Group 1 - The IPO market has been lackluster in 2026, with few high-profile listings despite some notable exceptions like Figma [1] - Klarna, a buy-now, pay-later company, recently went public, closing 15% higher than its IPO price of $40 on its first trading day [2] - Klarna positions itself as offering "flexible payment options," including buy now, pay later, credit cards, and AI-based data insights for customers and merchants [3] Group 2 - Klarna partners with a wide range of top brands, including Disney, Macy's, Uber, and Adidas, and has agreements with 790,000 merchants globally [5] - The company does not charge interest on small loans paid within 30 days but does impose late fees and interest on larger purchases over extended periods [6] - Klarna's average client balance over the past 12 months was $80, significantly lower than the average U.S. credit card debt of $6,730, with an average loan duration of 40 days [8] Group 3 - Klarna's provision for credit losses was 0.52% of gross merchandise volume (GMV) over the trailing 12 months, compared to 2.92% for commercial U.S. banks in 2024 [8] - The company has strong underwriting capabilities and a full banking license, although its expansion plans are currently impacting profitability [7]

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents Macy's, Inc.'s unaudited consolidated financial statements, including income, comprehensive income, balance sheets, equity, cash flows, and detailed accounting notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) 13 Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (millions) | August 3, 2024 (millions) | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Net sales | $4,812 | $4,937 | (2.5%) | | Total revenue | $4,999 | $5,096 | (1.9%) | | Operating income | $149 | $222 | (32.8%) | | Net income | $87 | $150 | (42.0%) | | Basic EPS | $0.32 | $0.54 | (40.7%) | | Diluted EPS | $0.31 | $0.53 | (41.5%) | 26 Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (millions) | August 3, 2024 (millions) | Change | | :-------------------------------- | :------------- | :------------- | :----- | | Net sales | $9,411 | $9,783 | (3.8%) | | Total revenue | $9,791 | $10,096 | (3.0%) | | Operating income | $242 | $346 | (30.0%) | | Net income | $124 | $212 | (41.5%) | | Basic EPS | $0.45 | $0.77 | (41.6%) | | Diluted EPS | $0.44 | $0.75 | (41.3%) | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) - For both the 13 and 26 weeks ended August 2, 2025, and August 3, 2024, **total comprehensive income was equal to net income**, as other comprehensive income (net of tax) was zero or negligible[15](index=15&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) - Total Assets decreased from **$16,402 million** on February 1, 2025, to **$15,551 million** on August 2, 2025[18](index=18&type=chunk) - Total Liabilities decreased from **$11,850 million** on February 1, 2025, to **$11,199 million** on August 2, 2025[18](index=18&type=chunk) - Shareholders' Equity decreased from **$4,552 million** on February 1, 2025, to **$4,451 million** on August 2, 2025[18](index=18&type=chunk) - Merchandise Inventories were **$4,342 million** as of August 2, 2025, a slight decrease from **$4,468 million** on February 1, 2025, and **$4,378 million** on August 3, 2024[18](index=18&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) - Shareholders' Equity remained at **$4,451 million** from May 3, 2025, to August 2, 2025, after starting at **$4,552 million** on February 1, 2025[22](index=22&type=chunk) - Stock repurchases for the 26 weeks ended August 2, 2025, totaled **$153 million**[22](index=22&type=chunk) - Common stock dividends paid for the 26 weeks ended August 2, 2025, totaled **$101 million**[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) - Net cash provided by operating activities increased to **$255 million** for the 26 weeks ended August 2, 2025, from **$137 million** in the prior year[28](index=28&type=chunk) - Net cash used by investing activities decreased to **$262 million** for the 26 weeks ended August 2, 2025, from **$373 million** in the prior year[28](index=28&type=chunk) - Net cash used by financing activities increased significantly to **$471 million** for the 26 weeks ended August 2, 2025, from **$152 million** in the prior year, primarily due to debt transactions and stock repurchases[28](index=28&type=chunk) - Cash, cash equivalents and restricted cash decreased to **$832 million** as of August 2, 2025, from **$1,310 million** at the beginning of the period[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Organization and Summary of Significant Accounting Policies](index=9&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) - Macy's, Inc. operates as an omni-channel retail organization under three nameplates: Macy's, Bloomingdale's, and Bluemercury, selling a wide range of merchandise[30](index=30&type=chunk) - Effective February 4, 2024, the Company changed its inventory valuation method from LIFO retail inventory method (RIM) to the LIFO cost method for improved accuracy, transparency, and comparability[35](index=35&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, is not expected to materially impact the estimated fiscal 2025 effective tax rate but is expected to decrease fiscal 2025 cash tax payments[39](index=39&type=chunk) - The Company is evaluating the impacts of ASU 2023-09 (Income Tax Disclosures, effective FY2026), ASU 2024-03 (Expense Disaggregation Disclosures, effective FY2028), and ASU 2025-05 (Credit Losses for Accounts Receivable, effective FY2027)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [2. Earnings Per Share](index=11&type=section&id=2.%20Earnings%20Per%20Share) - Diluted EPS for the 13 weeks ended August 2, 2025, was **$0.31**, down from **$0.53** for August 3, 2024[45](index=45&type=chunk) - Diluted EPS for the 26 weeks ended August 2, 2025, was **$0.44**, down from **$0.75** for August 3, 2024[45](index=45&type=chunk) - Stock options (**5.9 million shares**) and restricted stock units (**1.0 million shares**) were outstanding but excluded from diluted EPS computation for August 2, 2025, as their inclusion would have been antidilutive or performance conditions were not met[45](index=45&type=chunk) [3. Revenue](index=12&type=section&id=3.%20Revenue) - Net sales represented **96%** of total revenue for both the 13 and 26 weeks ended August 2, 2025[47](index=47&type=chunk) Revenue Breakdown (26 Weeks Ended August 2, 2025) | Revenue Type | Amount (millions) | | :-------------------------- | :---------------- | | Total Net Sales | $9,411 | | Credit card revenues, net | $306 | | Macy's Media Network revenue, net | $74 | | Total Other Revenue | $380 | | Total Revenue | $9,791 | - Macy's accounted for **84%** and **83%** of the Company's net sales for the 13 and 26 weeks ended August 2, 2025, respectively[50](index=50&type=chunk) - Digital sales accounted for **31%** and **32%** of net sales for the 13 and 26 weeks ended August 2, 2025, respectively[50](index=50&type=chunk) - Credit card revenues increased to **$306 million** for the 26 weeks ended August 2, 2025, from **$242 million** in the prior year, driven by a strong credit portfolio and active management of net credit card losses[48](index=48&type=chunk)[57](index=57&type=chunk) [4. Financing Activities](index=14&type=section&id=4.%20Financing%20Activities) - Debt repayments for the 26 weeks ended August 2, 2025, totaled **$650 million**, including **$6 million** short-term debt and **$644 million** long-term debt[60](index=60&type=chunk) - On July 29, 2025, Macy's Retail Holdings, LLC issued **$500 million** in **7.375%** senior notes due 2033[60](index=60&type=chunk) - The Company recognized a **$13 million loss** on extinguishment of debt in Q2 2025 due to tender offers and redemptions of senior notes and debentures[63](index=63&type=chunk) - On April 9, 2025, the ABL Credit Facility was reduced from **$3,000 million** to **$2,100 million** and extended to April 2030[64](index=64&type=chunk) - Approximately **12.6 million shares** were repurchased for **$151 million** during the 26 weeks ended August 2, 2025, with **$1,224 million** remaining under the share repurchase authorization[70](index=70&type=chunk) [5. Retirement Plans](index=15&type=section&id=5.%20Retirement%20Plans) - Defined contribution plan expense for the 401(k) Qualified Defined Contribution Plan was **$44 million** for the 26 weeks ended August 2, 2025[75](index=75&type=chunk) - The Pension Plan reported a net benefit of **$(19) million** for the 26 weeks ended August 2, 2025[75](index=75&type=chunk) - Supplementary Retirement Plan expense was **$13 million** for the 26 weeks ended August 2, 2025[75](index=75&type=chunk) [6. Fair Value Measurements](index=16&type=section&id=6.%20Fair%20Value%20Measurements) - The total fair value of marketable equity and debt securities was **$38 million** as of August 2, 2025, classified as Level 1[77](index=77&type=chunk) - The fair value of long-term debt was **$2,336 million** as of August 2, 2025, compared to a carrying amount of **$2,626 million**[80](index=80&type=chunk) - The Company concluded that goodwill and intangible assets with indefinite lives were not impaired in its annual assessment as of May 2025[81](index=81&type=chunk) [7. Supplier Finance Programs](index=17&type=section&id=7.%20Supplier%20Finance%20Programs) - Outstanding obligations related to suppliers participating in SCF programs were **$136 million** as of August 2, 2025, recorded within merchandise accounts payable[83](index=83&type=chunk) - The Company's obligations to its suppliers are not impacted by a supplier's participation in the SCF programs[82](index=82&type=chunk) [8. Segments](index=17&type=section&id=8.%20Segments) - Macy's, Inc. aggregates all its operations into a single reporting segment due to similar business activities, economic environments, and key economic metrics across its brands[85](index=85&type=chunk) - The Chief Executive Officer, Tony Spring, acts as the Chief Operating Decision Maker (CODM) and reviews segment performance based on net income, with disaggregation of depreciation and amortization from selling, general and administrative expenses[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Macy's, Inc.'s financial condition and results of operations, covering its 'A Bold New Chapter' strategy, performance, liquidity, capital resources, and non-GAAP reconciliations [Quarterly Overview and Company Strategy](index=18&type=section&id=Quarterly%20Overview%20and%20Company%20Strategy) - The Company is executing its 'A Bold New Chapter' strategy, focusing on enhancing the omni-channel shopping experience, strengthening the Macy's nameplate, accelerating luxury growth, and simplifying operations[89](index=89&type=chunk) - Macy's delivered its strongest second quarter net promoter score on record, with Reimagine 125 locations outperforming the rest of the Macy's fleet in traffic, average order value, and net promoter scores[89](index=89&type=chunk) - Bloomingdale's achieved its highest second quarter sales and net promoter score on record, and Bluemercury achieved its 18th consecutive quarter of comparable sales growth[89](index=89&type=chunk) Comparable Sales (Q2 2025 vs. Q2 2024) | Metric | Owned Basis | O+L+M Basis | | :-------------------------------- | :---------- | :---------- | | Macy's, Inc. | +0.8% | +1.9% | | Macy's, Inc. go-forward business | +1.1% | +2.2% | | Macy's | +0.4% | +1.2% | | Reimagine 125 locations | +1.1% | +1.4% | | Bloomingdale's | +3.6% | +5.7% | | Bluemercury | +1.2% | +1.2% | [Results of Operations](index=20&type=section&id=Results%20of%20Operations) [Comparison of the Second Quarter of 2025 and the Second Quarter of 2024](index=20&type=section&id=Comparison%20of%20the%20Second%20Quarter%20of%202025%20and%20the%20Second%20Quarter%20of%202024) - Net sales decreased by **$125 million (2.5%)** to **$4,812 million**, primarily due to the closing of 64 non-go-forward locations (approximately **$170 million** impact)[93](index=93&type=chunk) - Other revenue increased by **$28 million**, mainly driven by credit card revenues due to a strong credit portfolio and active management of net credit card losses[94](index=94&type=chunk) - Gross margin rate declined **80 basis points** to **39.7%**, attributed to proactive markdowns on early Spring assortments and the flow-through of product bought under **145%** China tariffs[95](index=95&type=chunk) - Selling, general and administrative (SG&A) expenses decreased by **$29 million (1.5%)** but increased as a percent of total revenue to **38.9%** from **38.7%** due to declining net sales[96](index=96&type=chunk) - Operating income decreased to **$149 million (3.0% of total revenue)** from **$222 million (4.4% of total revenue)** in the prior year[92](index=92&type=chunk) [Comparison of the 26 Weeks Ended August 2, 2025 and August 3, 2024](index=22&type=section&id=Comparison%20of%20the%2026%20Weeks%20Ended%20August%202%2C%202025%20and%20August%203%2C%202024) - Net sales for the first half of 2025 decreased by **$372 million (3.8%)** to **$9,411 million**, primarily due to the closing of 64 non-go-forward locations (approximately **$340 million** impact)[101](index=101&type=chunk) - Other revenue increased by **$67 million** to **$380 million**, mainly from a **$64 million** increase in credit card revenues and a **$3 million** increase in Macy's Media Network revenue[102](index=102&type=chunk) - Gross margin rate decreased **40 basis points** to **39.5%**, driven by proactive markdowns and the flow-through of **145%** China tariffs[103](index=103&type=chunk) - SG&A expenses decreased by **$28 million (0.7%)** but increased as a percent of total revenue to **39.4%** from **38.5%** due to declining net sales[104](index=104&type=chunk) - Operating income decreased to **$242 million (2.5% of total revenue)** from **$346 million (3.4% of total revenue)** in the prior year[100](index=100&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - The Company's principal sources of liquidity are cash from operations, cash on hand, and the Amended & Extended ABL Credit Facility[108](index=108&type=chunk) - Management believes current liquidity sources will be sufficient to satisfy anticipated needs for working capital, capital expenditures, and cash dividends for at least the next twelve months and the foreseeable future[109](index=109&type=chunk) - Capital allocation goals include maintaining a healthy balance sheet, achieving investment-grade credit metrics, investing in long-term profitable growth, and returning capital to shareholders through dividends and share repurchases[110](index=110&type=chunk) - Cash and cash equivalents were **$829 million** as of August 2, 2025, an increase of **$183 million** from August 3, 2024[111](index=111&type=chunk) - Borrowing availability under the ABL Credit Facility was **$1,957 million** as of August 2, 2025, after accounting for standby letters of credit[111](index=111&type=chunk) [Operating Activities](index=24&type=section&id=Operating%20Activities) - Net cash provided by operating activities increased to **$255 million** for the first half of 2025, up from **$137 million** in the prior year, driven by decreased working capital requirements and lower cash taxes paid[112](index=112&type=chunk)[113](index=113&type=chunk) [Investing Activities](index=24&type=section&id=Investing%20Activities) - Capital expenditures were **$343 million** in the first half of 2025, down from **$432 million** in the prior year, primarily focused on digital, technology, and omni-channel capabilities[114](index=114&type=chunk) [Financing Activities](index=24&type=section&id=Financing%20Activities) - Dividends paid totaled **$100 million** in the first half of 2025, up from **$96 million** in the prior year[115](index=115&type=chunk) - Approximately **12.6 million shares** were repurchased for **$151 million** in the first half of 2025 under the existing share repurchase program; no shares were repurchased in the prior year[117](index=117&type=chunk) - On July 29, 2025, the Company issued **$500 million** in **7.375%** senior unsecured notes due 2033, redeemed **$393 million** of senior notes/debentures, and completed a tender offer for **$251 million** of senior notes/debentures, resulting in a **$13 million loss** on extinguishment of debt[118](index=118&type=chunk) - On April 9, 2025, the ABL Credit Facility was amended, reducing it from **$3,000 million** to **$2,100 million** and extending its maturity to April 2030, with no outstanding borrowings[118](index=118&type=chunk) [Contractual Obligations](index=25&type=section&id=Contractual%20Obligations) - There were no material changes to the Company's contractual obligations and commitments outside the ordinary course of business since February 1, 2025[119](index=119&type=chunk) [Guarantor Summarized Financial Information](index=25&type=section&id=Guarantor%20Summarized%20Financial%20Information) - The Company had **$1,941 million** in senior unsecured notes outstanding as of August 2, 2025, which are fully and unconditionally guaranteed by Macy's, Inc. but are structurally subordinated to all existing and future secured indebtedness[120](index=120&type=chunk) Summarized Balance Sheets (Obligor Group, August 2, 2025) | Asset/Liability | Amount (millions) | | :-------------- | :---------------- | | Current Assets | $993 | | Noncurrent Assets | $5,620 | | Current Liabilities | $1,450 | | Noncurrent Liabilities | $6,995 | Summarized Statement of Operations (Obligor Group, 26 Weeks Ended August 2, 2025) | Metric | Amount (millions) | | :-------------------------- | :---------------- | | Net sales | $372 | | Consignment commission income | $1,453 | | Other revenue | $63 | | Cost of sales | $(154) | | Operating loss | $(713) | | Loss before income taxes | $(322) | | Net loss | $(117) | [Important Information Regarding Non-GAAP Financial Measures](index=26&type=section&id=Important%20Information%20Regarding%20Non-GAAP%20Financial%20Measures) - The Company uses non-GAAP financial measures such as comparable sales (O+L+M basis), EBITDA, Adjusted EBITDA, and Core Adjusted EBITDA to provide additional useful information for evaluating operating performance, sales growth, and operational efficiency[125](index=125&type=chunk) Non-GAAP Reconciliation (26 Weeks Ended August 2, 2025) | Metric | Amount (millions) | | :-------------------------- | :---------------- | | Net income (GAAP) | $124 | | EBITDA | $687 | | Adjusted EBITDA | $717 | | Core Adjusted EBITDA | $685 | - Adjusted diluted earnings per share for the 26 weeks ended August 2, 2025, was **$0.57**, compared to GAAP diluted EPS of **$0.44**[134](index=134&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the Company's market risk exposure since the filing of its 2024 Form 10-K - There have been no material changes to the Company's market risk as described in the 2024 10-K[135](index=135&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of August 2, 2025, and no material changes to internal control over financial reporting occurred during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of August 2, 2025[136](index=136&type=chunk) - No changes in the Company's internal control over financial reporting occurred during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[137](index=137&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal proceedings incidental to its normal course of business but does not anticipate any of them to have a material adverse effect on its financial position or results of operations - The Company does not expect any current legal proceedings to have a material adverse effect on its financial position or results of operations[139](index=139&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section updates the Company's risk factors, specifically revising the 'Supply Chain and Third-Party Risks' to highlight increased dependencies on vendors, potential disruptions from geopolitical tensions (e.g., U.S.-China trade dispute, tariffs), and the uncertain impact of price increases and reduced demand on profitability - The 'Supply Chain and Third-Party Risks' section has been revised to emphasize dependence on vendors, potential disruptions from geopolitical tensions, and the impact of price increases and reduced demand[140](index=140&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - New tariffs imposed by the Trump Administration on products from over 90 countries, including China, are expected to lead to strategic price increases across product categories, with uncertain impacts on gross margin and consumer demand[144](index=144&type=chunk) - The Company is evaluating sourcing options and working with vendors to mitigate tariff impacts, but these strategies may not be effective or timely[147](index=147&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the Company's common stock repurchases during the second quarter of 2025 under its existing share repurchase program - The Company repurchased **3,965 thousand shares** of common stock at an average price of **$12.61** per share during the period of July 6, 2025 - August 2, 2025[150](index=150&type=chunk) - As of August 2, 2025, **$1,224 million** remained available under the **$2,000 million** share repurchase program authorized on February 22, 2022[150](index=150&type=chunk) [Item 5. Other Information](index=31&type=section&id=Item%205.%20Other%20Information) This section includes cautionary statements regarding forward-looking information, outlining various risks and uncertainties that could affect future results, and confirms that no directors or officers engaged in Rule 10b5-1 or non-Rule 10b5-1 trading arrangement changes during the quarter [Forward-Looking Statements](index=31&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements subject to various risks and uncertainties, including the Company's ability to successfully implement its 'A Bold New Chapter' strategy, competitive pressures, and changes in economic conditions[151](index=151&type=chunk)[154](index=154&type=chunk) - Key risks include supply chain disruptions, labor shortages, wage pressures, rising inflation, geopolitical conditions, trade restrictions, tariffs, and the impact of weather and natural disasters[151](index=151&type=chunk)[154](index=154&type=chunk) [Trading Arrangements](index=32&type=section&id=Trading%20Arrangements) - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fiscal quarter ended August 2, 2025[153](index=153&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including indentures, certifications from the CEO and CFO, and the iXBRL formatted financial statements - Key exhibits include the Indenture for Macy's Retail Holdings, LLC's **7.375%** Senior Notes due 2033, certifications of the Chief Executive Officer and Chief Financial Officer, and the iXBRL formatted financial statements[157](index=157&type=chunk) SIGNATURES [SIGNATURES](index=34&type=section&id=SIGNATURES) The report is duly signed on behalf of Macy's, Inc. by Tracy M. Preston, Chief Legal Officer and Corporate Secretary, and Paul Griscom, Senior Vice President and Controller, dated September 10, 2025 - The report was signed by Tracy M. Preston, Chief Legal Officer and Corporate Secretary, and Paul Griscom, Senior Vice President and Controller[160](index=160&type=chunk) - The signing date of the report is September 10, 2025[161](index=161&type=chunk)

Group 1 - Macy's is celebrating the 40th anniversary of its ready-to-wear brand I.N.C., highlighting its legacy in fashion and trends [1] - To commemorate this milestone, Macy's has partnered with award-winning CFDA designer Christian Siriano, who will serve as the Creative Director and Curator for the fall fashion collection [1] - The new collection aims to celebrate decades of glamour, confidence, and fashion authority, honoring the brand's heritage while looking forward to its future [1]

Core Insights - Macy's stock has increased by 37% over the past month, but its operating performance and financial situation appear poor, with significant risks tied to economic downturns and reliance on discretionary spending [2] Financial Performance - In Q2 2025, Macy's reported revenue of $5.6 billion, a 4% decrease year-over-year, with net income at $210 million, down 22%, and adjusted EBITDA at $480 million, also lower than the previous year [3] - Free cash flow decreased to $120 million due to declining sales trends and increased promotional efforts [3] - The balance sheet shows $3.9 billion in debt against $800 million in cash, limiting financial flexibility [3] Valuation - Macy's trades at a price-to-earnings ratio of 8.1, significantly lower than the S&P 500's 23.9, and has a free cash flow multiple of 17.8 compared to the S&P 500's 21 [4] Growth Trends - Over the last three years, Macy's revenues have declined at an average annual rate of -4.4%, while the S&P 500 grew at 5.3% [5] - In the past twelve months, sales fell by -3.8% from $24 billion to $23 billion, with a recent quarterly revenue decrease of -4.1% year-over-year to $4.8 billion [5] Profitability - Macy's operating income for the past year was $879 million, yielding a 3.9% margin, with net income at $558 million and a 2.4% margin, all below S&P 500 averages [6] Financial Stability - Macy's has a high debt-to-equity ratio of 124.9%, significantly above the S&P 500 average of 20.5%, and cash constitutes only 5.8% of total assets compared to the index's 7.2% [7] Economic Resilience - Macy's stock has underperformed the S&P 500 during economic downturns, with a 71.7% drop during the 2022 inflation crisis compared to a 25.4% decline in the S&P 500 [8] - During the 2020 Covid pandemic, Macy's stock fell 75.5%, while the S&P 500 experienced a peak-to-trough decline of 33.9% [8] Investment Appeal - Despite low valuation, Macy's combination of weak growth and profitability makes the stock less appealing to investors [9]

Core Insights - The session is part of the Goldman Sachs 32nd Annual Global Retailing Conference, focusing on the retail sector [1] Company Overview - Macy's is represented by Tony Spring, Chairman and CEO, and Tom Edwards, COO and CFO [1]

Core Insights - Macy's Inc reported better-than-expected second-quarter earnings and raised its fiscal outlook, leading to an increase in share price [1][7] Financial Performance - Net sales for the quarter reached $4.81 billion, a decrease of 2.5% year-over-year, surpassing the consensus estimate of $4.76 billion [2] - The company raised its 2025 earnings guidance from a range of $1.60-$2.00 to $1.70-$2.05, compared to the consensus of $1.79 [2][7] - Full-year FY25 EPS is now projected at $1.95, slightly above the previous estimate of $1.90 [7] Future Outlook - Macy's anticipates a third-quarter adjusted loss of 15-20 cents per share, better than the consensus loss of 20 cents [3] - The company plans to close 150 underperforming stores as part of its "Bold New Chapter" strategy, which is expected to improve long-term margins [4] - Macy's aims to expand its luxury segment by 20% and targets $750 million in asset sales over the next three years [4] Tariff Impact - The company expects tariffs to reduce FY25 EPS by approximately 25-40 cents, which is more than previously forecasted [5] - Gross margin is projected to be pressured by 40-60 basis points, compared to the earlier estimate of 20-40 basis points [5] - As of the end of last year, about 20% of Macy's merchandise was sourced from China, down from over 50% before the pandemic [6] Strategic Adjustments - To mitigate tariff impacts, Macy's is renegotiating supplier terms, adjusting order volumes, evaluating pricing strategies, and diversifying sourcing [6]

Core Insights - Macy's Inc. reported better-than-expected second-quarter earnings, with net sales of $4.81 billion, down 2.5% year over year, surpassing both consensus and management guidance [1][2] - The company raised its fiscal 2025 earnings guidance from $1.60-$2.00 to $1.70-$2.05, and sales guidance from $21 billion-$21.4 billion to $21.15 billion-$21.45 billion [3] Financial Performance - Adjusted earnings per share were 41 cents, exceeding the consensus of 18 cents and last year's 53 cents, and surpassing management's guidance of 15-20 cents [1][2] - The retailer's second-quarter performance was driven by the strongest comparable sales growth in 12 quarters, particularly in Macy's Reimagine 125 locations, Bloomingdale's, and Bluemercury [2] Stock Market Reaction - Following the earnings announcement, Macy's shares gained 4%, trading at $16.92 [3] - Analysts adjusted their price targets for Macy's, with Jefferies raising it from $14.5 to $18.5, while UBS raised it from $6 to $6.5 [8]

Financial Data and Key Metrics Changes - The company reported its best quarter in 12 quarters, exceeding guidance for sales, margin, revenue, EBITDA, and EPS [9] - Quarterly EBITDA growth was significant, with a notable increase in digital and physical business [9] - SG&A expenses were reduced by approximately $30 million compared to the previous year [20] Business Line Data and Key Metrics Changes - The reimagined 125 Macy's stores achieved a 1.4% comp performance in the second quarter, outperforming the overall fleet which was up 0.1% [19][20] - Bloomingdale's experienced over 5.7% growth for the fourth consecutive quarter, with strong performance attributed to a great assortment and marketing campaigns [9][25] - Bluemercury marked its 18th consecutive quarter of growth, indicating strong brand performance [9] Market Data and Key Metrics Changes - The company closed 64 underproductive stores last year, generating cash proceeds of nearly $300 million from asset sales [22] - The recapture rate of customers from closed stores was better than expected, contributing positively to overall top-line growth [23] Company Strategy and Development Direction - The "Bold New Chapter" strategy aims to improve the quality of the entire enterprise, focusing on reimagining the Macy's nameplate and enhancing customer experience [10][11] - The strategy includes closing underperforming stores, increasing staffing in key areas, and leveraging AI for operational efficiency [13][19] - The company is committed to being a multi-category, multi-brand, and multi-price point retailer to adapt to changing consumer preferences [16] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding macroeconomic uncertainties but remains optimistic about the execution of their strategy [14] - The company anticipates a more choiceful consumer environment, embedding prudency into their guidance for the fall season [37] - Management believes that the current retail environment will lead to more market share consolidation, with Macy's positioned as a healthier retailer [41] Other Important Information - The company is focusing on private brand strategy, refreshing its portfolio and identifying white space opportunities in the market [57][58] - The impact of tariffs is expected to affect gross margins, with a projected increase in tariff-related costs [43][44] Q&A Session Summary Question: Can you discuss the key highlights in the quarter and the drivers of momentum? - The company reported significant growth across all nameplates, with strong performance in both digital and physical channels [9] Question: How is the Bold New Chapter strategy performing? - The strategy has shown positive results, with improvements in customer experience and store performance [10][14] Question: What are the expectations for the operating environment moving forward? - Management expects a more choiceful consumer and has adjusted guidance accordingly, indicating a cautious outlook for the fall season [37] Question: How is the company addressing the impact of tariffs? - The company has embedded a 40 to 60 basis point impact on gross margin due to tariffs and is actively negotiating with vendors to mitigate costs [43][44] Question: What is the outlook for Bloomingdale's performance? - Bloomingdale's is performing well due to a strong assortment and effective marketing strategies, with plans for further expansion [25][29]

Financial Data and Key Metrics Changes - Macy's reported strong second quarter results, exceeding guidance for sales, margin, revenue, EBITDA, and EPS, marking the best quarter in 12 quarters for the company [8][19] - The company achieved a 1.4% comp performance in the reimagined 125 stores, while overall comp growth was only 0.1% [19][20] - SG&A expenses were reduced by approximately $30 million year-over-year, contributing to improved profitability [20] Business Line Data and Key Metrics Changes - The Macy's brand saw growth in both digital and physical sales, with a notable increase in the R125 stores [8][10] - Bloomingdale's experienced its fourth consecutive quarter of growth, with a comp increase of over 5.7% [8] - Bluemercury achieved its 18th consecutive quarter of growth, indicating strong performance across all business lines [8] Market Data and Key Metrics Changes - The company closed 64 underproductive stores last year, generating nearly $300 million in cash proceeds from asset sales [22] - The recapture rate of customers from closed stores was better than expected, contributing positively to overall sales [22] Company Strategy and Development Direction - The "Bold New Chapter" strategy aims to improve the quality of the enterprise over three years, focusing on reimagining the Macy's nameplate and enhancing customer experience [10][11] - The strategy includes closing underperforming stores, increasing staffing in key areas, and leveraging AI for operational efficiency [13][19] - The company is committed to being a multi-category, multi-brand, and multi-price point retailer to adapt to changing consumer preferences [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainty in the macro environment but expressed confidence in the execution of their strategy [14] - The company expects a more choiceful consumer in the upcoming seasons, embedding prudency in their guidance for the fall [36] - Management believes that the current environment will likely lead to market share consolidation, with Macy's positioned as a healthier retailer [40] Other Important Information - The company is focusing on enhancing its private brand portfolio, with new brands introduced and existing ones refreshed [57][58] - Macy's is actively managing inventory levels, with a 1% decrease in inventory in Q2, positioning itself well for future sales [54] Q&A Session Summary Question: Can you discuss the impact of the Bold New Chapter strategy? - The strategy has led to positive comp growth and improved customer experience, with a focus on staffing and store presentation [10][11] Question: What are the expectations for the environment into the back half of 2025? - Management expects a more choiceful consumer and has embedded a prudent guide for the fall season [36] Question: How do you expect tariffs to impact profitability? - Tariffs are expected to have a 40 to 60 basis point impact on gross margin, with ongoing efforts to mitigate these costs [43][44] Question: What trends are seen in the off-price business? - The off-price business remains healthy, with no signs of trade down among consumers [31] Question: How is the company managing inventory? - Inventory was down 1% in Q2, with a focus on maintaining a clean composition and responding to consumer demand [54] Question: What are the plans for pricing in the remainder of the year? - Pricing will be managed judiciously, with a focus on serving the customer while considering cost pressures [48][60]

Core Insights - Rush Street Interactive, Inc. (RSI) has appointed Shubham Tyagi as Chief Technology Officer (CTO) to enhance its technology capabilities and innovation in the online gaming sector [1][5] Company Overview - RSI is a leading online casino and sports betting company operating in the United States, Canada, and Latin America, with brands such as BetRivers, PlaySugarHouse, and RushBet [6] - The company offers real-money mobile and online operations in fifteen U.S. states and several international markets, including Colombia, Ontario, Mexico, and Peru [6] - RSI has received multiple awards for its customer service and operational excellence, including the EGR North America Awards for Customer Services Operator of the Year from 2020 to 2024 [6] Leadership Appointment - Shubham Tyagi brings over 20 years of experience in leading global technology organizations across various sectors, including media, entertainment, and sports [2][3] - Prior to joining RSI, Tyagi served as CTO for Warner Bros. Discovery (WBD) - Sports, where he managed a global sports digital portfolio and led engineering teams across more than 20 platforms [3][4] - His leadership style emphasizes building trust and driving alignment, which aligns with RSI's commitment to innovation and player-first experiences [3][5] Strategic Direction - The appointment of Tyagi is part of RSI's strategy to invest in top-tier senior leadership, following recent strategic hires in marketing, product, and data leadership [5] - The company aims to develop advanced technical solutions that enhance player experiences and drive growth in the online gaming market [5]