M — Macy's, Inc.

Summary of Macy's, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Net Sales: Increased by 1.8% to $4.7 billion, exceeding guidance of $4.575 billion to $4.625 billion.
• Comparable Sales: Rose by 3%, the strongest first quarter since 2022; go-forward Macy's comps increased by 3.1%.
• Adjusted EBITDA: $290 million (5.9% of total revenue), surpassing guidance of 4.9% to 5.1%.
• Adjusted EPS: Reported at $0.13, significantly above the expected range of a loss of $0.01 to a gain of $0.01.
• Gross Margin: 38.9%, slightly down from 39.2% last year; flat when excluding a 30-basis-point tariff impact.
• Operating Cash Flow: Positive inflow of $292 million compared to an outflow of $64 million last year.
• Free Cash Flow: Inflow of $140 million, a significant improvement from an outflow of $203 million last year.

2. Strategic Updates and Business Highlights

• Bold New Chapter Strategy: Continued momentum with positive results across all key metrics and nameplates. Macy's achieved its best comparable sales in four years.
• Reimagine 200 Initiative: Expanded to 200 locations, contributing to positive sales growth; these stores represent 60% of Macy's go-forward locations.
• Digital Enhancements: Introduction of "Ask Macy's," an AI-powered shopping assistant, received favorable initial responses.
• Luxury Segment Growth: Bloomingdale's saw a 10.2% comp increase, marking its highest first-quarter sales in history.
• Bluemercury Performance: Comparable sales growth of 6.4%, driven by strong demand in makeup and skincare.

3. Forward Guidance and Outlook

• Second Quarter Guidance: Expected net sales of approximately $4.75 billion to $4.8 billion, with comparable sales projected to be flat to up 1%. Adjusted EBITDA expected at 6.9% to 7.2%, and adjusted diluted EPS between $0.29 to $0.34.
• Full Year Guidance: Raised to $21.5 billion to $21.75 billion in net sales, with comparable sales growth anticipated between 0.5% to 1.2%. Adjusted diluted EPS forecasted at $2 to $2.20, factoring in tariff and fuel cost impacts.

4. Bad News, Challenges, or Points of Concern

• Softness in Certain Categories: Notable declines in big-ticket home items, particularly furniture, and challenges in the plus-size segment.
• Tariff and Fuel Costs: Expected to have a combined negative impact on EPS of approximately $0.03 to $0.04 and a 20- to 40-basis-point impact on gross margin.
• Competitive Pressures: Ongoing geopolitical and macroeconomic uncertainties could affect consumer demand and competitive landscape.

5. Notable Q&A Insights

• Traffic Consistency: Management noted consistent traffic throughout Q1, with a focus on balancing AUR growth and conversion rates.
• Cross-Functional Collaboration: Enhanced collaboration between Macy's and Bloomingdale's is driving positive results, with efforts to maintain brand uniqueness while leveraging shared insights.
• AI Utilization: Early positive results from the "Ask Macy's" initiative, with plans to expand AI applications across the business.
• Marketing Strategy: Recognition of the need for better communication of brand changes and enhancements to attract customers, particularly in light of upcoming major events like the 100th Macy's Thanksgiving Day Parade.

Overall, Macy's demonstrated strong performance in Q1 2026, with positive sales growth and strategic initiatives gaining traction, despite facing challenges in certain categories and external cost pressures. The company remains optimistic about its future trajectory, supported by a solid balance sheet and proactive management strategies.