Core Insights - Macy's, Inc. reported third-quarter fiscal 2025 results with both top and bottom lines exceeding Zacks Consensus Estimates, despite a decrease in net sales and an increase in earnings compared to the previous year [1][3] - The company has raised its fiscal 2025 outlook, reflecting confidence in its strong balance sheet and diversified brand portfolio [2][12] Financial Performance - Adjusted earnings were reported at 9 cents per share, surpassing the Zacks Consensus Estimate of a loss of 13 cents, and increased from 4 cents in the year-ago quarter [3] - Net sales reached $4,713 million, exceeding the consensus estimate of $4,595 million, although this represented a 0.6% decline from the previous year [4] - Comparable sales increased by 2.5% on an owned basis and 3.2% on an owned-plus-licensed-plus-marketplace basis [4][5] Brand Performance - Comparable sales for the Macy's brand rose 1.4% on an owned basis and 2% on an owned-plus-licensed-plus-marketplace basis [6] - Bloomingdale's brand saw a significant increase in comps of 8.8% on an owned basis and 9% on an owned-plus-licensed-plus-marketplace basis, marking its fifth consecutive quarter of growth [6] - Bluemercury brand reported a 1.1% increase in comps on an owned basis, achieving its 19th consecutive quarter of growth [6] Margins and Expenses - Gross margin for the fiscal third quarter was 39.4%, beating the estimate of 39%, but down 20 basis points from the previous year due to tariff impacts [7] - Selling, general and administrative (SG&A) expenses were $2.02 billion, down 1.9% year over year, reflecting cost discipline and savings from closed stores [8][9] - Adjusted EBITDA was reported at $285 million, down 4.4% from $273 million in the year-ago quarter, with an adjusted EBITDA margin of 5.8%, up 20 basis points year over year [9] Financial Snapshot - The company ended the fiscal third quarter with cash and cash equivalents of $447 million, long-term debt of $2.43 billion, and shareholders' equity of $4.33 billion [10] - Merchandise inventories increased by 0.7% year over year, and net cash provided by operating activities was $247 million for the first nine months of fiscal 2025 [10] Share Repurchase and Asset Sales - In the third quarter, Macy's repurchased 2.8 million shares for $50 million, with $1.2 billion remaining under its $2 billion share repurchase authorization [11] - Asset sale gains were reported at $12 million, down from $66 million in the prior period, as the company continues to focus on closing underperforming stores [11] Fiscal 2025 Guidance - The company updated its annual outlook, raising net sales expectations to $21.48-$21.63 billion from $21.15-$21.45 billion [12][13] - Comparable owned-plus-licensed-plus-marketplace sales are now expected to be flat to up 0.5%, an improvement from the previous expectation of a decline [13] - Adjusted earnings per share are anticipated to be between $2.00 and $2.20, up from the prior range of $1.70-$2.05 [14]

Financial Data and Key Metrics Changes - Macy's Inc. achieved comparable sales growth of 1.9%, with adjusted EPS of $0.41, exceeding guidance of $0.15 to $0.20 [5][18][23] - Net sales were $4.8 billion, down 2.5% year-over-year, primarily due to the closure of 64 non-GoForward stores [18][19] - Gross margin was 39.7% of net sales, slightly better than expectations, impacted by proactive markdowns and tariffs [21][22] Business Line Data and Key Metrics Changes - Macy's brand achieved 1.2% comparable sales growth, driven by GoForward locations which rose 1.5% [6][19] - Bloomingdale's reported a 5.7% increase in comparable sales, marking its fourth consecutive quarter of growth [11][12] - Bluemercury achieved 1.2% comparable sales growth, its 18th consecutive quarter of gains, driven by skincare and new brand launches [13][14] Market Data and Key Metrics Changes - The luxury market remains competitive, but Bloomingdale's is gaining market share through brand expansions and digital growth [12][81] - The consumer remains resilient, with a notable portion of Macy's customer base earning over $100,000 household income [47][48] Company Strategy and Development Direction - The "Bold New Chapter" strategy focuses on enhancing customer experience, expanding product offerings, and optimizing operations [5][14] - The company is investing in Reimagined 125 stores, which have shown positive performance and customer satisfaction [40][41] - Future growth will be supported by expanding private brands and leveraging partnerships with market brands [52][56] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the consumer's resilience but remains prudent due to potential tariff impacts [14][46] - The company anticipates a tariff impact of 40 to 60 basis points on gross margin, adjusting pricing strategies accordingly [25][42] - The outlook for the third quarter and full year includes a cautious view on consumer demand and potential impacts from tariffs [24][25] Other Important Information - The company returned $251 million to shareholders through dividends and share repurchases, with $1.2 billion remaining on the buyback authorization [23][24] - Management emphasized the importance of maintaining a healthy balance sheet and liquidity profile to navigate market challenges [29] Q&A Session Summary Question: Drivers of sequential improvement in same-store sales - Management noted strong growth across various categories, with July being the strongest month, driven by back-to-school shopping [33][34] Question: Learnings from Reimagined 125 stores and expansion plans - Positive performance was noted in both the first and next 75 Reimagined stores, with local empowerment being a key factor [39][40] Question: Consumer sentiment and pricing strategies amid tariffs - Management sees the consumer as resilient but choiceful, with a cautious approach to pricing adjustments based on category performance [46][47] Question: SG&A savings and growth opportunities - SG&A was down nearly $30 million, with continued savings expected in the second half while reinvesting in growth initiatives [60][61] Question: Impact of tariffs on gross margin and future guidance - Tariffs had a notable impact in Q2, with management focused on mitigation strategies and maintaining competitive pricing [80][83] Question: Investments in service and balancing growth with SG&A leverage - Management is committed to investing in customer-facing initiatives while managing costs effectively to drive growth [94][95]