Macy's(M) - 2025 FY - Earnings Call Transcript

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]