Macy's stock rallies after same-store sales see first growth since 2022

By Steve Gelsi

Sales rise at the 125 stores in Macy's 'Reimagine' network, as well as Bluemercury and Bloomingdale's locations.

Macy's turned in its first positive quarter of same-store sales in about three years.

Macy's Inc.'s stock soared in Wednesday after the retailer boosted its profit outlook and reported the first growth in comparable sales in about three years, signaling that efforts to turn the company around are gaining traction.

Macy's stock (M) rose 17.2% to $15.81 a share, its highest point since February. Earlier in the day, the stock was up more than 20% for its second-largest one-day rise in its trading history after it rallied 21.17% on Nov. 18, 2021, according to Dow Jones Market Data.

Despite the success of appealing to "resilient" consumers, Macy's said it's cautious about how the year may play out.

"Given the uncertainty regarding the impact of tariffs on demand, we believe it's prudent to continue to incorporate a more choiceful consumer into our guidance for the remainder of the year," Macy's Chief Executive Tony Spring said, according to a transcript of the company's quarterly call with investors.

Macy's revenue was fueled by comparable sales gains in women's career clothing and contemporary wear. Men's tailored clothing also outperformed.

Macy's also benefitted from its relatively wealthy customer demographic, with more than 50% from households earning $100,000 a year or more. Bloomingdale's customers are more affluent than that.

"As you go by income level, you certainly see a healthier performance in the higher tiers of income," Spring said.

Improvements in store traffic, increases in average order value and a focus on enhancing the overall customer experience also contributed to the earnings performance by Macy's.

Companywide comparable-store sales - sales in stores open at least one year - rose 0.8% in its second quarter, well ahead of the average analyst estimate compiled by FactSet for a 0.5% drop. That marked the first positive figure since the fiscal first quarter of 2022, according to FactSet data.

Chief Executive Spring said the company's performance "highlights the advantages of being a multibrand, multi-category, omnichannel retailer" as it steers toward "sustainable, long-term profitable growth."

The New York-based chain said it benefited from a 1.1% increase in same-store sales at the 125 Macy's locations in its "Reimagine" network, as well as a 1.2% rise in same-store sales at its Bluemercury makeup stores and a 3.6% jump in Bloomingdale's same-store sales.

Macy's now expects full-year 2026 adjusted earnings of $1.70 a share to $2.05 a share, up from its earlier estimate of $1.60 a share to $2 a share. The midpoint of the new range - $1.88 a share - is above the FactSet consensus estimate of $1.79 a share.

Macy's said its second-quarter profit for the three months ended Aug. 2 fell to $87 million, or 31 cents a share, from $150 million, or 53 cents a share, in the year-ago period.

Excluding nonrecurring items, adjusted second-quarter profit of 41 cents a share beat the FactSet consensus of 19 cents a share. That marked the widest margin for a bottom-line beat since the fiscal third quarter of 2022, according to FactSet data.

Second-quarter sales fell to $4.81 billion from $4.94 billion in the year-ago quarter, but topped the analyst estimate of $4.7 billion. The sales decline stemmed from the closure of 64 stores at the end of 2024.

Macy's revenue was fueled by comparable sales gains in women's career clothing and contemporary wear. Men's tailored clothing also outperformed.

Watches, jewelry, mattresses and textiles drew "strong demand" and illustrate "the breadth of product and price points that we offer and our ability to cater to customers' evolving lifestyle needs," the company said.

Gross margins were squeezed by 0.8 percentage points to 39.7% as the company marked down prices on "to maintain healthy inventories and product bought under prior tariff rates," Macy's said.

Selling, general and administrative expenses fell $29 million to $1.9 billion. The lower expenses were partly due to cost-cutting efforts and savings from stores that have been closed. The cost savings were partly offset by investments in the Macy's 125 "Reimagine" locations and Bloomingdale's, the company said.

Along with Macy's stock price, its corporate bonds rallied, as spreads tightened. (See charts below)

Spreads tightened on Macy's corporate bonds after the retailer's upside earnings surprise and raised profit outlook.

Yields on Macy's bonds fell Wednesday after its Q2 results wowed Wall Street.

Ahead of Wednesday's trading, Macy's stock was down 20.3% in 2025, while the S&P 500 index SPX had gained 9.1%.

The company unveiled its "bold new chapter" effort in February, 2024, to close about 150 underproductive locations through 2026.

In January, it unveiled a list of 66 stores it planned to close this year.

Also read: Is a Macy's near you closing? Beleaguered department store is closing 66 locations.

-Steve Gelsi

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09-03-25 1443ET