cash flow and growth of our new services." Quarterly Dividend and Share Repurchase Program: - The Company paid a $0.36 per share quarterly dividend on August 4, 2026. The Company's Board of Directors has declared a quarterly dividend of $0.37 per share payable on November 3, 2026, to shareholders of record at the close of business on October 23, 2026. - The Company did not repurchase any shares under its share repurchase program during the third quarter of fiscal year 2026. At August 31, 2026, the Company's remaining share repurchase authorization was $396.6 million. Business Outlook: The following statements are based on the Company's current expectations for the fourth quarter and the full year fiscal 2026. Non-GAAP financial measures exclude the impact of impairment charge, acquisition-related, integration and restructuring expenses, amortization of intangible assets, depreciation, loss on held for sale, share-based compensation and the related tax effects thereon. The non-GAAP EPS guidance assumes no impact from changes in acquisition contingent consideration and foreign currency losses (gains), net included in other expense (income), net. These statements are forward-looking and actual results may differ materially. Fourth Quarter Fiscal 2026 Expectations: - Fourth quarter reported revenue of $2.410 billion to $2.460 billion. Based on current exchange rates, these expectations assume an approximate 65-basis point negative impact of foreign exchange rates compared with the prior year period. The guidance implies constant currency revenue decline for the quarter ranging from (5.0)% to (3.0)%. - Operating income of $174 million to $184 million and non-GAAP operating income of $310 million to $320 million. - Non-GAAP diluted EPS of $2.86 to $2.98, assuming approximately 61.2 million diluted common shares outstanding and approximately 4.9% of net income attributable to participating securities. - The effective tax rate is expected to be approximately 24%. Full Year 2026 Expectations: - Full year reported revenue of $9.827 billion to $9.877 billion. Based on current exchange rates, these expectations assume an approximate 80-basis point positive impact of foreign exchange rates compared with the prior year. The guidance implies constant currency revenue decline for the full year of (0.8)% to (0.3)%. - Operating loss of $(522) million to $(512) million and non-GAAP operating income of $1,206 million to $1,216 million. - Non-GAAP diluted EPS of $10.97 to $11.09, assuming approximately 61.1 million diluted common shares outstanding and approximately 4.9% of net income attributable to participating securities. - The effective tax rate is expected to be approximately 24%. In addition, the Company expects to generate approximately $630.0 million to $650.0 million of adjusted free cash flow in fiscal year 2026. The Company believes that a quantitative reconciliation of the non-GAAP EPS outlook to the most directly comparable GAAP measure cannot be provided without unreasonable efforts due to the inability to forecast future foreign currency losses (gains), net included in other expense (income), net. For the same reason, the Company is unable to address the probable significance of the unavailable information, which may have a material impact on the Company's GAAP results. The Company believes that a quantitative reconciliation of the adjusted free cash flow outlook to the most directly comparable GAAP measure cannot be provided without unreasonable efforts due to uncertainty related to the future changes in the Company's factoring program and related timing of those changes. For the same reason, the Company is unable to address the probable significance of the unavailable information, which may have a material impact on the Company's GAAP results. Conference Call and Webcast The Company will host a conference call for investors to review its third quarter fiscal 2026 results today at 5:00 p.m. (ET)/2:00 p.m. (PT). The live conference call webcast will be available in listen-only mode in the Investor Relations section of the Company's website under "Events and Presentations" at https://ir.concentrix.com/events-and-presentations. A replay will also be available on the website following the conference call. About Concentrix: Powering a World That Works Concentrix Corporation (NASDAQ: CNXC), is the Fortune 500® technology and services company, helping the world's best brands create intelligent operations that perform in the real world. We design, build, and run integrated human and AI solutions, harnessing the insight from billions of real-world interactions to help 2,000+ of the world's most complex organizations solve their toughest business challenges. Backed by 20+ years of operational experience and battle tested AI, we're the intelligent transformation partner that helps clients across every major industry move from ambition to measurable, scalable performance. Virtually everywhere. To learn more, visit concentrix.com. Use of Non-GAAP Information In addition to disclosing financial results that are determined in accordance with GAAP, we also disclose certain non-GAAP financial information, including: - Constant currency revenue growth (decline), which is revenue growth (decline) adjusted for the translation effect of foreign currencies so that certain financial results can be viewed without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of our business performance. Constant currency revenue growth (decline) is calculated by translating the revenue of each fiscal year in the billing currency to U.S. dollars using the comparable prior year's currency conversion rate in comparison to prior year's revenue. Generally, when the U.S. dollar either strengthens or weakens against other currencies, revenue growth at constant currency rates or adjusting for currency will be higher or lower than revenue growth reported at actual exchange rates. - Non-GAAP operating income, which is operating income (loss), adjusted to exclude impairment charge, acquisition-related, integration and restructuring expenses, step-up depreciation, amortization of intangible assets, loss on held for sale and share-based compensation. - Non-GAAP operating margin, which is non-GAAP operating income, as defined above, divided by revenue. - Adjusted earnings before interest, taxes, depreciation, and amortization, or adjusted EBITDA, which is non-GAAP operating income, as defined above, plus depreciation (exclusive of step-up depreciation). - Adjusted EBITDA margin, which is adjusted EBITDA, as defined above, divided by revenue. - Non-GAAP net income, which is net income (loss) excluding the tax-effected impact of impairment charge, acquisition-related, integration and restructuring expenses, step-up depreciation, amortization of intangible assets, loss on held for sale, share-based compensation, certain debt costs, imputed interest related to the Sellers' Note, certain legal settlement costs, change in acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP net income also excludes the income tax effect of certain tax law changes. - Free cash flow, which is cash flows from operating activities less capital expenditures, and adjusted free cash flow, which is free cash flow excluding the effect of changes in the outstanding factoring balance. We believe that free cash flow is a meaningful measure of cash flows since capital expenditures are a necessary component of ongoing operations. We believe that adjusted free cash flow is a meaningful measure of cash flows because it removes the effect of factoring, which changes the timing of the receipt of cash for certain receivables. However, free cash flow and adjusted free cash flow have limitations because they do not represent the residual cash flow available for discretionary expenditures. For example, free cash flow and adjusted free cash flow do not incorporate payments for business acquisitions. - Non-GAAP diluted EPS, which is diluted EPS excluding the per share, tax-effected impact of impairment charge, acquisition-related, integration and restructuring expenses, step-up depreciation, amortization of intangible assets, loss on held for sale, share-based compensation, certain debt costs, imputed interest related to the Sellers' Note, certain legal settlement costs, change in acquisition contingent consideration and foreign currency losses (gains), net. Non-GAAP EPS also excludes the per share income tax effect of certain tax law changes. Non-GAAP EPS also reflects a per share adjustment to exclude non-GAAP net income attributable to participating securities. We believe that providing this additional information is useful to the reader to better assess and understand our base operating performance, especially when comparing results with previous periods and for planning and forecasting in future periods, primarily because management typically monitors the business adjusted for these items in addition to GAAP results. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. These non-GAAP financial measures exclude amortization of intangible assets. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to the services performed for our clients. Additionally, intangible asset amortization expense typically fluctuates based on the size and timing of our acquisition activity. Accordingly, we believe excluding the amortization of intangible assets, along with the other non-GAAP adjustments, which neither relate to the ordinary course of our business nor reflect our underlying business performance, enhances our and our investors' ability to compare our past financial performance with our current performance and to analyze underlying business performance and trends. These non-GAAP financial measures also exclude share-based compensation expense. Given the subjective assumptions and the variety of award types that companies can use when calculating share-based compensation expense, management believes this additional information allows investors to make additional comparisons between our operating results and those of our peers. As these non-GAAP financial measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures employed by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures and should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. Safe Harbor Statement This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements regarding the Company's expected future financial condition, growth and profitability, results of operations, including revenue and operating income, cash flows, and effective tax rate, leverage and liquidity, capital expenditures and anticipated investment costs, the Company's stock price and market capitalization, the future growth and success of, and demand for, the Company's services and products, the potential benefits associated with use of the Company's artificial intelligence ("AI") solutions and other products, share repurchase and dividend activity, capital allocation, debt repayment and obligations, business strategy, product launches, foreign currency exchange rate fluctuations, and statements that include words such as believe, expect, intend, plan, may, will, anticipate, provide, could, should, target, estimate, outlook, and other similar expressions. These forward-looking statements are inherently uncertain and involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things: risks related to general economic and geopolitical conditions and their effects on our clients' businesses and demand for our services, including consumer demand, interest rates, inflation, the price of oil and other petroleum-based products, international tariffs and global trade policies, supply chains, and the conflicts in the Middle East and Ukraine; cyberattacks on the Company's or its clients' networks and information technology systems; uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of AI, including agentic and generative AI; the failure of the Company's staff and contractors to adhere to the Company's and its clients' controls and processes; the inability to protect personal and proprietary information; the effects of communicable diseases or other public health crises, natural disasters and adverse weather conditions; geopolitical, economic and climate- or weather-related risks in regions with a significant concentration of the Company's operations; the ability to successfully execute the Company's strategy; the timing and success of product launches; competitive conditions in the Company's industry and consolidation of its competitors; variability in demand by the Company's clients or the early termination of the Company's client contracts; the level of business activity of the Company's clients and the market acceptance and performance of their products and services; the demand for end-to-end solutions and technology; damage to the Company's reputation through the actions or inactions of third parties; changes in law, regulations, or regulatory guidance, or changes in their interpretation or enforcement, including changes in law and policy that restrict offshoring or travel or visas between countries in which we have operations; the operability of the Company's communication services and information technology systems and networks; the loss of key personnel or the inability to attract and retain staff across all geographies with the skills and expertise needed for the Company's business; increases in the cost of labor, including minimum wage rates in the countries in which the Company operates; the inability to successfully identify, complete, and integrate strategic acquisitions or investments or realize anticipated benefits within the expected timeframe; higher than expected tax liabilities; currency exchange rate fluctuations; investigative or legal actions; and other factors contained in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2025 filed with the Securities and Exchange Commission ("SEC") and subsequent documents filed with or furnished to the SEC. The Company does not undertake a duty to update forward-looking statements, which speak only as of the date on which they are made, except as required by law. Copyright 2026 Concentrix Corporation. All rights reserved. Concentrix, the Concentrix logo, and all other Concentrix company, product, and services word and design marks and slogans are trademarks or registered trademarks of Concentrix Corporation and its subsidiaries. Other names and marks are the property of their respective owners. From Fortune ©2026 Fortune Media (USA) Corporation. All rights reserved. Used under license. Fortune and Fortune 500 are registered trademarks of Fortune Media (USA) Corporation and are used under license. Fortune and Fortune Media (USA) Corporation are not affiliated with, and do not endorse products or services of, Concentrix. Investor Contact: Elise Brassell Concentrix Corporation [email protected] | | | CONCENTRIX CORPORATION CONSOLIDATED BALANCE SHEETS (currency and share amounts in thousands, except par value) | | | | August 31, 2026 | | November 30, 2025 | (unaudited) | | ASSETS | | | Current assets: | | | Cash and cash equivalents | $ | 244,692 | | | $ | 327,347 | Accounts receivable, net | | 1,969,848 | | | | 1,999,021 | Assets held for sale | | 212,959 | | | | — | Other current assets | | 489,238 | | | | 758,135 | Total current assets | | 2,916,737 | | | | 3,084,503 | Property and equipment, net | | 698,116 | | | | 735,550 | Operating lease right-of-use assets, net | | 864,749 | | | | 857,025 | Goodwill | | 2,636,667 | | | | 3,671,746 | Intangible assets, net | | 1,651,400 | | | | 1,960,338 | Deferred tax assets | | 346,058 | | | | 317,453 | Other assets | | 147,042 | | | | 134,471 | Total assets | $ | 9,260,769 | | | $ | 10,761,086 | | | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | Current liabilities: | | | Accounts payable | $ | 221,495 | | | $ | 244,771 | Current portion of long-term debt | | 450,000 | | | | 65,625 | Accrued compensation and benefits | | 680,040 | | | | 764,962 | Other accrued liabilities | | 763,409 | | | | 997,198 | Income taxes payable | | 73,221 | | | | 123,794 | Liabilities held for sale | | 182,149 | | | | — | Total current liabilities | | 2,370,314 | | | | 2,196,350 | Long-term debt, net | | 3,925,373 | | | | 4,572,889 | Other long-term liabilities | | 949,867 | | | | 950,983 | Deferred tax liabilities | | 246,476 | | | | 296,519 | Total liabilities | | 7,492,030 | | | | 8,016,741 | Stockholders' equity: | | | Preferred stock, $0.0001 par value, 10,000 shares authorized and no shares issued and outstanding as of August 31, 2026 and November 30, 2025, respectively | | — | | | | — | Common stock, $0.0001 par value, 250,000 shares authorized; 70,679 and 70,316 shares issued as of August 31, 2026 and November 30, 2025, respectively, and 60,948 and 61,739 shares outstanding as of August 31, 2026 and November 30, 2025, respectively | | 7 | | | | 7 | Additional paid-in capital | | 3,859,842 | | | | 3,783,972 | Treasury stock, 9,731 and 8,577 shares as of August 31, 2026 and November 30, 2025, respectively | | (657,424 | ) | | | (610,162 | ) Retained deficit | | (1,157,782 | ) | | | (177,010 | ) Accumulated other comprehensive loss | | (275,904 | ) | | | (252,462 | ) Total stockholders' equity | | 1,768,739 | | | | 2,744,345 | Total liabilities and stockholders' equity | $ | 9,260,769 | | | $ | 10,761,086 | | | | CONCENTRIX CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (currency and share amounts in thousands, except per share amounts) (unaudited) | | | | | | | | Three Months Ended | | | | Nine Months Ended | | | August 31, 2026 | | August 31, 2025 | | % Change | | August 31, 2026 | | August 31, 2025 | | % Change Revenue | | | | | | | | | | | Technology and consumer electronics | $ | 603,512 | | | $ | 670,573 | | | (10 | )% | | $ | 1,862,845 | | | $ | 1,990,984 | | | (6 | )% Retail, travel and e-commerce | | 662,612 | | | | 622,822 | | | 6 | % | | | 1,952,770 | | | | 1,790,502 | | | 9 | % Communications and media | | 381,905 | | | | 411,229 | | | (7 | )% | | | 1,168,176 | | | | 1,175,192 | | | (1 | )% Banking, financial services and insurance | | 432,463 | | | | 384,449 | | | 12 | % | | | 1,286,456 | | | | 1,133,657 | | | 13 | % Healthcare | | 145,173 | | | | 174,106 | | | (17 | )% | | | 475,872 | | | | 540,297 | | | (12 | )% Other | | 228,014 | | | | 220,074 | | | 4 | % | | | 670,424 | | | | 642,214 | | | 4 | % Total revenue | $ | 2,453,679 | | | $ | 2,483,253 | | | (1 | )% | | $ | 7,416,543 | | | $ | 7,272,846 | | | 2 | % Cost of revenue | | 1,604,800 | | | | 1,628,246 | | | (1 | )% | | | 4,894,658 | | | | 4,713,792 | | | 4 | % Gross profit | | 848,879 | | | | 855,007 | | | (1 | )% | | | 2,521,885 | | | | 2,559,054 | | | (1 | )% Selling, general and administrative expenses | | 709,184 | | | | 708,023 | | | — | % | | | 2,168,210 | | | | 2,094,858 | | | 4 | % Impairment charge | | 1,050,000 | | | | — | | | NM | | | 1,050,000 | | | | — | | | NM Operating income (loss) | | (910,305 | ) | | | 146,984 | | | NM | | | (696,325 | ) | | | 464,196 | | | NM Interest expense and finance charges, net | | 64,856 | | | | 72,014 | | | (10 | )% | | | 208,247 | | | | 220,414 | | | (6 | )% Other expense (income), net | | 4,603 | | | | (36,474 | ) | | NM | | | (23,014 | ) | | | (20,175 | ) | | 14 | % Income (loss) before income taxes | | (979,764 | ) | | | 111,444 | | | NM | | | (881,558 | ) | | | 263,957 | | | NM Provision for income taxes | | 8,349 | | | | 23,334 | | | (64 | )% | | | 29,690 | | | | 63,497 | | | (53 | )% Net income (loss) | $ | (988,113 | ) | | $ | 88,110 | | | NM | | $ | (911,248 | ) | | $ | 200,460 | | | NM | | | | | | | | | | | Earnings (loss) per common share: | | | | | | | | | | | Basic | $ | (16.24 | ) | | $ | 1.34 | | | | | $ | (14.99 | ) | | $ | 3.01 | | | Diluted | $ | (16.24 | ) | | $ | 1.34 | | | | | $ | (14.99 | ) | | $ | 3.01 | | | Weighted-average common shares outstanding: | | | | | | | | | | | Basic | | 60,910 | | | | 62,598 | | | | | | 61,011 | | | | 63,325 | | | Diluted | | 60,910 | | | | 62,702 | | | | | | 61,011 | | | | 63,379 | | | | | | | | | | | | | | NM Not Meaningful - Change greater than 100%. CONCENTRIX CORPORATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES (currency and share amounts in thousands, except per share amounts) (unaudited) | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2026 Revenue | $ | 2,453,679 | | | $ | 7,416,543 | Revenue growth (decline), as reported under U.S. GAAP | (1.2 | )% | | | 2.0 | % Foreign exchange impact | | 0.7 | % | | (1.3 | )% Constant currency revenue growth (decline) | (0.5 | )% | | | 0.7 | % | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Operating income (loss) | $ | (910,305 | ) | | $ | 146,984 | | | $ | (696,325 | ) | | $ | 464,196 | Impairment charge | | 1,050,000 | | | | — | | | | 1,050,000 | | | | — | Acquisition-related, integration and restructuring expenses (1) | | 42,493 | | | | 18,619 | | | | 142,867 | | | | 53,451 | Step-up depreciation | | 2,626 | | | | 2,704 | | | | 8,082 | | | | 7,616 | Amortization of intangibles | | 100,908 | | | | 111,779 | | | | 306,421 | | | | 326,556 | Loss on held for sale | | 1,528 | | | | — | | | | 8,420 | | | | — | Share-based compensation | | 21,757 | | | | 25,042 | | | | 76,579 | | | | 78,504 | Non-GAAP operating income | $ | 309,007 | | | $ | 305,128 | | | $ | 896,044 | | | $ | 930,323 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Net income (loss) | $ | (988,113 | ) | | $ | 88,110 | | | $ | (911,248 | ) | | $ | 200,460 | Interest expense and finance charges, net | | 64,856 | | | | 72,014 | | | | 208,247 | | | | 220,414 | Provision for income taxes | | 8,349 | | | | 23,334 | | | | 29,690 | | | | 63,497 | Other expense (income), net | | 4,603 | | | | (36,474 | ) | | | (23,014 | ) | | | (20,175 | ) Impairment charge | | 1,050,000 | | | | — | | | | 1,050,000 | | | | — | Acquisition-related, integration and restructuring expenses (1) | | 42,493 | | | | 18,619 | | | | 142,867 | | | | 53,451 | Step-up depreciation | | 2,626 | | | | 2,704 | | | | 8,082 | | | | 7,616 | Amortization of intangibles | | 100,908 | | | | 111,779 | | | | 306,421 | | | | 326,556 | Loss on held for sale | | 1,528 | | | | — | | | | 8,420 | | | | — | Share-based compensation | | 21,757 | | | | 25,042 | | | | 76,579 | | | | 78,504 | Depreciation (exclusive of step-up depreciation) | | 53,947 | | | | 54,074 | | | | 162,466 | | | | 160,410 | Adjusted EBITDA | $ | 362,954 | | | $ | 359,202 | | | $ | 1,058,510 | | | $ | 1,090,733 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Operating margin | (37.1 | )% | | 5.9 | % | | (9.4 | )% | | 6.4 | % Non-GAAP operating margin | 12.6 | % | | 12.3 | % | | 12.1 | % | | 12.8 | % Adjusted EBITDA margin | 14.8 | % | | 14.5 | % | | 14.3 | % | | 15.0 | % | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Net income (loss) | $ | (988,113 | ) | | $ | 88,110 | | | $ | (911,248 | ) | | $ | 200,460 | Impairment charge | | 1,050,000 | | | | — | | | | 1,050,000 | | | | — | Acquisition-related, integration and restructuring expenses (1) | | 42,493 | | | | 18,619 | | | | 142,867 | | | | 53,451 | Step-up depreciation | | 2,626 | | | | 2,704 | | | | 8,082 | | | | 7,616 | Debt costs (2) | | — | | | | — | | | | 6,268 | | | | 1,102 | Imputed interest related to Sellers' Note included in interest expense and finance charges, net | | — | | | | 4,739 | | | | — | | | | 13,428 | Legal settlement costs (3) | | — | | | | — | | | | — | | | | 2,000 | Change in acquisition contingent consideration included in other expense (income), net | | 2,125 | | | | (2,417 | ) | | | 1,180 | | | | 4,250 | Foreign currency losses (gains), net (4) | | (889 | ) | | | (35,531 | ) | | | (33,548 | ) | | | (28,921 | ) Amortization of intangibles | | 100,908 | | | | 111,779 | | | | 306,421 | | | | 326,556 | Loss on held for sale | | 1,528 | | | | — | | | | 8,420 | | | | — | Share-based compensation | | 21,757 | | | | 25,042 | | | | 76,579 | | | | 78,504 | Income taxes related to the above (5) | | (40,628 | ) | | | (30,535 | ) | | | (126,490 | ) | | | (112,458 | ) Income tax effect of change in tax law | | (5,298 | ) | | | 721 | | | | (5,298 | ) | | | 4,990 | Non-GAAP net income | $ | 186,509 | | | $ | 183,231 | | | $ | 523,233 | | | $ | 550,978 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Net income (loss) | $ | (988,113 | ) | | $ | 88,110 | | | $ | (911,248 | ) | | $ | 200,460 | Less: net income allocated to participating securities (6) | | (1,116 | ) | | | (4,214 | ) | | | (3,461 | ) | | | (9,709 | ) Net income (loss) attributable to common stockholders | $ | (989,229 | ) | | $ | 83,896 | | | $ | (914,709 | ) | | $ | 190,751 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Non-GAAP net income | $ | 186,509 | | | $ | 183,231 | | | $ | 523,233 | | | $ | 550,978 | Less: Non-GAAP net income allocated to participating securities (7) | | (8,929 | ) | | | (8,763 | ) | | | (25,651 | ) | | | (26,685 | ) Non-GAAP income attributable to common stockholders | $ | 177,580 | | | $ | 174,468 | | | $ | 497,582 | | | $ | 524,293 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Diluted earnings (loss) per common share ("EPS") (6) | $ | (16.24 | ) | | $ | 1.34 | | | $ | (14.99 | ) | | $ | 3.01 | Impairment charge | | 17.24 | | | | — | | | | 17.21 | | | | — | Acquisition-related, integration and restructuring expenses | | 0.70 | | | | 0.30 | | | | 2.34 | | | | 0.84 | Step-up depreciation | | 0.04 | | | | 0.04 | | | | 0.13 | | | | 0.12 | Debt costs (2) | | — | | | | — | | | | 0.10 | | | | 0.02 | Imputed interest related to Sellers' Note included in interest expense and finance charges, net | | — | | | | 0.08 | | | | — | | | | 0.21 | Legal settlement costs (3) | | — | | | | — | | | | — | | | | 0.03 | Change in acquisition contingent consideration included in other expense (income), net | | 0.03 | | | | (0.04 | ) | | | 0.02 | | | | 0.07 | Foreign currency losses (gains), net (4) | | (0.01 | ) | | | (0.57 | ) | | | (0.55 | ) | | | (0.46 | ) Amortization of intangibles | | 1.66 | | | | 1.78 | | | | 5.02 | | | | 5.15 | Loss on held for sale | | 0.03 | | | | — | | | | 0.14 | | | | — | Share-based compensation | | 0.36 | | | | 0.40 | | | | 1.26 | | | | 1.24 | Income taxes related to the above (5) | | (0.67 | ) | | | (0.49 | ) | | | (2.07 | ) | | | (1.77 | ) Income tax effect of change in tax law | | (0.09 | ) | | | 0.01 | | | | (0.09 | ) | | | 0.08 | Adjustment for participating securities (7) | | (0.13 | ) | | | (0.07 | ) | | | (0.36 | ) | | | (0.27 | ) Non-GAAP Diluted EPS (7) | $ | 2.92 | | | $ | 2.78 | | | $ | 8.16 | | | $ | 8.27 | | | | | | | | Weighted-average number of common shares - diluted | | 60,910 | | | | 62,702 | | | | 61,011 | | | | 63,379 | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | August 31, 2026 | | August 31, 2025 | | August 31, 2026 | | August 31, 2025 Net cash provided by operating activities | $ | 268,206 | | | $ | 224,803 | | | $ | 442,878 | | | $ | 462,747 | Purchases of property and equipment | | (46,978 | ) | | | (65,054 | ) | | | (149,054 | ) | | | (171,464 | ) Free cash flow | | 221,228 | | | | 159,749 | | | | 293,824 | | | | 291,283 | Change in outstanding factoring balances | | (2,911 | ) | | | 19,056 | | | | 22,205 | | | | 47,992 | Adjusted free cash flow | $ | 218,317 | | | $ | 178,805 | | | $ | 316,029 | | | $ | 339,275 | | | | | | | | | | | | | | | | | Forecast | Three Months Ending November 30, 2026 | | Fiscal Year Ending November 30, 2026 | Low | | High | | Low | | High Revenue | $ | 2,410,000 | | | $ | 2,460,000 | | | $ | 9,826,543 | | | $ | 9,876,543 | Revenue growth (decline), as reported under U.S. GAAP | (5.65 | )% | | (3.65 | )% | | | — | % | | | 0.50 | % Foreign exchange impact | | 0.65 | % | | | 0.65 | % | | (0.80 | )% | | (0.80 | )% Constant currency revenue decline | (5.00 | )% | | (3.00 | )% | | (0.80 | )% | | (0.30 | )% | | | | | | | | Forecast | Three Months Ending November 30, 2026 | | Fiscal Year Ending November 30, 2026 | Low | | High | | Low | | High Operating income (loss) | $ | 174,400 | | | $ | 184,400 | | | $ | (521,925 | ) | | $ | (511,925 | ) Impairment charge | | — | | | | — | | | | 1,050,000 | | | | 1,050,000 | Amortization of intangibles | | 85,000 | | | | 85,000 | | | | 391,421 | | | | 391,421 | Share-based compensation | | 19,700 | | | | 19,700 | | | | 96,279 | | | | 96,279 | Acquisition-related, integration and restructuring expenses | | 30,000 | | | | 30,000 | | | | 172,867 | | | | 172,867 | Step-up depreciation | | 900 | | | | 900 | | | | 8,982 | | | | 8,982 | Loss on held for sale | | — | | | | — | | | | 8,420 | | | | 8,420 | Non-GAAP operating income | $ | 310,000 | | | $ | 320,000 | | | $ | 1,206,044 | | | $ | 1,216,044 | | | | | | | | | | | | | | | | (1) For the three and nine months ended August 31, 2026, acquisition-related, integration and restructuring expenses primarily included restructuring costs associated with our recent cost reduction initiatives, including severance and employee-related costs. Restructuring expenses also included costs associated with facilities consolidation, including lease terminations. For the three and nine months ended August 31, 2025, acquisition-related, integration and restructuring costs primarily included integration costs associated with our combination with Webhelp and restructuring expenses. These costs primarily included severance and employee-related costs, costs associated with facilities consolidation, including lease terminations to integrate the businesses, and information technology system consolidation costs. (2) For the nine months ended August 31, 2026, debt costs included debt extinguishment costs associated with our early redemption of $600 million of our senior notes due in August 2026. For the nine months ended August 31, 2025, debt costs included debt extinguishment costs associated with our restated credit agreement and our voluntary prepayment of a portion of our outstanding term loans. (3) For the nine months ended August 31, 2025, legal settlement costs consist of amounts incurred to settle certain litigation arising outside of the ordinary course of business. (4) Foreign currency losses (gains), net are included in other expense (income), net and primarily consist of gains and losses recognized on the revaluation and settlement of foreign currency transactions and realized and unrealized gains and losses on derivative contracts that do not qualify for hedge accounting. (5) The tax effect of taxable and deductible non-GAAP adjustments was calculated using the tax-deductible portion of the expenses and applying the entity-specific, statutory tax rates applicable to each item during the respective periods presented. (6) Diluted EPS is calculated using the two-class method, which is an earnings allocation proportional to the respective ownership among holders of common stock and participating securities. Restricted stock awards and certain restricted stock units granted to employees are considered participating securities. For the purposes of calculating diluted EPS for the three and nine months ended August 31, 2026, participating securities did not participate in net losses prior to dividends. For the purposes of calculating diluted EPS for the three and nine months ended August 31, 2025, net income attributable to participating securities was approximately 4.8%. (7) For the purposes of calculating non-GAAP net income attributable to common shareholders and non-GAAP diluted EPS, non-GAAP net income attributable to participating securities was approximately 4.8% and 4.8% of non-GAAP net income, respectively, for the three months ended August 31, 2026 and 2025, and 4.9% and 4.8% of non-GAAP net income, respectively, for the nine months ended August 31, 2026 and 2025, and was excluded from non-GAAP net income attributable to common shareholders to calculate non-GAAP diluted EPS.

Macy's, Inc. M entered the second half with better momentum after second-quarter comparable sales rose 2.7% and adjusted earnings, excluding the tariff-refund benefit, increased 14% year over year. Management also raised its full-year 2026 sales, margin and earnings ranges.Still, the third quarter is set to absorb heavier investment while lapping a 3.2% comparable-sales gain from a year earlier. The annual raise improves the cushion, but it does not remove the near-term earnings risk. Macy’s now expects 2026 net sales of $21.675-$21.825 billion compared with $21.5-$21.75 billion previously. Comparable sales are projected to rise 1-1.5%, up from 0.5-1.2%, while the adjusted EBITDA margin outlook increased to 7.8-8%.Adjusted earnings are now projected at $2.15-$2.35 per share compared with $2-$2.20 earlier. The upgrade follows a second-quarter beat in which net sales increased 1.1% to $4.866 billion and adjusted EBITDA rose to $457 million from $373 million. Image Source: Zacks Investment Research The near-term picture is softer. Macy’s expects third-quarter net sales of $4.65-$4.70 billion, comparable sales between a 0.5% decline and 0.5% growth and an adjusted EBITDA margin of 3.7-4%. Adjusted earnings are guided to a loss of 19-23 cents per share.Management held its underlying second-half sales expectations after the second-quarter beat. Fiscal 2025 store closures also create roughly a $30 million third-quarter sales comparison headwind, while big-ticket categories remained below the prior-year level in the second quarter. Macy's, Inc. price-consensus-eps-surprise-chart | Macy's, Inc. Quote Cost pressures have eased. Macy’s now expects tariffs and fuel to reduce full-year gross margin by only five-15 basis points, versus 20-30 basis points previously. Supply-chain efficiencies are also expected to support gross margin in the second half.Those offsets are partly delayed by reinvestment. Macy’s plans to reinvest $96 million of its $116 million tariff refunds, including $82 million in the third quarter. Full-year SG&A dollars are expected to rise 1.5-2.25%, with investments more concentrated in the third quarter. Kohl's Corporation KSS raised its 2026 outlook after second-quarter comparable sales declined 0.9%. That combination underscores a mixed backdrop for department-store demand and margins.Target Corporation TGT reported 3.8% comparable-sales growth and 8.7% digital comparable-sales growth in its second quarter while increasing its full-year sales view. That performance raises the competitive bar as Macy’s works to sustain traffic and digital engagement through fall and holiday. The raised outlook gives Macy’s more room to absorb a soft third quarter, but it does not eliminate execution risk. Better second-quarter trends, luxury momentum and lower tariff pressure are offsets. Negative third-quarter earnings guidance, heavier investment and unchanged second-half sales assumptions keep the near-term setup balanced.The stock currently carries a Zacks Rank #3 (Hold), with a VGM Score of A, Value Score of A, Growth Score of B and Momentum Score of A. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The favorable Style Scores support its value and momentum characteristics, but they are designed to complement the Zacks Rank. For now, the #3 Rank favors a measured stance while investors watch third-quarter execution. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macy's, Inc. (M) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Kohl's Corporation (KSS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Macy’s, Inc. M reported second-quarter fiscal 2026 results, with earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics increased from the year-ago quarter.The company’s Bold New Chapter strategy continued to gain traction, with positive comparable-sales growth across Macy’s, Bloomingdale’s and Bluemercury. Bloomingdale’s posted a second consecutive quarter of double-digit comparable-sales growth, while the Reimagine 200 Macy’s locations maintained their outperformance.However, Macy’s shares fell 4.7% yesterday despite the quarterly earnings and revenue beat and the higher full-year outlook. The market reaction indicates that investors may have focused on the projected third-quarter loss, the expected sequential moderation in comparable sales and the company’s decision to reinvest most of the tariff-refund benefit to support longer-term growth. Macy's, Inc. price-consensus-eps-surprise-chart | Macy's, Inc. Quote Adjusted earnings, excluding the net tariff-refund benefit, were 40 cents per share, topping the Zacks Consensus Estimate of 37 cents and increasing from 35 cents in the year-ago quarter. Macy’s reported GAAP earnings of 62 cents per share and adjusted earnings of 63 cents per share, with both figures including a 23-cent net benefit from tariff refunds after reinvestment.Net sales of $4,866 million surpassed the Zacks Consensus Estimate of $4,820 million and increased 1.1% year over year. Excluding the impact of fiscal 2025 store closures, net sales grew 1.9%. Total revenues advanced 1.2% to $5,059 million from $4,999 million in the prior-year quarter.Comparable sales rose 2.7% on an owned-plus-licensed-plus-marketplace basis, marking the company’s fifth consecutive quarter of comparable-sales growth. Go-forward business comps, including go-forward locations and digital across the three nameplates, increased 2.8%. Other revenues increased 3.2% to $193 million. Credit card net revenues grew 2% to $156 million, aided by a healthy credit portfolio and stable net credit card losses. Macy’s Media Network revenues advanced 8.8% to $37 million, reflecting higher partner engagement on the advertising platform. Comparable sales at the Macy’s nameplate increased 1.1% year over year, representing the fifth consecutive quarterly gain. Reimagine 200 locations posted comparable-sales growth of 1.9%, with increases in nine of the past 10 quarters. These stores account for nearly 60% of the go-forward Macy’s fleet and about 75% of go-forward store sales.At Macy’s, strength in watches, dresses, petites, career sportswear, kids, handbags, fragrances and men’s and women’s shoes was partly offset by softness in plus sizes, intimates and women’s sleepwear. Big-ticket trends improved sequentially but remained below the prior-year level. Digital comps were also positive, supported by improved assortments and marketplace growth.Bloomingdale’s comparable sales jumped 11.3%, marking the brand’s second consecutive quarter of double-digit growth and its highest second-quarter sales volume in 154 years. Growth was broad-based across channels, markets and categories, with notable strength in ready-to-wear, men’s apparel, fine jewelry, fragrances and tabletop.Bluemercury comps increased 6.2%, driven by its Summer Party marketing campaign and demand for dermatological skincare, makeup and fragrances. New and remodeled stores continued to perform well during the quarter. The gross margin rate expanded 180 basis points to 41.5%, which beat our estimate of 39.8%. The quarter included a 180-basis-point benefit from net tariff refunds, partly offset by a 10-basis-point headwind from ongoing tariff and fuel costs. Excluding both effects, the underlying gross margin rate improved about 10 basis points, reflecting favorable brand mix and benefits from the Reimagine expansion, partly offset by channel mix.Selling, general and administrative (SG&A) expenses increased 0.8% to $1.96 billion. The rise reflected higher variable costs tied to sales growth and continued investments in Bold New Chapter initiatives, partly offset by cost-management efforts. As a percentage of total revenues, the SG&A rate improved 20 basis points to 38.7%. We estimated SG&A expenses to increase 1% year over year in the second quarter of fiscal 2026.Adjusted EBITDA increased 22.5% to $457 million from $373 million in the prior-year period. The adjusted EBITDA margin expanded 150 basis points to 9% of total revenues. Macy’s ended the quarter with cash and cash equivalents of $1.29 billion, up from $829 million a year ago, with total debt of $2.43 billion. The company had $2 billion of available borrowing capacity under its asset-based credit facility and no material long-term debt maturities until 2030.Merchandise inventories increased 2.5% year over year, broadly in line with comparable-sales growth. Management said inventory was well-positioned for the fall season, with a balanced mix of newness and evergreen merchandise.For the first half of fiscal 2026, operating cash flow was an inflow of $586 million compared with $255 million in the year-ago period. Free cash flow was $262 million versus an outflow of $88 million a year earlier. Capital expenditures totaled $324 million.During the second quarter, Macy’s returned $101 million to shareholders through $51 million in dividends and $50 million in share repurchases. The company bought back 2.2 million shares during the quarter and had about $1 billion remaining under its $2-billion authorization. For the third quarter of fiscal 2026, this Zacks Rank #2 (Buy) company expects net sales of $4.65-$4.70 billion. Fiscal 2025 store closures contributed approximately $30 million to sales in the comparable prior-year period. Comparable sales are projected to range from a 0.5% decline to a 0.5% growth on an owned-plus-licensed-plus-marketplace basis.The adjusted EBITDA margin is expected to be between 3.7% and 4%. The adjusted loss per share is forecast between 19 cents and 23 cents. The outlook incorporates a portion of the planned second-half reinvestment of tariff refunds and a tougher comparable-sales comparison against 3.2% growth in the prior-year quarter. Following the second-quarter beat, Macy’s raised its fiscal 2026 outlook. The company expects net sales of $21.675-$21.825 billion, up from the previously stated $21.5-$21.75 billion. The guidance continues to reflect the impact of fiscal 2025 store closures, which contributed approximately $145 million to prior-year sales.Comparable sales are projected to increase 1-1.5%, above the earlier forecast of 0.5-1.2% growth. Other revenues are still expected to be $920 million. The gross margin rate is anticipated to be between 38.5% and 38.7%, while SG&A expenses are expected to increase 1.5-2.25% on a dollar basis.The adjusted EBITDA margin is forecast at 7.8-8%, up from 7.7-7.9%. Adjusted earnings are projected at $2.15-$2.35 per share compared with the prior range of $2-$2.20. The outlook does not incorporate the effect of potential future share repurchases.Macy’s expects full-year capital expenditures of $800-$825 million. The company anticipates a combined tariff and fuel gross-margin headwind of 5-15 basis points, narrower than the previously expected 20-30 basis points. Of the $116 million in tariff refunds received, management expects roughly $20 million or about 5 cents per share, to flow to full-year earnings, with the balance supporting brand building, selective value investments and additional Reimagine pilots. Macy's Stock Past Three-Month Performance Image Source: Zacks Investment Research Shares of this company have lost 19.2% over the past three months compared with the industry’s 4.7% decline. We have highlighted three other top-ranked stocks in the retail space, namely Kohl’s Corporation KSS, Target Corporation TGT and Ross Stores Inc. ROST.Kohl’s is a United States based department store retailer. The company offers moderately priced apparel, footwear and accessories for women, men and children, along with beauty and home products. It flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Kohl’s current fiscal-year earnings and sales indicates growth of 17.3% and decline of 0.8%, respectively, from the year-ago actuals. KSS delivered a trailing four-quarter average earnings surprise of 84.8%.Target offers guests fashionable, differentiated merchandise and everyday essentials at discounted prices. It currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Target's current fiscal-year earnings and sales suggests growth of 37.8% and 4.7%, respectively, from the year-ago actuals. TGT delivered a trailing four-quarter average earnings surprise of 10.5%.Ross Stores operates as an off-price retailer of apparel and home accessories, primarily in the United States. The company also holds a Zacks Rank #2 at present. The Zacks Consensus Estimate for Ross Stores’ current fiscal-year earnings and sales indicates growth of 32.7% and 12.4%, respectively, from the year-ago actuals. ROST delivered a trailing four-quarter average earnings surprise of 11.2%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macy's, Inc. (M) : Free Stock Analysis Report Target Corporation (TGT) : Free Stock Analysis Report Kohl's Corporation (KSS) : Free Stock Analysis Report Ross Stores, Inc. (ROST) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Sept. 10, 2026 at 8:00 a.m. ET Vice President of Investor Relations - Pamela Nagler Quintiliano Chairman and Chief Executive Officer - Antony Spring Chief Operating Officer and Chief Financial Officer - Thomas J. Edwards Jr. Operator: Greetings, and welcome to the Macy's, Inc. Second Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this call is being recorded. It is now my pleasure to turn the floor over to Pamela Nagler Quintiliano, Vice President of Investor Relations. Thank you. Please go ahead. Pamela Nagler Quintiliano: Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our Chairman and CEO, and Tom Edwards, our COO and CFO. Along with our second quarter 2026 press release, a Form 8-K has been filed with the Securities and Exchange Commission. And a presentation has been posted on the Investors section of our website, macysinc.com, and is being displayed live during today's webcast. Unless otherwise noted, the comparisons we provide will be versus 2025. All references to our prior expectations, outlook, or guidance refer to information provided on our March 3, 2026 earnings call. On today's call, we will refer to certain non GAAP financial measures. Reconciliations of these measures can be found in our earnings presentation and SEC filings available on the Investor Relations section of our website. All references to comp sales throughout today's prepared remarks represent comparable owned plus licensed plus marketplace sales. Unless otherwise noted. All reported nameplate comp sales results are on a go forward basis. Go forward Macy's Inc. Comp sales include the approximately 350 go forward store locations and digital for Macy's. Which represents the Macy's go-forward nameplate, and all stores and digital for Bloomingdale's and Bluemercury. Which represent their respective nameplates. All forward looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 2 thousand. These forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the SEC. Today's call is being webcast on our website. A replay will be available approximately 2 hours after the conclusion of this call. With that, I will turn it over to Tony Spring. Antony Spring: Good morning and thank you for joining us today. First, I would like to welcome Pam. Our new VP of Investor Relations to the team. Over the coming months, she will meet with many of you on the call today. We are so excited to have her on board. Now on to the results. We are encouraged by our strong performance in the second quarter. Which reflects our continued momentum of the Bold New Chapter strategy. We delivered revenue growth, comparable sales increases across all nameplates and channels, and better than expected performance across all key financial metrics. These results reflect the substantive enterprise wide improvements we are making in our business that are resonating with our customers. Combined with consistent execution of our bold new chapter initiatives, we are building a durable foundation that delivered second quarter results ahead of expectations. Macy's Inc. Net sales, comparable sales, adjusted EBITDA and adjusted diluted EPS all exceeded our guidance. Macy's nameplate delivered its 5th consecutive quarter of positive comps, led by the reimagined 200. Bloomingdale's achieved double digit comparable sales growth for the second consecutive quarter and its best second quarter sales volume on record. And Bluemercury delivered another quarter of solid comparable sales growth. Our talented colleagues are driving this performance, and I want to take a moment to recognize all of them. They are the heart of our customer led focus, powering the bold new chapter. Through meaningful customer engagement and strong execution, our teams are making a difference every day and delivering tangible results. Now turning to a more detailed view of the quarter. Macy's Inc. Delivered comparable sales growth of 2.7%, our fifth consecutive quarter of comp sales growth. On a go forward basis, our business continued to outperform, with Macy's Inc. Comparable sales rising 2.8%, Adjusted EPS of $0.63 reflects both higher sales as well as the net benefit of tariff refunds received in the quarter. When excluding the net tariff refund benefit, adjusted EPS was 14% above the prior year and above the high end of our guidance. Now let's discuss how each pillar of the contributed to our results beginning with strengthening and reimagining Macy's. The Macy's nameplate achieved positive 1.1% in comparable sales posting its 5th consecutive quarter of increases. This reflects a steady multiyear improvement Macy's comp sales grew 32 basis points on a 2-year stack, driven by sustained progress, enhanced brand offerings, product assortments, and omnichannel shopping experience. Our Reimagined stores continue to outperform in the second quarter. Sustaining that lead over several years Earlier this year, we expanded the program to 200 locations, which delivered comp growth of 1.9% in the second quarter. This performance reflects our customer led focus and purposeful changes around staffing, events, and local market strengths. The result is 5 consecutive quarters of Reimagined comparable sales growth, with increases in 9 of the last 10 quarters. Year after year, quarter after quarter, Reimagined stores consistently perform higher on our Net Promoter Score contributing to continued improvement in NPS for the entire Macy's fleet. Our total Macy's fleet NPS score is up 10 full points. Since the initiation of the strategy, underscoring the strength of our customer first approach. As a reminder, the Reimagined locations account nearly 60% of our go-forward Macy's stores and 75% of our Macy's go forward store sales. and are now delivering meaningful scale to our overall business. These stores represent a clear proof point of our ability to drive growth, and we are confident we can continue to expand these initiatives going forward. Our digital channel also contributed to positive comparable sales growth in the quarter. Results benefited from the halo of brand and assortment improvements and a shift to fashion authority positioning. In addition, we saw continued growth in our marketplace business, which provides complementary offerings and fills white-space opportunities. Digital is a central component of our omnichannel approach. We are creating a seamless customer experience across all touch points, and continue to enhance our digital offerings and connections across channels. Our new AI powered conversational shopping assistant, AskMacy's, was introduced last quarter on digital platforms. As a starting point for discovery. We are now expanding this capability to our in store colleagues to help deliver the best Macy's at every touch point. Turning to brand offerings. We are increasingly viewed as a valued partner to market brands, which are excited to work alongside our teams. Our strong balance sheet, large addressable market, and loyal customer base are attractive differentiators that further strengthen our vendor relationships. In the quarter, we continue to make progress on our brand curation adding new brands and expanding distribution for others. 1 good example is Kiko Milano. A trend setting Gen Z Italian beauty brand. KIKO MILANO chose Macy's for its exclusive US launch of their popular beauty line. We also introduced Happy Campers junior apparel line, and further expanded the store distribution of Reiss, Rodd and Gunn, and BOSS among others. Our multi category model provides product and price optionality and diversification. It gives us the ability to lean into areas of opportunity and chase important trends. Providing more reasons for customers to shop with us. In the second quarter, we continue to see outperformance in watches, dresses, petites, career sportswear, kids, handbags, fragrances, and men's and women's shoes. We experienced softer trends in plus sizes, intimates, and women's sleepwear. We did see improvement for our big ticket category compared to the prior quarter, but it remained soft versus the prior year. From a marketing and event perspective, we continue to engage with customers and leverage the strength of our brand as part of Macy's year of celebrations. This summer, we hosted our biggest Macy's fourth of July fireworks yet, celebrating the event's 50th anniversary with America's 250th. Over 11 million people tuned in to watch the live event setting a new record, up nearly 60% from last year. The star studded event featured performances by Noah Khan, Post Malone, Salt N Pepa, Bibi Rexha, Shibuzi, and Blake Shelton. We also leverage the reach of this national event to drive in store traffic through local activations, celebration Saturdays, and fireworks themed marketing. Summing up the Macy's nameplate, we are pleased with our continued growth reflecting the positive consumer response to our offerings and initiatives. Now turning to the second pillar of our bold new chapter strategy, accelerating and differentiating luxury. Bloomingdale's delivered another impressive quarter, achieving positive 11.3% in comparable sales and the highest second quarter sales volume in its 154-year history. This performance was driven by growth in all channels, and categories and is a testament to the brand's progress as the omnichannel local leader in the markets we serve. In addition, Bloomingdale's performance highlights significant step change with comp sales up almost 1.7 thousand basis points on a 2-year stack. These results reflect Bloomingdale's and unique positioning from premium contemporary to luxury. We continue to raise the bar on our curation, with a clear emphasis on discovery, newness, and experiences. Looking at the second quarter category performance, we saw growth in all areas with outperformance in ready to wear, men's apparel, fine jewelry, fragrances, and tabletop. We grew our customer base and continue to expand the reach of our very important client program, which focuses on our highest spending customers. Bloomingdale's continues to deepen brand partnerships. Expanding the breadth of our offerings during the second quarter. We introduced several new brands, including Ulla Johnson, Proenza Schouler and Dries Van Noten. We also expanded distribution of James Perse, Chanel Fine Jewelry and watches, Christian Louboutin, and Prada shoes. Our compelling brand assortment evolution continues to engage existing customers and attract new ones, strengthening Bloomingdale's cultural relevance. Looking at the customer experience, there are several initiatives to support our loyal customer base. First, we are expanding our widely popular in store events, holding hundreds of events across the majority of our stores during the quarter. In addition, we launched Bloomingdale's own AI powered conversational shopping assistant for digital. Which enhances how customers engage with the brand and discover products. This rollout also highlights the power of leveraging enterprise wide capabilities across Macy's Inc, to enhance the customer experience across nameplates. Summing up Bloomingdale's, we are encouraged by the brand momentum and the ongoing growth potential. Our strategic initiatives position us to continue to gain market share across brands, categories, and regions. Turning to Bluemercury. We are pleased to welcome Alexandra Schreer, as the new CEO. Alexandra brings extensive experience in beauty, luxury strategy, and retail to our team and joins an exciting time to help guide Bluemercury's next phase of growth. Bluemercury delivered another quarter of solid comparable sales with growth of 6.2% Results were driven by our in store marketing campaign, summer party, which drove strong customer engagement. From a product perspective, growth was led by dermatological skin care, makeup, fragrances, including brands such as SkinCeuticals, Victoria Beckham Beauty, La Mer, and Jo Malone London. Both new and remodeled stores continue to perform well. The final pillar of our strategy is simplifying and modernizing end-to-end operations. Which was recently expanded to incorporate optimizing and scaling enterprise wide organizational excellence. We are focused on harnessing the extensive reach and capabilities of Macy's Inc. To support revenue growth, improve customer experiences, and execute our strategies even more effectively. These efforts include supply chain efficiencies, with additional savings expected in the second half of the year and included in our outlook. We are also actively advancing our AI and automation capabilities in areas such as the customer journey, inventory management, and localization while ensuring that the human connection remains central to our customers and to our colleagues. Now I would like to discuss our thoughts on the consumer, upcoming events, and guidance. Our consumers remained resilient and engaged in the second quarter, responding positively to newness across our product offerings and our lineup of marketing and events. Across nameplates, we continue to skew toward middle and upper income consumers where performance remains stronger. For the third quarter, we are delivering a strong slate of events. For Macy's, this includes our fall fashion campaign, celebrate American designers. This week, we launched our exclusive capsule collections, featuring 6 of the most influential voices in American fashion. Including icons Tommy Hilfiger, Donna Karan, and Michael Kors, and the New Guard, Edwing D'Angelo, Sade Mims, and Jonathan Cohen. We are also building up to our marquee event of the year, our 100th Macy's Thanksgiving Day Parade. We have already kicked off the 100-day countdown with a compelling set of activations designed to engage consumers and generate excitement leading up to the parade. At Bloomingdale's, we just launched our fall campaign named Hotel Bloomingdale's. This features exclusive products and immersive brand activations and includes a special partnership with the Ritz Carlton Hotels. We are excited for this collaboration, which brings together 2 iconic brands that share a commitment to exceptional service and elevated experiences. Turning to guidance. Today, we are raising our full year outlook, reflecting our better results and confidence in the Bold New Chapter strategy, as well as a pass through of a portion of our tariff refunds. Consistent with our past practice, we are taking a prudent approach that provides the flexibility to respond potential changes in the competitive landscape and consumer demand. Regarding tariff refunds, we received the majority in the second quarter and are taking a balanced approach to deploy the benefits. We are flowing through a portion to the bottom line and reinvesting the remainder to support the Bold New Chapter strategy and our long term growth ambition. We will continue to ensure we deliver for our customer. In closing, I am encouraged by our results This performance reinforces our confidence that the Bold New Chapter continues to gain momentum. Our initiatives are resonating. Highlighted by 6 consecutive quarters of better than expected results 5 consecutive quarters of comparable sales growth, and 2 consecutive quarters of net sales growth. This reflects the strength across Macy's, Bloomingdale's, Bluemercury and underscores the benefits of being a multi brand, multi category, and multichannel retailer serving customers from off price to luxury. Combined with a strong financial position, we are building a durable foundation that positions the company to deliver sustainable long term profitable growth. With that, let me turn it over to Tom. Thomas J. Edwards Jr.: Thank you, Tony, and good morning, everyone. In the second quarter, the Bold New Chapter continued to deliver strong financial and operational results. Our strategies are gaining traction, driving top and bottom line performance. These results are made possible by the skillful execution and customer focus of our dedicated colleagues and teams across the company. Looking at a detailed view of the quarter, beginning with Macy's Inc, net sales grew 1.1% to $4.9 billion compared to $4.8 billion last year. Net sales grew 1.9%, adjusting for a roughly $35 million from the 14 store closures at the end of last year. Comparable sales on a reported basis rose 2.7% on top of 1.9% growth last year. and go-forward comps grew 2.8%. By nameplate, Macy's comparable sales rose 1.1%. We continue to be encouraged by the performance of the Reimagined locations, which grew 1.9%. Bloomingdale's comparable sales were up 11.3% and Bluemercury comparable sales increased 6.2%. Total revenue rose 1.2% to $5.1 billion. On a go-forward basis, total revenue increased 2% to $4.9 billion Other revenue, which includes credit card and Macy's Media Network, was $193 million, up 3% versus last year. Within that, credit card revenue was $156 million, up 2%, supported by a healthy credit portfolio and stable net credit card losses. Macy's Media Network revenue was $37 million, up 9%. Reflecting partner engagement on our advertising platform. Gross margin was $2 billion or 41.5% of net sales compared to 39.7% last year. Excluding both the net tariff refund benefit and the incremental impact of ongoing tariffs and fuel, our underlying gross margin rate increased approximately 10 basis points versus last year. Underlying gross margin expansion was driven by favorable brand mix as well as the continued benefits of reimagined expansion partially offset by channel mix. Ongoing tariff and fuel costs impacted the quarter by approximately 10 basis points, which was favorable to our prior estimate of 20 to 40 basis points, driven by lower tariffs. Our SG and A rate was 38.7%, an improvement from 38.9% last year reflecting leverage on higher sales. SG and A dollars of $1.96 billion were 1% above prior year of $1.944 billion reflecting higher variable costs driven by sales growth, as well as investments in Bold New Chapter initiatives partially offset by our always on approach to expense savings. Adjusted EBITDA was $457 million or 9% of total revenue, compared to $373 million or 7.5% of total revenue last year. Adjusted EPS of $0.63 compared to prior year second quarter of $0.35. Second quarter results included a roughly $0.23 net tariff refund benefit. Excluding the net tariff refund benefit, adjusted EPS would have been up 14% versus prior year and above the high end of our guidance. Our disciplined approach to cash flow generation and balance sheet management continues to support our strong financial position. During the first half, operating cash flow was an inflow of $586 million versus $255 million last year. Free cash flow was an inflow of $262 million versus an outflow of $88 million last year. End of quarter inventory dollars were up 2.5% compared to last year. In line with our expectations and comp sales growth. We believe the composition and level of inventories are well positioned heading into the fall season with a good balance of newness and evergreen product. In the first half of 26, we returned $201 million to shareholders, through $101 million of quarterly cash dividends and $100 million of share repurchases including $50 million during the second quarter. This leaves approximately $1 billion remaining on our buyback authorization. Capital expenditures were $324 million compared to $343 million in the prior year. Monetization proceeds were $35 million compared to $75 million last year. And we ended the quarter with $1.3 billion of cash on our balance sheet, compared to $829 million last year. Now I would like to provide some additional perspective on our end-to-end initiatives and efforts to optimize and scale enterprise wide organizational excellence. 2 examples of these efforts highlight our focus on building efficiency and improving the customer experience. The first relates to delivering products to our customers. We have made significant enhancements over the past years And this fall, we will continue to improve service times provide more transparency around order status, and reduce costs. In addition, the ramp up at China Grove continues to progress, and over time, we believe the automation improvements will support faster, more reliable service for customers and a more scalable operating model. Another example of our end-to-end initiatives is focused on inventory replenishment. A critical area centered on having the right product in the right place at the right time. We are adding an AI forecast overlay capability to replenishment. Moving from pilot to broader execution, to improve in stocks and deploy our inventory more efficiently. In total, we expect to realize supply chain efficiencies in the second half of 26 which will benefit gross margin. Looking further ahead, we are confident we can build on these and other initiatives to drive revenue, improve the customer experience, and reduce costs. Before moving to detailed guidance, I would like to discuss our tariff and fuel outlook for the year. Second quarter tariff impacts were lower than anticipated. For the second half of 26, we now anticipate tariff being a tailwind compared to the prior year. For fuel and transportation costs, we are factoring in current outlook based on what we know today. We now forecast full year combined tariff and fuel gross margin net headwind of 5 to 15 basis points compared to prior guidance of 20 to 30 basis points. Turning to tariff free funds, In the second quarter, we received $98 million of proceeds and $18 million following quarter end for a total of $116 million. We have now received all of our expected refunds. We are taking a balanced approach to deploying the proceeds to both the bottom line and for reinvestment. From an EPS perspective, we are flowing through approximately $0.05 to the bottom line, representing about $20 million. We are using the remaining funds to invest in Macy's brand building, accelerate reimagine store pilots, to support 2027 program expansion, strengthen our value proposition, and mitigate the uncertainty of fuel headwinds. Now moving to guidance. For the full year, we are raising our outlook on the top and bottom lines. From a sales perspective, we are flowing through the entire second quarter outperformance and are maintaining second half sales consistent with our prior outlook. Our EPS assumptions reflect our better results and confidence in the bold new chapter strategy as well as a pass through of a portion of our tariff refunds. Consistent with our past practice, we are taking a thoughtful approach to quarterly and annual guidance allowing us to respond to changes in the macroeconomic and geopolitical environment. Looking at detailed third quarter guidance, we expect net sales of $4.65 billion to $4.7 billion Last year's store closures contributed about $30 million to sales in the comparable period. Comparable sales of down 0.5% to up 0.5% adjusted EBITDA as a percent of total revenue of 3.7% to 4.0% and adjusted diluted EPS of a loss of $0.19 to $0.23 it is important to note that our outlook includes disciplined reinvestment of tariff refunds which nets to approximately $0.18 of EPS in the second half of 26. For more details, please see slide 23 of our earnings presentation. For the full year, we increased net sales to $21.675 billion to $21.825 billion Door closures contributed roughly $145 million to net sales in the prior year. Comparable sales of up 1.0% to up 1.5% other revenue of $920 million. Gross margin as a percent of net sales of 38.5% to 38.7% SG and A up 1.5% to 2.25% on a dollar basis compared to last year. Adjusted EBITDA as a percent of total revenue of 7.8% to 8.0% interest expense of roughly $90 million and have increased our adjusted diluted EPS to $2.15 to $2.35. In summary, we are pleased with second quarter performance as we continue to deliver and execute the bold new chapter strategy. We are well positioned to navigate the near term environment, and we remain focused executing our strategic initiatives to deliver long term profitable growth. This is supported by our healthy balance sheet and disciplined approach to investment and capital allocation. Now let me turn the call back to Tony for closing remarks. Antony Spring: Thanks, Tom. In closing, the second quarter is another proof point for the Bold New Chapter and our ability to deliver growth. Our strategy is gaining traction. And we are excited to continue to scale the initiatives that are resonating so well with the customers. Looking at the back half, we are well positioned for the fall and holiday seasons. And longer term, we are focused on building on our progress, delivering for our customers, and increasing shareholder value. And with that, operator, we are now ready for questions. Operator: Thank you. The floor is now open for questions. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the In the interest of time, we do ask that you please limit yourself to 1 question and 1 follow-up. Again, that is 1 to register a question at this time. Today's first question is coming from Blake Anderson of Jefferies. Please go ahead. Blake Anderson: Congrats on a nice quarter. So I wanted to start off with it sounded like you held the second half sales expectations mostly despite the Q2 outperformance. Can you provide any color on the quarter to date comp versus the flat guide at the midpoint, which implies a step down? How much of this is recent run rate? Versus maybe prudence for the macro or a tougher compare? Any color you can provide there or rather puts and takes for Q3 comp would be helpful. Antony Spring: Sure. Thanks, Blake. Appreciate the question. We, had a strong, first quarter, second quarter. You saw that we beat guidance in both, and we raised for the year, each time. We look at the third quarter as being the strongest comp that we are up against for the year, 3.2%. there is actually a slight acceleration on a on a stack basis. That being said, there is nothing unusual unfolding about the quarter. You know, we sat here, right after Memorial Day in the first quarter. We sat here right after Labor Day now in the second quarter. I feel exactly the same way. We have the right strategy, the right team, the right culture, the right execution, we are really well prepared. And you go back a year ago, we were scrambling with tariffs and re forecasting the business and canceling orders and re pricing merchandise. We are focused solely on the customer and the quality of the experience. So I think we have opportunity to obviously deliver beyond what we have guided. Tom? Thomas J. Edwards Jr.: And, Tony, I would add that, Blake, we have raised our guidance now 2 quarters in a row. We started out the year at $1.90 to $2.10, added $0.10 in Q1 and now an additional $0.15 and that really highlights the confidence we have in our business and in the Bold New Chapter. And your insight into the second half is exactly correct. When you take out all the puts and takes our second half expectations are exactly in line with what we had at the prior quarter. So we think that is important as we are moving forward. And look forward to talking more about that as we continue the call. Blake Anderson: Great. Thank you. And if I could ask as a follow-up, wanted to unpack AUR a bit more. there is some moving factors there. You have made a lot of progress on accelerating AUR. Do we think about the AUR sustainability into the second half? How much runway do you have left for premiumizing brand mix? And then maybe lower promotions despite what sounds like more prep price investments across the industry. And perhaps with your tariff refunds as well? Antony Spring: Yeah, Blake. I think we have opportunity to continue to increase our AUR. It may not be at the rate that it is been for the last 12 months, but we can premium premiumize, whatever the right word is, our assortments across all 3 brands. The customer continues to respond most favorably to newness, to trends, to the expansion of brands, to additional points of distribution, think you heard, on the call the comments about brand expansions at both Macy's and Bloomingdale's. So that naturally is gonna have a positive benefit to our AUR. But I think the other piece is making sure that we are not undershooting the customer's expectations. So there is a interest in buying certain products and certain brands, And when we have them, we can convert that to a higher AUR. We are using a portion of the tariff refund to sharpen our pricing in a couple of categories furniture and fine jewelry being 2 of them, where we wanna make sure we are capturing our fair share of the business. Thomas J. Edwards Jr.: And I would add, Blake, that AUR is really part of our broader model of building a healthier business. We saw AUR up in the quarter around 9%. And it is driven, as Tony mentioned, by more relevant brands refined assortment, a better omnichannel experience. And our traffic is very steady and very significant and predictable. We do see a slight offsetting conversion, but our overall basket size has been higher and AUR trends growing at been a multiyear effort. So we see this continuing over time and a big part of our model going forward. Antony Spring: Thank you. Best of luck for the back half. Thanks, Blake. Appreciate it. Operator: Thank you. The next question is coming from Alex Straton of Morgan Stanley. Alex Straton: Thanks so much and congrats on a nice quarter. Tom, I just wanted to clarify quickly just on the updated full year guidance. it is clear that your back half sales assumptions are the same as last quarter. But excluding tariffs, has your back half margin outlook evolved at all across the growth or SG and A? Then I just have 1 quick follow-up. Thomas J. Edwards Jr.: Sure. Our back half of margins are consistent with our prior outlook. So we do anticipate on the gross margin side expansion, and this is a little more weighted to Q4 In the prepared remarks, I referenced some supply chain activities and other initiatives that are improving our cost structure as well as delivering importantly for the customer, and providing better service and better transparency as well as some AI initiatives that are helping us to forecast better and put the right inventory in the right place at the right time for areas like replenishment. We see that coming to fruition in our highest volume quarter in Q4. For SG and A, excluding the other puts and takes related to refunds, we they had always noted that our investments would be made more in the third quarter. So we see higher SG and A investments in Q3 that was part of our initial guide for the year as well as in Q4. that is part of supporting our bold new chapter. that is more reimagined stores as we expand it to reimagine 200. Supporting Bloomingdale's, continued growth, and other initiatives like digital. So the answer the net is it is the same as it was before. And it is really investments to support the bold new chapter and delivering for our customer. Alex Straton: Perfect. that is that is super clear. Maybe turning to Re imagine, do you have any details that you can share around how the oldest Reimagine cohorts so the first 50 is performing today, I am just curious as those stores mature, are you seeing the comp uplifts strengthen? Is it holding steady? Or is it moderating? I would just love to understand how those stores are performing. Antony Spring: Sure. Alex, it is Tony. What we would say is that all cohorts of stores are growing. And since we do not break out the, individual year cohorts, again, offer any anything more specific than that. I think what is exciting is that all cohorts are growing and that the stores continue to benefit from the investment in staffing. The better assortments, the better execution, and the improvements in our customer experience. I mean, 10 points of net promoter score growth And, actually, the Reimagined stores are higher over the 2.5 years of the program, I think, underscores the reaction, the customer is giving us to the changes we are making in the Macy's store experience. And our confidence in the reimagine program is 1 of the reasons why as part of the tariff spend back, we allocated a portion to pilot some additional stores at the end of this year, which will allow us to get a head start as we expand the program in 2027. Thanks so much. Good luck. Thanks, Alex. Operator: Thank you. The next question is coming from Matthew Boss of JPMorgan. Please go ahead. Matthew Boss: Thanks and congrats on a nice quarter. Tony, could you elaborate on the strategies that are gaining traction and the comment that you made earlier? So specifically, at the Macy's banner, you lapped the inflection to positive low single digit comps a year ago. You showed acceleration on a 2-year stack this quarter. And Bloomingdale's posted both their best 1 and 2 year comps this quarter. So what initiatives or strategies that the Macy's banner where do you see opportunity remaining, and what inning do you see this market share momentum at Bloomingdale's in today? Antony Spring: Sure. Thanks for the question, Matthew. It starts with product. So we are in the early innings, 3rd inning, 4th inning. In terms of the improvement in the quality of our assortments. that is the right balance of best, better, good. that is a part of the AUR growth that seeing at both Macy's and Bloomingdale's. Luxury on the Bloomingdale's side, contemporary on the Macy's side. it is the respect and treatment of product in our stores. So it is a better flow of inventory. it is better presentation and storytelling. You see today on both of our websites, the American designer campaign at Macy's, focused on trends, focused on newness. You see the launch of Hotel Bloomingdale's focused on trends, focused on newness. Both store brands doing activation events, in the stores in the course of September. So I believe the focus continues to be making sure we have relevant assortments, making sure we are rooting out the redundancy within our assortments, improving the variety, and making sure that top of funnel, we are spending enough time from, social to CRM to, audio and video on how we communicate our enthusiasm for fashion of the season. As I mentioned on the call, newness and fashion and trends are selling. We are excited about suede brown, the boot assortment, animal prints, new treatments in denim. There is so much to, convey to the consumer, and we just have to make sure that we balance that with the other messages that we are, communicating, throughout the season. Matthew Boss: And Tom, maybe multiyear or just the bottom line opportunity tied to Tony's top line answer there. Could you speak to gross margin drivers from here? And what comp is needed to leverage SG and A on a multiyear basis? Thomas J. Edwards Jr.: Well, Matthew, thanks for the question. And I would say in the first couple of quarters, we have levered SG and A, held it flat and it is slightly lower on percent of sales basis in Q2 with low single digit comp growth. And that is the area point to with a model of low single digit growth on the top line. Mid single digit in the middle. And a little lower higher growth at the bottom when we look at EPS. So that is, I believe, the model that we have talked about and can continue to deliver. And it is the 1 that we actually have delivered. So in the first half of the year, we have grown the top line, and the bottom line. And last year, in fiscal 2025, excluding tariffs on a go forward basis, we grew both the top line and the bottom line. So we are committed to deliver long term profitable growth And I would say they and can point to that we are doing that. And I just I just add inventory is in a healthy position. We see opportunities for margin expansion as we get to the end of the year and we go into next year and controlling SG and A, below the rate of inflation. I think if we have the low single digit comp growth, we can we can lever and we can deliver greater profit for our shareholders. Great color. Best of luck. Thanks, Matthew. Operator: Thank you. The next question is coming from Brooke Roach of Goldman Sachs. Please go ahead. Brooke Roach: Good morning, and thank you for taking our question. Tony, with the success of the reimagine format at the Macy's banner, are you thinking about the pacing of expanding that to the remainder of the fleet? And additional investments in reimagine ahead? Antony Spring: Thanks, Brooke. We are excited about the Re imagine performance, 9 of 10 quarters of growth, continued outperformance versus the rest of the fleet, I think as I said before, you know, it is this great recipe of a great product and a better experience, more people in the stores. And adding in local empowerment has made the difference in continuing to grow and comp the comp across all cohorts of stores. We saved the fourth quarter call for the expansion of the store fleet, but you can bet based on our piloting of additional store initiatives in the fourth quarter that we are gonna be adding more reimagined stores next year, and the aim will be to reimagine all of our go forward fleet. The we said that at the beginning of the bold new chapter that there were 350 go forward stores. We began with 50. We added 75. We added another 75. So I think you have pretty much our cadence of, expansion. But we will we will leave that for the fourth quarter call. Thomas J. Edwards Jr.: And, Brooke, I would add that we take a very disciplined approach to rolling out initiatives and delivering ROI, and our reimagined stores are working. Are delivering results and very pleased. They are capital light. As well. So our investments are in associates, in eventing, and in bringing in new brands and assortments. And these investments are driving growth. Importantly, we are learning and iterating as we have moved along, so our investments are becoming even more efficient as we go from 1 cohort to the next, and we look forward to continuing to build on that. Brooke Roach: Great. And then just a follow-up for Tom. Can you unpack the proportion of the reinvestment of tariff dollars is being put into price versus the other buckets? And then how should we be thinking about the baseline margin rate from which you can grow into 2027 as you cycle these refunds and reinvestments into next year from a margin rate perspective? Thomas J. Edwards Jr.: Sure, Brooke. I am happy to help with that. So on the reinvestment piece, the majority of our reinvestments are in the Bold New Chapter Strategy and supporting our long term growth. There is a portion, as Tony mentioned, that is supporting our value proposition for some very selective and surgical areas. Such as big ticket and fine jewelry. But the other areas are brand marketing, particularly for Macy's, for top of the funnel to build out our brand. To do our reimagine pilots. And, of course, we are holding a little back just due to the realities of the situation and dynamics of the external environment related with fuel. But the longer term is what we are focused on. And then as we look at 2027, these initiatives are designed to give us a head start and continue the momentum and traction of the bold new chapter. So I do not look at it so much as lapping as it is helping us maintain and build on the momentum of our strategies. Antony Spring: Great. Thanks so much. Thanks, Brooke. Operator: Thank you. The next question is coming from Oliver Chen of TD Cowen. Please go ahead. Oliver Chen: Hi, Tony and Tom. The AUR was impressive. What factors offset that? And also, as we think about guidance, what is incorporated and what you are thinking for longer term AUR trends? Second question was just on your thoughts on the younger customer and the initiatives that you are conducting to target that younger customer, embrace the younger customer while the same time, of course, maintaining your loyal base. And then on the guidance as well, merchandise margins and promotions and markdowns, versus last year, should we expect that to be flattish And would also love your comments on the consumer, meaning did anything incrementally change since we last spoke? We have been seeing some pressure additional pressure at the middle to lower, but would love your thoughts on any changes or optimism. Thank you. Antony Spring: Thanks, Oliver. Let me try to take the first few parts of the questions, then I will let Tom finish out. AURs continue to grow because our product assortment continues to improve. The, assortment of better quality things, whether it be third pieces whether it be leather versus faux, whether it be, brands that command a higher price point. We are in the early innings of continuing to better and improve the quality of our assortments. The growth of Ralph Lauren, the growth of Coach, the, and continued growth of, areas like watches, fine jewelry, Bloomingdale's all leads to a higher AUR. And that is the confidence of our colleagues. that is the impact of our web on the better goods that we sell that the customer wants to buy them from Macy's and Bloomingdale's and Bloom Mercury. In terms of the younger customer just coming off of a great prom season, great graduation season, I mean, our watch business is on fire because it is it is to graduation gifts. it is the great birthday gifts. It is a great entree to the younger customer as is the prom business. As is our wedding registry which continues to grow. So I think we just have many opportunities. We have a young next gen fashion component at Macy's. We have the launch of Hotel Bloomingdale's. A part of that is the new Aqua collab with Nikki Hilton, which is obviously geared a little more younger So there is there is so much within the assortment based on the brand matrix to cater to multigeneration of customers and certainly the younger customer. Tom? Thomas J. Edwards Jr.: And I would add we are not seeing anything dramatically different in the competitive environment right now and expect our promotional activity to be in line with last year. Importantly, we are positioned very well from an inventory perspective. Inventory up to a half percent in Q2, in line with our growth. And a lot of newness positioned for the fall. So feel like we are heading into the fall and holiday in a in a good spot. And our consumer skews more to the middle and higher end, and we have seen more consistent performance at that level. And as we have noted before, at the lower end, a little more choiceful, but those trends have remained. And I point out, as Tony was mentioning, we are we also have a wonderful ecosystem across Macy's We have our credit card, our loyalty program, with visibility into over 70% of our customers. Every transaction and a chance to really engage with them as we now have the product and the reimagined store built out to 75% of our go forward volume. So feel good about how we are positioned for fall. Great. Best regards. Thank you. Nice job. Thanks, Oliver. Operator: Thank you. Our next question is coming from Michael Binetti of Evercore ISI. Please go ahead. Michael Binetti: A couple from me. Think this is just second quarter in a row with really big AUR gains, but modest gross margin expansion. Is in your mind, is there a transition point where AUR starts to offset any of the gross margin headwinds in the business that leads to a higher rate of the strong AUR strategy? Is it best to think that AURs come with ongoing higher costs, they are driving a nice top line and gross profit dollar growth, but the rate is kind of the investment for that top line. And then Tony, I think 1 thing that investors in the sector are wrestling with is comments across the sector that tariff refunds are going to be redeployed into investments and sharper prices in the second half, there is generally a lack of increasing same store sales guidance. Into the back half despite more investment or even slowing multiyear stacks I would love your perspective on that. You have got a lot of investment in third quarter, like Tom mentioned, and you are putting some of the tariff refund back to work. But there is a range in 3Q and 4Q comps that allows for slightly negative comps. I would just love to get your perspective on that for the industry. Antony Spring: Sure. Let me take a shot at both, and then I am sure Tom will want to add as well. I would love to separate AUR from gross margin because I think it is a false narrative to kind of say higher AURs lead to higher margin. Because we have businesses with high AURs that have high margins naturally, We have businesses with high AURs that have naturally lower margins. So it really is category and brand dependent. A higher AUR will ultimately allow us to flow fewer units through the system, which will lower our cost base, will allow us to, improve the quality of the experience for the customer because we are maybe moving fewer units through a colleague per hour. So there is a lot of advantages to selling if you can, a higher AUR product. And so it is been a mission of ours across both Macy's, Bloomingdos, and Bluemercury to have the right proportion We wanna have best, better, good. We wanna have a range of, brands and price points to offer. But higher AUR really just gives you more of an opportunity to lever on the expense side than it does to deliver more on the margin side. In terms of your other question about the investment of tariffs and the and the comp guide, I think our investment of, tariff refunds is disproportionately focused on the long term health of our brands and business. So while there will be some benefit to the short term, most of it, when you talk about top of funnel brand building, when you talk about piloting reimagine, store initiatives, when you talk about defraying fuel costs in the fourth quarter, those things do not have a short term, sales benefit. They are the yet the right thing to do for the business. And if you go back to the middle of, 2025 and you say, what were the things that we were wrestling with as we faced the impact of tariffs? We started to pull back on marketing. We started to change kind of the piloting program for reimagined stores. So we stopped doing the things we should be doing because we had to navigate the impact of, tariffs. So in my mind, this reinvestment program is doubling down on the benefits of the Bold New Chapter which if you strip everything away, strip all the tariff headwinds and tailwinds away, the core of our business is actually performing better. Thomas J. Edwards Jr.: I would emphasize that point, Tony, that our tariff refund reinvestment is focused on the long term, and the short term is more surgical. And we are not overly investing in any 1 specific area. So it is not a meaningful in terms of the broader overall business. And, Michael, when we look at AUR, I would just add on to your point that we look to grow margin dollars with top line growth. And they are longer term margin expansion opportunities because better, best brands do ultimately help drive margin, but they do come with cost in the short term. And with gross margin, we look to improve our assortment continue to manage and improve the efficiency of managing our inventories We can expand our private brands and continue with our store and online initiatives to build margin as we go forward. And as I noted earlier, from an SG and A perspective, we can lever the P&L at a low single digit level And we certainly always have our always on savings approach. So look forward to delivering margin dollars along with top line growth as we move forward. Thanks, Michael. Operator: Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead. Dana Telsey: Hi, good morning everyone and nice to see the progress. 1 of the things that you mentioned in the deck at least was AI. An AI both for Macy's and for the Bloomingdale's brand. How do you see AI as a revenue driver and an expense enhancer? And then just lastly, obviously, with the new activations and the stores do look great. I have seen them the Bloomingdale's almost all over the country, and each 1 is special in terms of what they are doing. How are you thinking about brands that is where are you in brand newness? Is there more brands that are added or brands being subtracted? How do you think of the flow? Thank you. Antony Spring: Thanks, Dana, for the questions. I will give you a small piece on AI and let Tom finish and then talk more about the brand, additions. You know, we view AI in 3 parts. Driving revenue, improving the experience for our colleagues and customers, and creating greater efficiency and reducing costs for our company. And I think our initiatives are geared that way. We have a number of pilots a number of things that are proof of concept, and a number of things that are rolling out. That are in those 3 buckets. And if you wanna say a third, a third, a third, that is as good a, way to look at it as any. Because I think the embracement of AI also comes with the belief that humanity has a role within the retail business. Particularly in the relationship selling that we do at all 3 of our brands. In terms of the brand additions, we are we still have plenty of opportunity to edit and add. Thomas J. Edwards Jr.: And I think that is the great part of where we are in the bold new chapter. If we were done, where's the upside? We are in the early innings. There is plenty more to do. We are seeing more excitement. We are adding it. Macy's, adding Kurt Geiger. We will have, Tory Burch launching at Herald Square. In the fourth quarter. So there is plenty of opportunity for growth all 3 of our brands by making the case in the market that we are a, dependable, consistent, well thought of, great balance sheet, strong partner, believe in the importance of fashion and newness in our business, and have great regard for our grant brand partners where we really just wanna be the very best partner they can work with. And, Tony, on AI, I would just add that they are very thoughtful around the return on investment. And the example of our replenishment is a good 1. That started out as a pilot. Has moved to through testings to prove itself out and then to further roll it out more broadly. To improve how we are allocating our inventory to stores. And that is a great example of making sure we do it thoughtfully and get a return. We are also have customer facing activities like the AI assistant that has been rapidly rolled out from Macy's Digital to Macy's stores and now Bloomingdale's Digital that helps customers really choose what products they want, and we have seen much better engagement end results, and basket size, and conversion from people who are using it. So we wanna make sure we are doing the right thing for the business, as well as for our customer. And look at a lot of different opportunities going forward on Thank you. Thanks, Dana. Operator: The next question is coming from Paul Lejuez of Citi. Please go ahead. Paul Lejuez: Hey, thanks guys. On the reimagine 200, I am curious where the outperformance is from. Is it more from transactions? Or ticket, and also, just at a high level, like, are those stores able to traffic or is it more of a conversion? Customers show up in the stores. And then second, just at a high level, here on the Macy's banner, how apparel performed versus other categories within the store? Thanks. Antony Spring: Sure, Paul. Thanks for the question. On the businesses that are performing, we are seeing the apparel business strong at both Macy's and Bloomingdale's. And again, we referred to the return to work as being a driver of that. You can say GLP ones are a driver of that, and I would argue that fashion within all the brands and across both nameplates is a driver of that. And there is even more reason to be excited as you look at what, the fall season has to offer, which always comes in the fall season with higher AURs when you talk about coats. Versus swim or you talk about boots versus sandals. it is just naturally a an easier, sale in terms of growing the, the top line. In terms of the Reimagine 200, we are seeing steady performance in terms of traffic, We are seeing increase in AUR. We are seeing higher basket size and we are seeing, slightly lower conversion based on the price points and the deliberative, experience I think that the consumer has in those stores. So we know our conversion rate at Bloomingdale's is lower than Macy's. And our AUR is higher than Macy's, and our average transaction is higher than Macy's. So we can kind of really, forecast nicely looking and understanding market by market and store by store. As we change the character of the assortment, what happens to the individual components? You get a higher AUR. You can get a higher basket. You have slightly less conversion because people deliberate a little longer on a more expensive purchase. Thanks, Tony. Paul Lejuez: Just to go back to the category, then any other color you could share outside of apparel? How other categories perform, maybe what underperformed? Antony Spring: Sure. In terms of other categories that performed, we are continuing to see growth in our petite business. We are excited the growth in men's and women's shoes. I think we talked about the watch category. Has been strong for 3 quarters now, and we are we think that is great going into the holiday season. it is gonna be a super gift business for both Macy's and Bloomingdale's. The fragrance business continues to perform really well. there is a ton of newness in fragrances, for the fall season. And we are already getting a nice read on all the new fragrances, for the third quarter. And then in terms of softer businesses, we talked about the women's, intimate of power business being softer. We talked about the sleepwear business being softer. And the big ticket business, even though it got better in the second quarter versus the first quarter, was still down to the prior year. it is 1 of the places where we are using a portion of the tariff refunds to sharpen our prices. And I think when we return to pre tariff pricing and big ticket, we saw a meaningful change in the business. Got it. Thank you. Good luck. Thanks, Paul. Operator: Thank you. The next question is coming from Chuck Grom of Gordon Haskett. Please go ahead. Ryan Bulger: Hey, guys. This is, Ryan Bulger on for Chuck here. I wanted to ask about historically, you have seen tourism, as a contributor. To the business and then spoke me to it a little bit less recently. You know, you had a bit of a unique event with the with the World Cup here in Q2. And I was just curious if did you see anything related to that either impacting your business during the quarter or impacting how you think about the contribution of tourism, on the business overall going forward? Thank you. Antony Spring: We had a great performance World Cup product. So I would say we are very pleased that at both Macy's and Bloomingdale's, a bigger piece at Macy's. Of the World Cup business. I think we probably saw a little bit more tourism but we are still nowhere near the, tourism levels that we saw before the pandemic. And I think as I always look at it and say, this represents a big opportunity for us over time. Because, our city stores that draw tourists, represent, incremental business that we are not counting on, but that will return at some point in the future as more people travel to The States. Great. Thank you. Thanks, Ryan. Operator: Thank you. The next question is coming from Bob Drbul of BTIG. Please go ahead. Robert Drbul: Hi. Good morning. Tom, I was just wondering if you could spend some time, on the credit card side of the business, you know, a little bit more detail around trends there, usage trends and any sort of, I would say, bad debt, etcetera, that you are seeing at that level? Thanks. Thomas J. Edwards Jr.: Sure. Happy to. So our credit card continued to grow in the quarter. And we are pleased with performance. Net credit losses in line with expectations, and we believe better than overall industry. And we have great credit quality. Importantly, we are continuing to build out our credit base with great partnership across all of our businesses in store and on digital. And have a number of programs to build usage of the card because it is intimately connected to our loyalty program. Is part of our broader ecosystem. And so we are pleased with credit card trends, believe they are sustainable, and it is a critical part of our overall loyalty and business model going forward. Great. Thank you very much. You are welcome. Operator: Thank you. Our final question today is coming from Simeon Siegel of Guggenheim Partners. Please go ahead. Simeon Siegel: Thanks. Good morning, everyone. Thanks for slipping me in there. Hope you had a nice summer. Tony or Tom, maybe just within your comments about the different AUR dynamics by brand. So could you share what AUR versus students were by banner? And then I was hoping you could flesh out the traffic versus conversion comments you had made earlier on the call. You feel like you need to and maybe there is an opportunity to retrain your customers for the ongoing elevation? That would help conversion, or do you feel like you need to walk away from certain customers? Just curious how you are thinking about that traffic versus conversion dynamic as an opportunity. And maybe thinking that, especially with the great NPS improvement, how you would align that with the conversion you are seeing. Thanks, guys. Antony Spring: Thanks, Simon, for the question. On the AUR, do not break out the difference the 2. But as I said, the AUR at Bloomingdale's is meaningfully higher than the AUR at Bloomingdale's, but has been growing at both brands. Based on the mix of products we are selling and based on the brand elevation that we are committed to. In terms of traffic and conversion, traffic has been steady. Both physically and digitally, and conversion has been more of a of a challenge. And I would say that your point is right. That we are working with our colleagues to help them to become better sellers We are spending more time on our PDPs and on the quality of our top of funnel marketing, making sure that we are underscoring and accentuating the benefits of buying better things. We are also trying to temper ourselves because, you have data now by the second that some purchases take 1, 2, or 3 visits before you make them. So a more expensive mattress or a more expensive diamond or a better quality leather, is not an immediate purchase necessarily. So how do you tease between the immediacy of conversion you are looking for on every single visit to the site or to the store, with what may be a browse behavior that is so important to people becoming and falling in love with your brand and business. Sounds great. Thanks, guys. Best of luck for the year. Thanks, Simeon. Operator: Thank you. At this time, I would like to turn the floor back over to Mr. Spring for closing comments. Antony Spring: Thank you, everybody. Appreciate your questions today. And for joining our second quarter call. Please look out for some fun surprises as we are less than 77 days from the parade. And I promise our hundredth Macy's Thanksgiving Day parade will be our best yet. Talk to you after the holidays. Happy Fall. Operator: Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time. And enjoy the rest of your day. Before you buy stock in Macy's, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Macy's wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Macy's (M) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Department store chain Macy’s (NYSE:M) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 1.2% year on year to $5.06 billion. The company expects the full year’s revenue to be around $21.75 billion, close to analysts’ estimates. Its non-GAAP profit of $0.40 per share was 8.7% above analysts’ consensus estimates. Is now the time to buy M? Find out in our full research report (it’s free). Revenue: $5.06 billion vs analyst estimates of $5.01 billion (1.2% year-on-year growth, 1% beat) Adjusted EPS: $0.40 vs analyst estimates of $0.37 (8.7% beat) Adjusted EBITDA: $457 million vs analyst estimates of $380.7 million (9% margin, 20% beat) The company slightly lifted its revenue guidance for the full year to $21.75 billion at the midpoint from $21.63 billion Management raised its full-year Adjusted EPS guidance to $2.25 at the midpoint, a 7.1% increase Operating Margin: 4.8%, up from 3% in the same quarter last year Locations: 661 at quarter end, down from 681 in the same quarter last year Same-Store Sales rose 1.9% year on year, in line with the same quarter last year Market Capitalization: $5.37 billion Macy’s delivered revenue and profit ahead of Wall Street expectations in Q2, but the market responded negatively, reflecting some investor skepticism around the sustainability of recent gains. Management highlighted continued success with its Bold New Chapter strategy, noting positive comparable sales growth across all banners and channels. CEO Tony Spring credited improved product assortments, expansion of the Reimagined store strategy, and steady digital growth for driving customer engagement. COO Tom Edwards pointed to higher average unit retail (AUR) and operational efficiencies in supply chain and inventory as additional contributors. Despite a cautious consumer environment, especially at the lower end, the company saw strength among middle and upper-income shoppers and in categories such as watches, fragrances, and shoes. Looking ahead, Macy’s increased its full-year revenue and adjusted EPS forecasts, underpinned by ongoing investments in store and brand initiatives funded partly by recent tariff refunds. Management emphasized a disciplined approach to deploying these funds, prioritizing long-term brand health through marketing, expansion of the Reimagined format, and selective price adjustments in key categories. CFO Tom Edwards stated, “Our reinvestment of tariff refunds is focused on the long term, and the short term is more surgical.” Management expects continued benefits from supply chain automation, AI-powered tools for inventory and customer engagement, and a product mix shift toward higher-margin brands. However, guidance assumes no significant macroeconomic rebound and maintains a cautious stance on consumer demand. Management attributed the quarter’s performance to higher AUR, strong luxury and beauty growth, and expanded Reimagined stores, while tariff refunds provided a temporary tailwind to profit margins. Luxury and beauty outperformance: Bloomingdale’s posted double-digit comparable sales growth, achieving its best second-quarter sales volume ever. Bluemercury continued to gain traction with strong results in skincare and makeup, supported by new leadership and successful in-store events. Reimagined store expansion: The Reimagined store program, now covering 200 Macy’s locations, consistently delivered higher customer satisfaction and sales growth compared to the rest of the fleet. Management noted improved Net Promoter Scores and indicated further expansion is planned. Brand curation and new launches: Macy’s added exclusive brands like KIKO MILANO and expanded distribution of popular lines such as Reiss and BOSS. Management stressed these partnerships are key to attracting younger customers and supporting AUR growth. Digital and AI-driven engagement: The company launched AI-powered shopping assistants for both Macy’s and Bloomingdale’s digital channels, aiming to improve product discovery and customer conversion. Supply chain automation and AI-based inventory forecasting are expected to enhance efficiency and service quality. Tariff refunds and selective reinvestment: Macy’s received significant tariff refunds in Q2, with management allocating a portion to price investments in categories like furniture and jewelry, while the majority supports marketing, Reimagined pilots, and offsetting higher fuel costs. The company remains cautious about near-term consumer risk, particularly among lower-income shoppers. Macy’s outlook is anchored by ongoing investments in store upgrades, digital innovation, and brand partnerships, but management remains cautious on the macroeconomic environment and consumer spending trends. Reinvestment in growth initiatives: Management is directing most tariff refund proceeds toward marketing, expanding the Reimagined store program, and digital upgrades. COO Tom Edwards said these investments are “designed to give us a head start and continue the momentum” of the current strategy, rather than generate immediate sales lifts. Margin management and cost discipline: Gross margin improvements are expected from supply chain efficiencies, AI-driven inventory management, and a favorable product mix. However, increased SG&A spending is planned for customer experience enhancements and digital capabilities, which may limit near-term margin expansion. Consumer and competitive headwinds: The company’s outlook assumes ongoing caution among consumers, especially at the lower end, and no significant recovery in tourism or broad retail demand. Management flagged stable but not accelerating traffic, a need to carefully manage promotions, and continued uncertainty in the macro environment as risks to the outlook. In the coming quarters, key catalysts to watch include (1) the pace and impact of Reimagined store expansion, (2) progress in digital engagement and AI-powered customer tools, and (3) the effectiveness of tariff refund reinvestments in driving customer loyalty and brand strength. Additionally, whether Macy’s can sustain elevated AUR and margin improvements amid a cautious consumer landscape will be important to monitor. Macy's currently trades at $20.57, down from $21.70 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. 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Macy's, Inc. (NYSE:M) continued to make progress with its turnaround strategy in the second quarter of 2026, which allowed the company to also raise its guidance. On September 10, the company reported its Q2 results, with comparable sales and adjusted earnings both coming in ahead of Wall Street expectations. Jonathan Weiss / Shutterstock.com In Q2 2026, Macy's, Inc.’s (NYSE:M) comparable sales increased 2.7%, marking the fifth consecutive quarter of growth. This increase was much higher than Wall Street’s expectation of 0.8% growth, as per S&P Global Market Intelligence data. The company also exceeded estimates on both the top and bottom lines. Adjusted earnings came in at $0.63 per share, compared with the Street’s estimate of $0.37 per share. However, the earnings beat was partly driven by a $0.23 per share benefit from tariff refunds, net of reinvestment. Net sales reached $4.9 billion, ahead of analysts’ expectations of $4.8 billion. Macy's, Inc. (NYSE:M) is now in the third year of its “Bold New Chapter” transformation strategy, which focuses on closing 150 underperforming stores and reinvesting in the remaining 350 locations. The company is also working to reduce redundant merchandise and bring in more fashionable brands, including Theory and Free People, in an effort to better appeal to middle- and upper-income consumers. The strategy appears to be working as the company raised its full-year 2026 net sales guidance to between $21.67 billion and $21.82 billion, up from its previous forecast of $21.5 billion to $21.75 billion. The improved outlook comes as consumers remain cautious. High gas prices and broader economic uncertainty continue to weigh on sentiment. Retailers have increasingly pointed to an environment in which consumers are becoming more selective about where they spend. Despite the impressive results, investors appear to have focused on the quality of Macy's, Inc.’s (NYSE:M) earnings growth. A meaningful part of the adjusted EPS beat came from the $0.23 per share benefit from tariff refunds, rather than the company’s core retail operations. The modest increase in full-year guidance has also failed to help the stock gain momentum. Here is What the Numbers Say Hedge fund interest in Macy's, Inc. (NYSE:M) increased slightly in the second quarter. According to Insider Monkey's database, 47 hedge funds held positions in Macy's, Inc. (NYSE:M) in the second quarter of 2026, compared with 44 in the first quarter. At the same time, short interest remains relatively high at 12.86% of the company’s float as of August 14. However, the stock trades at a relatively low valuation, with a forward price-to-earnings ratio of 9.55, compared with the sector median of 15.04. While Macy's, Inc. (NYSE:M) is showing signs of progress and has increased its full-year sales outlook, continued investor caution suggests that the company will still need to show stronger underlying earnings growth to sustain the turnaround. While we acknowledge the potential of M as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: Could Tesla’s (TSLA) Cybercab Unlock a New Growth Driver? and VersaBank (VBNK) Surpasses $7 Billion in Total Assets, Targets More US Growth. Disclosure: None. Follow Insider Monkey on Google News.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was anchored by the 'Reimagined 200' stores, which outperformed the broader fleet by 80 basis points, validating the strategy of enhanced staffing and curated assortments. Bloomingdale's achieved its highest second-quarter sales volume in its 154-year history, driven by a 1,700 basis point step-change on a two-year stack as it captures market share in premium and luxury segments. Management attributed the 9% increase in Average Unit Retail (AUR) to a deliberate shift toward 'fashion authority' positioning, prioritizing better/best brand tiers over high-volume, low-margin units. The company successfully leveraged enterprise-wide capabilities, such as Macy's is leveraging its marketplace business to fill white-space opportunities, while dermatological skincare brands like SkinCeuticals drove growth at Bluemercury. Operational efficiency gains were realized through AI-powered replenishment tools and supply chain enhancements, which improved service times and reduced delivery and supply chain costs. Macy's continues to see growth in its marketplace business, which provides complementary offerings and fills white-space opportunities. Management noted that while the lower-income consumer remains 'choiceful,' the core Macy's and luxury customer base remains resilient and responsive to newness and trend-right products. Full-year guidance was raised to reflect Q2 outperformance, though management maintains a 'prudent' outlook for the second half to account for potential macroeconomic volatility. The company received $116 million in total tariff refunds; $20 million is being flowed to the bottom line, with the remainder earmarked for brand building and accelerating the 2027 store expansion pipeline. Gross margin guidance assumes a net headwind of 5 to 15 basis points from combined tariff and fuel costs, a significant improvement from the previously expected 20 to 30 basis point headwind. Strategic reinvestment of tariff refunds will specifically target 'sharpening' price points in big-ticket furniture and fine jewelry to regain market share lost during previous inflationary cycles. Q3 is anticipated to be the most challenging year-over-year comparison (facing a 3.2% comp from the prior year), but management expressed confidence in current inventory positioning for the holiday season. Management clarified that higher AUR is a multi-year strategic goal driven by brand curation (e.g., Ralph Lauren, Coach) rather than just inflationary pricing. While higher AUR doesn't always lead to higher gross margin rates due to category mix, it significantly improves expense leverage by moving fewer units through the supply chain. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. All cohorts of reimagined stores are showing growth, with management noting that the strategy is 'capital light' as it focuses on staffing and eventing rather than structural renovations. The company is iterating on the model to make investments more efficient as they scale from the initial 50 stores to the current 200. Management cited 'return to work' and potentially GLP-1 medications as tailwinds for the strong apparel performance at both Macy's and Bloomingdale's. The 'choiceful' nature of the consumer is manifesting in longer deliberation times for high-ticket items, leading to slightly lower conversion rates offset by higher basket sizes. Inventory levels are up 2.5%, which management views as 'healthy' and aligned with sales growth, emphasizing a high ratio of 'newness' for the fall season. Promotional activity is expected to remain in line with the prior year, with no plans for aggressive discounting despite the competitive landscape.

Macy’s M) shares have slipped as much as 8% after the department-store giant reported Q2 results on Thursday morning, despite beating expectations and raising its full-year outlook. The post-earnings pullback may be worth a closer look for income investors, particularly as Macy’s turnaround gains traction and its roughly 3.5% dividend yield appears increasingly well supported by improving cash generation and a healthier balance sheet. Image Source: Zacks Investment Research Macy’s delivered one of its better quarters in recent years, with net sales rising 1% year over year to $4.87 billion and edging estimates of $4.82 billion. Reported adjusted EPS reached $0.63, up from $0.35 a year ago, but management disclosed that the quarter included a $0.23-per-share net benefit from tariff refunds. Excluding that benefit, Q2 adjusted EPS was $0.40, representing a much more modest 14% year-over-year increase and still topping expectations of $0.37 per share by 8%. Notably, Macy’s has now surpassed earnings expectations for seven consecutive quarters and has exceeded sales estimates for six straight quarters. Image Source: Zacks Investment Research Furthermore, companywide comparable sales increased 2.7%, marking the fifth consecutive quarter of positive comps. Adjusted EBITDA also climbed to $457 million from $373 million, with the adjusted EBITDA margin improving to 9% from 7.5%. Importantly, the results suggest Macy’s “Bold New Chapter” turnaround strategy is gaining traction rather than relying solely on cost cuts. Comparable sales at its Reimagine 200 Macy’s locations rose 1.9%, while Bloomingdale’s surged 11.3% to its highest second-quarter sales volume ever, and Bluemercury comps increased 6.2%. Management subsequently raised its fiscal 2026 outlook, now calling for net sales of $21.68-$21.83 billion and adjusted EPS of $2.15-$2.35, compared with its previous EPS forecast of $2.00-$2.20. For income investors, Macy’s improving cash position may be just as important as its earnings recovery. The company generated $586 million of operating cash flow during the first half of the year, more than double the $255 million generated during the comparable period last year. After $324 million of combined property, equipment, and capitalized software spending and $35 million of asset-sale proceeds, Macy’s produced roughly $297 million of cash flow after capital expenditures, comfortably covering the $101 million it paid in dividends. Macy’s recently declared another quarterly dividend of $0.1915 per share, equating to about $0.77 annually. Furthermore, the annual payout represents only about 34% of the midpoint of Macy’s updated $2.15-$2.35 adjusted EPS guidance, leaving a reasonable cushion if retail conditions soften. The balance sheet provides additional support. Macy’s finished Q2 with $1.3 billion in cash, up sharply from $829 million a year ago, against $2.4 billion of total debt. Perhaps more importantly, the company has no material long-term debt maturities until 2030, limiting near-term refinancing pressure. Image Source: Zacks Investment Research Despite the turnaround progress, Macy’s valuation remains modest. At recent levels, Macy’s stock trades at around 9X forward earnings and less than 1X forward sales, with its price-to-free-cash-flow multiple also remaining low. That valuation already leaves considerable skepticism baked into the shares and could provide an attractive entry point if Macy’s sustains positive comparable-sales growth and improved profitability. Of course, Macy’s remains exposed to discretionary consumer spending, tariffs, and the structural challenges facing traditional department stores, meaning its dividend is not without risk. Still, improving sales trends, stronger cash generation, and ample liquidity make the payout look considerably better supported. Image Source: Zacks Investment Research The post-earnings dip in Macy’s stock may offer an appealing opportunity for income-oriented investors willing to tolerate the volatility of the retail sector. Reassuringly, Macy’s turnaround is producing tangible improvements across its brands, cash flow is comfortably covering the dividend, and its balance sheet provides additional financial flexibility. At the moment, Macy’s stock currently sports a Zacks Rank #2 (Buy) and an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Macy's, Inc. (M) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Net Sales: Grew 1.1% to $4.9 billion; up 1.9% adjusting for ~$35 million impact from 14 store closures at end of last year. Total Revenue: Rose 1.2% to $5.1 billion; go-forward total revenue up 2% to $4.9 billion. Comparable Sales: Reported comps up 2.7%; go-forward comps up 2.8% (fifth consecutive quarter of growth). Macy's Nameplate Comps: Up 1.1%; Reimagine locations up 1.9%. Bloomingdale's Comps: Up 11.3%; highest second-quarter sales volume in 154-year history. Bluemercury Comps: Up 6.2%. Other Revenue: $193 million, up 3%; credit card revenue $156 million, up 2%; Macy's Media Network revenue $37 million, up 9%. Gross Margin: $2 billion or 41.5% of net sales, vs. 39.7% last year; underlying rate up ~10 basis points excluding tariff refunds and ongoing tariff/fuel impacts. SG&A: Rate of 38.7%, improved from 38.9% last year; dollars of $1.96 billion, up 1% vs. $1.944 billion. Adjusted EBITDA: $457 million or 9% of total revenue, vs. $373 million or 7.5% last year. Adjusted EPS: $0.63 vs. $0.35 prior year; included ~$0.23 net tariff refund benefit; excluding it, up 14% and above high end of guidance. Operating Cash Flow: First-half inflow of $586 million vs. $255 million last year. Free Cash Flow: First-half inflow of $262 million vs. outflow of $88 million last year. Inventory: End-of-quarter dollars up 2.5% vs. last year. Shareholder Returns: $201 million returned in first half ($101 million dividends, $100 million buybacks); ~$1 billion remaining on buyback authorization. Capital Expenditures: $324 million vs. $343 million prior year. Cash Balance: Ended quarter with $1.3 billion vs. $829 million last year. Tariff Refunds: Received $98 million in Q2 plus $18 million after quarter end, totaling $116 million; ~$0.05 flowed to bottom line (~$20 million). Q3 Guidance: Net sales $4.65$4.7 billion; comps down 0.5% to up 0.5%; adjusted EBITDA margin 3.7%4.0%; adjusted diluted EPS loss of $0.19$0.23. Full-Year Guidance: Net sales $21.675$21.825 billion; comps up 1.0%1.5%; other revenue $920 million; gross margin 38.5%38.7%; SG&A up 1.5%2.25%; adjusted EBITDA margin 7.8%8.0%; adjusted diluted EPS $2.15$2.35. Warning! GuruFocus has detected 4 Warning Sign with M. Is M fairly valued? Test your thesis with our free DCF calculator. Release Date: September 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Macy's Inc (NYSE:M) delivered comparable sales growth of 2.7%, marking the fifth consecutive quarter of comp sales growth. Macy's Inc (NYSE:M) raised its full-year outlook for both top and bottom lines, reflecting confidence in the Bold New Chapter strategy. Bloomingdale's achieved double-digit comparable sales growth of 11.3%, the best second-quarter sales volume in its 154-year history. Bluemercury delivered solid comparable sales growth of 6.2%, driven by strong customer engagement and new store performance. Macy's Inc (NYSE:M) generated strong operating cash flow of $586 million and free cash flow of $262 million in the first half, improving from the prior year. Macy's Inc (NYSE:M) expects third-quarter comparable sales to be down 0.5% to up 0.5%, a slowdown from the second quarter's 2.7% growth. The company anticipates a third-quarter adjusted diluted EPS loss of $0.19 to $0.23, reflecting increased investments and seasonal factors. Macy's Inc (NYSE:M) continues to face softness in plus sizes, intimates, and women's sleepwear categories. Big-ticket categories remain soft compared to the prior year, despite some improvement from the first quarter. Tourism levels remain well below pre-pandemic levels, representing a persistent headwind for Macy's Inc (NYSE:M)'s city stores. Q: Blake Anderson of Jefferies asked about the second-half sales expectations being held despite Q2 outperformance, and what the quarter-to-date comp versus the flat guide implies.A: CEO Tony Spring explained that Q3 faces the strongest comp of the year at 3.2%, implying a slight acceleration on a stacked basis. He noted nothing unusual is unfolding and expressed confidence in the strategy, team, and execution, contrasting with a year ago when the company was scrambling with tariffs. CFO Tom Edwards added that guidance has been raised two quarters in a row, from $1.90-$2.10 to now $2.15-$2.35, and second-half expectations are exactly in line with the prior quarter. Q: Alex Straton of Morgan Stanley asked whether the back-half margin outlook has evolved excluding tariffs, across gross margin or SG&A.A: CFO Tom Edwards said back-half margins are consistent with the prior outlook, with gross margin expansion weighted more to Q4, driven by supply chain activities, AI initiatives, and better inventory forecasting. SG&A investments are weighted more to Q3, supporting the Reimagine 200 expansion, Bloomingdale's growth, and digital initiatives. Q: Brooke Roach of Goldman Sachs asked how the company is thinking about the pacing of expanding the Reimagine format to the remainder of the fleet.A: CEO Tony Spring highlighted 9 of 10 quarters of growth and continued outperformance versus the rest of the fleet, crediting great product, better experience, more staffing, and local empowerment. He said the company will share fleet expansion details on the Q4 call but confirmed more Reimagine stores will be added next year, with the aim to reimagine the entire go-forward fleet of approximately 350 stores. CFO Tom Edwards noted the program is capital light, with investments in associates, eventing, and new brands, and that the company is learning and iterating to make investments more efficient. Q: Michael Binetti of Evercore ISI asked whether there is a transition point where AUR starts to offset gross margin headwinds, and about the industry dynamic of tariff refunds being redeployed without raising same-store sales guidance.A: CEO Tony Spring separated AUR from gross margin, noting it is category and brand dependent, but higher AUR allows fewer units through the system, lowering the cost base and improving the customer experience. On tariff refunds, he said the investment is disproportionately focused on long-term brand health, including top-of-funnel brand building, Reimagine store pilots, and defraying fuel costs, which do not have short-term sales benefits. CFO Tom Edwards emphasized the reinvestment is focused on the long term with surgical short-term actions, and that the company looks to grow margin dollars with top-line growth. Q: Oliver Chen of TD Cowen asked what factors offset AUR gains, thoughts on the younger customer, and whether merchandise margins and promotions should be flattish versus last year.A: CEO Tony Spring said AUR continues to grow because the product assortment keeps improving, citing growth in Ralph Lauren, Coach, watches, and fine jewelry. On the younger customer, he pointed to strong prom and graduation seasons, the watch business as a graduation gift driver, the growing wedding registry, and the AQUA collaboration with Nicky Hilton. CFO Tom Edwards said promotional activity is expected to be in line with last year, inventory is well positioned with newness for fall, and the consumer skews to the middle and higher end where performance is more consistent. Q: Matthew Boss of JPMorgan asked about the strategies gaining traction at the Macy's banner and what inning the market share momentum at Bloomingdale's is in.A: CEO Tony Spring said it starts with product, and the company is in the early innings (third or fourth) of improving assortment quality, balancing best/better/good. He cited better inventory flow, presentation, storytelling, and marketing campaigns like Celebrate American Designers at Macy's and Hotel Bloomingdale's. He noted newness and fashion are selling, including suede, brown, boots, animal prints, and new denim treatments. CFO Tom Edwards added that with low single-digit comp growth, the company can lever SG&A and deliver higher EPS growth, a model it has already delivered in the first half of the year. Q: Dana Telsey of Telsey Advisory Group asked how AI is viewed as a revenue driver and expense enhancer, and about the flow of brand additions and subtractions.A: CEO Tony Spring said AI is viewed in three parts: driving revenue, improving the colleague and customer experience, and creating efficiency and reducing costs, roughly a third each. He emphasized that humanity still has a role in relationship selling. On brands, he said there is plenty of opportunity to edit and add, citing Kurt Geiger at Macy's and Tory Burch launching at Herald Square in Q4. CFO Tom Edwards highlighted the replenishment AI initiative that moved from pilot to broader rollout, and the AI shopping assistant that has expanded from Macy's digital to stores and now Bloomingdale's digital, driving better engagement, basket size, and conversion. Q: Paul Lejuez of Citi asked whether Reimagine 200 outperformance comes from transactions or ticket, and how apparel performed versus other categories.A: CEO Tony Spring said apparel is strong at both Macy's and Bloomingdale's, driven by return to work, GLP-1s, and fashion. For Reimagine 200, he noted steady traffic, higher AUR, higher basket size, and slightly lower conversion due to higher price points and a more deliberative experience. On categories, he cited growth in petites, men's and women's shoes, watches (strong for three quarters), and fragrances, while women's intimates, sleepwear, and big-ticket remained softer, with tariff refunds used to sharpen prices in big ticket. Q: Simeon Siegel of Guggenheim Partners asked about AUR versus units by banner and how the company is thinking about the traffic versus conversion dynamic.A: CEO Tony Spring said AUR at Bloomingdale's is meaningfully higher than at Macy's, and both are growing based on product mix and brand elevation. On traffic and conversion, he said traffic has been steady both physically and digitally, while conversion has been more of a challenge. He noted the company is helping colleagues become better sellers, improving product detail pages and top-of-funnel marketing, and recognizing that higher-priced purchases often take multiple visits, requiring a balance between immediate conversion and browse behavior. Q: Robert Drbul of BTIG asked for more For the complete transcript of the earnings call, please refer to the full earnings call transcript.