Macy’s (M 0.86%), the storied department store chain behind the iconic Thanksgiving Day Parade, released its second-quarter fiscal 2025 earnings on Sept. 3, 2025. The company posted net sales of $4.81 billion and adjusted earnings per share (EPS) of $0.41, exceeding management’s guidance range of $0.15 to $0.20 (provided in the Q1 report). Comparable sales, a crucial industry gauge that includes owned, licensed, and marketplace transactions, increased 1.9% (non-GAAP). While adjusted profitability beat forecasts, there were pockets of weakness, including a year-over-year decline in net sales and an 80-basis-point drop in gross margin.
Overall, the quarter showed clear progress in Macy’s transformation efforts, but management signaled ongoing caution about promotional activity and cost pressures heading into the back half of the year.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| Adjusted EPS | $0.41 | $0.53 | (22.6%) |
| Net sales | $4.81 billion | $4.94 billion | (2.5%) |
| Adj. EBITDA | $393 million | $438 million | (10.3%) |
| Gross margin | 39.7% | 40.5% | (0.8) pp |
Source: Macy's.
Macy’s Business Overview and Key Drivers
Macy’s is a leading retailer in the United States, operating under the Macy’s, Bloomingdale’s, and Bluemercury brands. It sells apparel, accessories, cosmetics, and home goods through about 680 physical stores and online platforms.
Macy’s has been focused on modernizing its physical stores, expanding its digital marketplace, and growing its luxury concepts. The most important success factors today are its ability to blend seamless digital and in-store experiences, right-size its store base, develop exclusive private label products, and control operating costs as retail competition intensifies.
Quarter in Detail: What Drove the Results
Macy’s delivered a quarter that comfortably beat internal forecasts on both revenue and earnings. Net sales (GAAP) of $4.81 billion were above the high end of company guidance, even as the overall figure slipped 2.5% from the prior year. Adjusted EPS of $0.41 was also above the company’s forecast, though down from $0.53 in the year-ago period, as higher costs and margin pressures filtered through. The company’s “comparable sales” measure -- tracking like-for-like sales across physical stores and digital channels -- rose 1.9% on a mix of owned, licensed, and marketplace sales. This marked a sharp improvement from the negative 2.9% figure in Q2 FY2024 (owned-plus-licensed-plus-marketplace), and represented the best comparable sales growth for Macy’s in 12 quarters.
Performance was especially strong in several areas. The company’s “Reimagine 125” store locations -- which have undergone modernization -- outperformed the broader Macy’s base, posting 1.1% comps (owned) and 1.4% (owned and licensed). The Bloomingdale’s luxury banner recorded net sales up 4.6%, with comps up 5.7% when including licensed and marketplace deals. Bluemercury, the beauty-focused brand, extended its streak to 18 consecutive quarters of comp growth with a 1.2% comp increase (owned only). Management credited a combination of refreshed merchandise, targeted promotions, and digital expansion for these improvements.
That said, the quarter was not without its headwinds. Gross margin dropped to 39.7% from 40.5% in Q2 FY2024, its second consecutive quarterly decline. The company attributed this primarily to “proactive markdowns” on unsold early spring merchandise and the continued impact from U.S. tariffs on China-sourced products. Selling, general and administrative (SG&A) expenses fell $29 million in dollar terms, reflecting cost-cutting and the closure of underperforming stores. However, because costs did not fall as quickly as sales. GAAP net income declined from $150 million in Q2 FY2024 to $87 million, and operating income margin shrank from 4.4% to 3% year over year.
Other revenue, driven mainly by the company’s credit card partnership, grew 17.6% to $187 million. Credit card revenue rose 22.4% to $153 million, suggesting stronger consumer use. Macy’s Media Network, the company’s retail media platform that sells online ad space, was flat year over year at $34 million. The sale of real estate contributed $16 million, down from $36 million in Q2 FY2024.
On the balance sheet, Macy’s showed healthy progress. Merchandise inventories decreased 0.8% year over year, reflecting continued inventory discipline. Cash and equivalents increased to $829 million while total debt fell to $2.6 billion, thanks to proactive refinancing moves, including redeeming older notes to push out maturity risk. The company returned $50 million to shareholders via dividends and bought back $50 million of its shares, with $1.2 billion in remaining authorization. The quarterly dividend of $0.1824 per share was maintained. Capital expenditures for the first half of FY2025 were $343 million, down 21% compared to the first half of FY2024.
Operational Focus: Segments and Strategy in Motion
All three main business banners posted positive comparable sales -- a noteworthy shift from the recent past. The Macy’s brand, which accounts for the company’s largest footprint, posted a 1.2% comp gain (including licensed and marketplace sales). The refreshed Reimagine 125 stores continued to outperform the broader Macy’s base, while Bloomingdale’s and Bluemercury drove significant growth through exclusive partnerships and premium product offerings, with comparable sales up 3.6% and 1.2% respectively. The luxury banners garnered stronger consumer demand, but represent a smaller portion of total sales.
Digitally enabled selling remains a cornerstone of Macy’s strategy, though the company did not disclose specific digital sales percentages this quarter. The improvement in comparable sales, which now includes digital and third-party marketplace transactions (on an owned-plus-licensed-plus-marketplace, or O+L+M, non-GAAP basis), was reported. Management described its position as a “multi-brand, multi-category, omni-channel retailer,” meaning it aims to deliver a consistent experience whether shoppers are online, in-store, or a mix of both. Investments continue in improving the online marketplace, exclusive product launches, and customer experience programs that bridge store and digital engagement.
Cost and inventory management have grown in importance as Macy’s deals with heightened competition and a promotional retail environment. The company executed markdowns to manage older seasonal inventory, which helped control product levels but weighed on gross margins. Ongoing tariffs on China-sourced goods continued to pressure costs, a risk management flagged for the back half of the year as well. Supply chain flexibility and proactive sourcing will be vital for future quarters, particularly if promotional pressures continue in the holiday season.
Private label brands remain a strategic priority. But in prior quarters, management emphasized ongoing efforts to reduce tariff exposure and invest in the exclusivity and relevance of these lines. Supply chain reconfiguration and vendor renegotiation should help further, though much depends on consumer demand and competitive activity in the coming quarters.
Looking Ahead: Revised Guidance and Investor Watchpoints
Based on second-quarter results, management raised its full-year sales and earnings guidance. Net sales (GAAP, FY2025 guidance) are now projected between $21.15 billion and $21.45 billion, up from the previous range of $21.0 billion to $21.4 billion. Adjusted diluted EPS is guided to $1.70–$2.05 for FY2025, above the prior $1.60–$2.00 range. However, leadership added a clear note of caution: the outlook assumes “the consumer is more choiceful in the second half” and anticipates ongoing promotional intensity and the margin impact of tariffs. EBITDA margin guidance— which measures adjusted earnings before interest, tax, depreciation, and amortization as a share of total revenue — remained unchanged, demonstrating cautious optimism but no expectation for relief on margin pressures just yet.
For the rest of fiscal 2025, investors should pay close attention to how Macy’s manages gross margin (as defined under GAAP as net sales less cost of sales) amid discounts, ongoing tariff exposure, and changes in shopping behavior, especially during the important holiday season. The performance of digital initiatives, fresh store concepts, and the ability of the core Macy’s brand to sustain positive comparable sales will be critical to watch. The company will also be monitored for its approach to capital allocation, including potential share repurchases with the remaining authorization.
Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
