Macy’s Stock Falls on Mixed Q2: Earnings Beat and Guidance Raised, but Tariff Refunds Flatter Underlying Profit

Macy’s (NYSE:M) shares opened sharply lower Thursday, gapping down from Wednesday’s close of $21.51 to $20.25, even as the retailer delivered quarterly results that topped analyst estimates and lifted its full-year profit forecast. The stock was last trading at $20.9070 on volume of about 4.4 million shares.

For the fiscal second quarter, Macy’s reported earnings of $0.63 per share on revenue of $5.06 billion. Analysts had expected $0.37 per share and $4.81 billion in revenue, according to consensus figures cited in a MarketBeat report. Revenue rose 1.1% year over year.

Net sales increased to $4.9 billion, up 1.1% from $4.8 billion a year earlier, as detailed in the company’s earnings call transcript. Adjusted for the impact of 14 store closures completed at the end of last year, net sales rose 1.9%, according to Chief Operating Officer and CFO Tom Edwards.

The company raised its fiscal 2026 guidance, now projecting earnings per share of $2.15 to $2.35, above the $2.11 analyst consensus. Revenue guidance was increased to approximately $21.7 billion to $21.8 billion, versus expectations near $21.1 billion.

**Tariff Refunds Bolster Quarter**

The strong earnings beat was partly driven by a one-time benefit. Macy’s received $98 million in tariff-refund proceeds during the second quarter and an additional $18 million after quarter-end, for a total of $116 million. CFO Edwards said the company has received all expected refunds.

Approximately $20 million, or $0.05 per share, of the proceeds will flow to the bottom line, while the remainder will be reinvested in brand building, store pilots and mitigation of potential fuel headwinds. On the earnings call, executives said selective pricing investments will include furniture and fine jewelry.

The tariff refunds contributed roughly $0.23 per share to adjusted earnings. Excluding that benefit, adjusted EPS would have increased 14% from the prior year, Edwards said.

**Third-Quarter Outlook Falls Short**

The positive headline was tempered by a weaker-than-expected third-quarter view. Macy’s guided for third-quarter EPS of negative $0.23 to negative $0.19, below the consensus estimate of negative $0.12, even as projected revenue was broadly in line.

MarketBeat analysts attributed the stock’s decline primarily to the below-consensus near-term outlook, noting that investors may also be discounting the quality of the full-year profit increase because tariff refunds may not recur.

**Turnaround Shows Measurable Progress**

Chairman and CEO Tony Spring said the retailer delivered revenue growth, comparable-sales gains across every nameplate and channel, and better-than-expected results on key financial measures. “These results reflect the substantive enterprise-wide improvements we are making in our business that are resonating with our customers,” Spring said on the earnings call.

Comparable sales, including owned, licensed and marketplace sales, rose 2.7% on a reported basis, following 1.9% growth in the prior-year quarter. On a go-forward basis, comparable sales increased 2.8%. By banner, Macy’s comparable sales rose 1.1%, Bloomingdale’s comparable sales increased 11.3%, and Bluemercury comparable sales grew 6.2%.

Spring noted that Macy’s posted its fifth consecutive quarter of positive comparable-sales growth. The company’s 200 reimagined Macy’s stores generated 1.9% comparable-sales growth during the quarter and now represent nearly 60% of go-forward Macy’s stores and 75% of go-forward store sales.

Bloomingdale’s reported its highest second-quarter sales volume in its 154-year history, with growth across channels and categories. Bluemercury’s comparable sales increase of 6.2% was driven by its Summer Party marketing campaign and growth in dermatological skincare, makeup and fragrances.

**Margins Improve Under the Surface**

Gross margin improved to 41.5% of net sales from 39.7% a year earlier. Excluding tariff refunds and the impact of ongoing tariffs and fuel, the underlying gross-margin rate rose about 10 basis points, helped by favorable brand mix and benefits from the Reimagine 200 store program.

Adjusted EBITDA increased to $457 million, or 9% of total revenue, from $373 million, or 7.5% of revenue, in the prior-year period.

Macy’s now expects combined tariff and fuel costs to create a full-year gross-margin headwind of 5 to 15 basis points, an improvement from prior guidance for a 20- to 30-basis-point headwind. The company said tariffs are expected to be a year-over-year tailwind in the second half.

**Analyst Ratings and Insider Activity**

Several analysts updated their views on the stock following the results, according to MarketBeat. Evercore set a $22.00 price target, Citigroup raised its target to $24.00 with a “neutral” rating, Morgan Stanley reissued an “overweight” rating with a $30.00 target, and TD Cowen raised its target to $25.00 with a “hold” rating. Zacks Research upgraded Macy’s from “hold” to “strong-buy.” Overall, the stock holds an average rating of “Hold” and an average price target of $22.78, per MarketBeat.

In insider transactions disclosed in SEC filings, SVP Paul Griscom sold 10,077 shares at an average price of $25.63, reducing his position by 28.43%. EVP Thomas Edwards sold 16,419 shares at an average price of $24.89, a 45.08% reduction in his holding. Both sales were related to tax withholding obligations from equity vesting.

Macy’s also declared a quarterly dividend of $0.1915 per share, payable October 1 to shareholders of record September 15, representing a yield of 3.7% and a payout ratio of 31.82%.