Macy’s (M) Q2 2025 earnings summary

Executive summary

• Net sales for Q2 2024 declined 3.8% year-over-year to $4.9B, but gross margin improved to 40.5% and adjusted diluted EPS rose to $0.53, exceeding expectations.

• Macy's First 50 locations outperformed with positive comparable sales, while Bluemercury delivered its 14th consecutive quarter of growth.

• The company is executing the "Bold New Chapter" strategy, focusing on store rationalization, digital growth, and luxury expansion.

• Net income for Q2 2024 was $150M, reversing a net loss of $22M in Q2 2023.

• Ongoing investments in digital, technology, and omni-channel capabilities, with $432M in capital expenditures in the first half of 2024.

Financial highlights

• Q2 2024 net sales: $4.9B, down 3.8% year-over-year; total revenue: $5.10B.

• Gross margin rate improved to 40.5% (up 240 bps); SG&A expense rate was 38.7% of revenue.

• Adjusted EBITDA for Q2 2024 was $438M, up from $347M in Q2 2023; operating income rose to $222M.

• Net cash from operations was $137M; free cash flow was an outflow of $244M; $96M paid in dividends.

• Inventories increased 6% year-over-year, partly due to cost accounting changes.

Outlook and guidance

• FY24 net sales expected at $22.1–$22.4B, with comparable sales down 2% to down 0.5%; luxury nameplates up 0.5% to 2%.

• FY24 adjusted diluted EPS guidance reaffirmed at $2.55–$2.90; gross margin rate 39%–39.2%; adjusted EBITDA margin 8.6%–9%.

• Q3 net sales expected at $4.7–$4.82B; gross margin rate 40.3%–40.5%; adjusted EPS between a loss of $0.04 and earnings of $0.01.

• 2024 is a transition and investment year, with focus on margin enhancement and expense control.

• Guidance reflects a more cautious consumer and heightened promotional environment.