With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

World's Most Admired Companies

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-164-Macys

Founded in 1858, the department store chain offers consumer goods such as apparel, accessories, and cosmetics. While the company, which also owns Bloomingdale's, has been closing unprofitable mall-based stores, first quarter 2021 sales jumped 56% year over year thanks to vaccinated shoppers getting back out there.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-120-Macys

The retailer, headquartered in New York City, is behind three retail brands: Macy's, Bloomingdale's, and Bluemercury.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

Fortune Global 500

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

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The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Macy’s is one of only two department store operators left on the U.S. stock markets, along with Dillard’s. Though the chain has struggled for years against discounters like T.J. Maxx and online rivals like Amazon, it is still a behemoth. The company operates 450 namesake department stores, along with the Bloomingdale’s and Bluemercury chains in the U.S. In 2024, it began a three-year rejuvenation program called Bold New Chapter, focused on building up its luxury business and simplifying its operations. The company has a few billion-dollar brands like Alfani, and is a major seller of brands like Nike and Ralph Lauren.

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Macy's (M): Company Profile, Stock Price, News, Rankings

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Macy's

macy's

Greetings, and welcome to the Macy's, Inc. second quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this call is being recorded. It is now my pleasure to turn the floor over to Caitlin Howe, Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, operator. Good morning, everyone, and thanks for joining us. With me on the call today are Tony Spring, our Chairman and Chief Executive Officer, and Tom Edwards, our Chief Operating Officer and Chief Financial Officer. Along with our second quarter 2026 press release, a Form 8-K has been filed with the Securities and Exchange Commission and a presentation has been posted on the Investors section of our website, macysinc.com, and is being displayed live during today's webcast. Unless otherwise noted, the comparisons we provide will be versus 2025. All references to our prior expectations, outlook, or guidance refer to information provided on our June 3rd, 2026 earnings call. On today's call, we will refer to certain Non-GAAP financial measures. Reconciliations of these measures can be found in our earnings presentation and SEC filings available on the Investor Relations section of our website.

All references to comp sales throughout today's prepared remarks represent comparable owned, plus licensed, plus marketplace sales, unless otherwise noted. All reported nameplate comp sales results are on a go-forward basis. Go-forward Macy's, Inc. comp sales include the approximately 350 go-forward store locations and digital for Macy's, which represents the Macy's go-forward nameplate, and all stores and digital for Bloomingdale's and Bluemercury, which represent their respective nameplates. All forward-looking statements are subject to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions mentioned today. A detailed discussion of these factors and uncertainties is contained in our filings with the SEC. Today's call is being webcast on our website. A replay will be available approximately two hours after the conclusion of this call.

Good morning, and thank you for joining us today. First, I would like to welcome Caitlin, our new VP of Investor Relations, to the team. Over the coming months, she will meet with many of you on the call today. We are so excited to have her on board. Now on to the results. We are encouraged by our strong performance in the second quarter, which reflects our continued momentum of the A Bold New Chapter strategy. We delivered revenue growth, comparable sales increases across all nameplates and channels, and better-than-expected performance across all key financial metrics. These results reflect the substantive enterprise-wide improvements we are making in our business that are resonating with our customers. Combined with consistent execution of our A Bold New Chapter initiatives, we are building a durable foundation that delivered second quarter results ahead of expectations. Macy's, Inc.

net sales, comparable sales, adjusted EBITDA, and adjusted diluted EPS all exceeded our guidance. Macy's nameplate delivered its fifth consecutive quarter of positive comps, led by the Reimagine 200. Bloomingdale's achieved double-digit comparable sales growth for the second consecutive quarter and its best second quarter sales volume on record. Bluemercury delivered another quarter of solid comparable sales growth. Our talented colleagues are driving this performance, and I want to take a moment to recognize all of them. They are the heart of our customer-led focus, powering the A Bold New Chapter. Through meaningful customer engagement and strong execution, our teams are making a difference every day and delivering tangible results. Now turning to a more detailed view of the quarter. Macy's, Inc. delivered comparable sales growth of 2.7%, our fifth consecutive quarter of comp sales growth. On a go-forward basis, our business continued to outperform, with Macy's, Inc.

comparable sales rising 2.8%. Adjusted EPS at $0.63 reflects both higher sales as well as the net benefit of tariff refunds received in the quarter. When excluding the net tariff refund benefit, adjusted EPS was 14% above the prior year and above the high end of our guidance. Now let's discuss how each pillar of the strategy contributed to our results, beginning with strengthening and reimagining Macy's. Macy's nameplate achieved positive 1.1% comparable sales, posting its fifth consecutive quarter of increases. This reflects a steady multiyear improvement. Macy's comp sales grew 230 basis points on a two-year stack, driven by sustained progress, enhanced brand offerings, product assortments, and omnichannel shopping experience. Our reimagined stores continued to outperform in the second quarter, sustaining that lead over several years. Earlier this year, we expanded the program to 200 locations, which delivered comp growth of 1.9% in the second quarter.

This performance reflects our customer-led focus and purposeful changes around staffing, events, and local market strengths. The result is five consecutive quarters of reimagined comparable sales growth with increases in nine of the last 10 quarters. Year after year, quarter after quarter, reimagined stores consistently perform higher on our net promoter score, contributing to continued improvement in NPS for the entire Macy's fleet. Our total Macy's fleet NPS score is up 10 full points since the initiation of the strategy, underscoring the strength of our customer-first approach. As a reminder, the reimagined locations account for nearly 60% of our go-forward Macy's stores and 75% of our Macy's go-forward store sales, and are now delivering meaningful scale to our overall business. These stores represent a clear proof point of our ability to drive growth, and we are confident we can continue to expand these initiatives going forward.

Our digital channel also contributed to positive comparable sales growth in the quarter. Results benefited from the halo of brand and assortment improvements and a shift to fashion authority positioning. In addition, we saw continued growth in our marketplace business, which provides complementary offerings and fills whitespace opportunity. Digital is a central component of our omni-channel approach. We are creating a seamless customer experience across all touch points and continue to enhance our digital offerings and connections across channels. Our new AI-powered conversational shopping assistant, Ask Macy's, was introduced last quarter on digital platforms as a starting point for discovery. We are now expanding this capability to our in-store colleagues to help deliver the best Macy's at every touch point. Turning to brand offerings, we are increasingly viewed as a valued partner to market brands, which are excited to work alongside our teams.

Our strong balance sheet, large addressable market, and loyal customer base are attractive differentiators that further strengthen our vendor relationships. In the quarter, we continued to make progress on our brand curation, adding new brands and expanding distribution for others. One good example is Kiko Milano, a trendsetting Gen Z Italian beauty brand. Kiko Milano chose Macy's for its exclusive U.S. launch of their popular beauty line. We also introduced The Happy Camp3r junior apparel line and further expanded the store distribution of Reiss, Rodd & Gunn, and Boss, among others. Our multi-category model provides product and price optionality and diversification. It gives us the ability to lean into areas of opportunity and chase important trends, providing more reasons for customers to shop with us. In the second quarter, we continued to see outperformance in watches, dresses, petites, career sportswear, kids, handbags, fragrances, and men's and women's shoes.

We experienced softer trends in plus sizes, intimates, and women's sleepwear. We did see improvement for our big ticket category compared to the prior quarter, but it remains soft versus the prior year. From a marketing and event perspective, we continued to engage with customers and leverage the strength of our brand as part of Macy's year of celebrations. This summer, we hosted our biggest Macy's 4th of July Fireworks yet, celebrating the event's 50th anniversary with America's 250th. Over 11 million people tuned in to watch the live event, setting a new record, up nearly 60% from last year. The star-studded event featured performances by Noah Kahan, Post Malone, Salt-N-Pepa, Bebe Rexha, Shaboozey, and Blake Shelton. We also leveraged the reach of this national event to drive in-store traffic through local activations, celebration Saturdays, and fireworks-themed marketing.

Summing up the Macy's nameplate, we are pleased with our continued growth, reflecting the positive consumer response to our offerings and initiatives. Now, turning to the second pillar of our A Bold New Chapter strategy, accelerating and differentiating luxury. Bloomingdale's delivered another impressive quarter, achieving positive 11.3% comparable sales and the highest second quarter sales volume in its 154-year history. This performance was driven by growth in all channels, markets, and categories, and is a testament to the brand's progress as the omni-channel local leader in the markets we serve. In addition, Bloomingdale's performance highlights a significant step change with comp sales up almost 1,700 basis points on a two-year stack. These results reflect Bloomingdale's differentiated and unique positioning from premium contemporary to luxury. We continue to raise the bar on our curation with a clear emphasis on discovery, newness, and experiences.

Looking at the second quarter category performance, we saw growth in all areas with outperformance in ready-to-wear, men's apparel, fine jewelry, fragrances, and tabletop. We grew our customer base and continued to expand the reach of our very important client program, which focuses on our highest-spending customers. Bloomingdale's continues to deepen brand partnerships, expanding the breadth of our offerings during the second quarter. We introduced several new brands, including Ulla Johnson, Proenza Schouler, and Dries Van Noten. We also expanded distribution of James Perse, Chanel Fine Jewelry and Watches, Christian Louboutin, and Prada shoes. Our compelling brand assortment evolution continues to engage existing customers and attract new ones, strengthening Bloomingdale's cultural relevance. Looking at the customer experience, there are several initiatives to support our loyal customer base. First, we are expanding our widely popular in-store events, holding hundreds of events across the majority of our stores during the quarter.

In addition, we launched Bloomingdale's own AI-powered conversational shopping assistant for digital, which enhances how customers engage with the brand and discover products. This rollout also highlights the power of leveraging enterprise-wide capabilities across Macy's, Inc. to enhance the customer experience across nameplates. Summing up Bloomingdale's, we are encouraged by the brand momentum and the ongoing growth potential. Our strategic initiatives position us to continue to gain market share across brands, categories, and regions. Turning to Bluemercury, we are pleased to welcome Alex Choueiri as the new Chief Executive Officer. Alex brings extensive experience in beauty, luxury strategy, and retail to our team, and joins at an exciting time to help guide Bluemercury's next phase of growth. Bluemercury delivered another quarter of solid comparable sales with growth of 6.2%. Results were driven by our in-store marketing campaign, Summer Party, which drove strong customer engagement.

From a product perspective, growth was led by dermatological skincare, makeup, fragrances, including brands such as SkinCeuticals, Victoria Beckham Beauty, La Mer, and Jo Malone. Both new and remodeled stores continued to perform well. The final pillar of our strategy is simplifying and modernizing end-to-end operations, which was recently expanded to incorporate optimizing and scaling enterprise-wide organizational excellence. We are focused on harnessing the extensive reach and capabilities of Macy's, Inc. to support revenue growth, improve customer experiences, and execute our strategies even more effectively. These efforts include supply chain efficiencies, with additional savings expected in the second half of the year and included in our outlook. We are also actively advancing our AI and automation capabilities in areas such as the customer journey, inventory management, and localization, while ensuring that the human connection remains central to our customers and to our colleagues.

Now, I would like to discuss our thoughts on the consumer, upcoming events, and guidance. Our consumers remained resilient and engaged in the second quarter, responding positively to newness across our product offerings and our lineup of marketing and events. Across nameplates, we continue to skew toward middle and upper-income consumers, where performance remains stronger. For the third quarter, we are delivering a strong slate of events. For Macy's, this includes our fall fashion campaign, Celebrate American Designers. This week, we launched our exclusive capsule collections featuring six of the most influential voices in American fashion, including icons Tommy Hilfiger, Donna Karan, and Michael Kors, and the new guard, Edvin Thompson, Sally LaPointe, and Jonathan Cohen. We are also building up to our marquee event of the year, our 100th Macy's Thanksgiving Day Parade.

We have already kicked off the 100-day countdown with a compelling set of activations designed to engage consumers and generate excitement leading up to the parade. At Bloomingdale's, we just launched our fall campaign named Hotel Bloomingdale's. This features exclusive products and immersive brand activations and includes a special partnership with The Ritz-Carlton Hotels. We're excited for this collaboration, which brings together two iconic brands that share a commitment to exceptional service and elevated experiences. Turning to guidance, today we are raising our full-year outlook reflecting our better results and confidence in the A Bold New Chapter strategy, as well as a pass-through of a portion of our tariff refunds. Consistent with our past practice, we are taking a prudent approach that provides the flexibility to respond to potential changes in the competitive landscape and consumer demand.

Regarding tariff refunds, we received the majority in the second quarter and are taking a balanced approach to deploy the benefits. We are flowing through a portion to the bottom line and reinvesting the remainder to support the A Bold New Chapter strategy and our long-term growth ambition. We'll continue to ensure we deliver for our customer. In closing, I'm encouraged by our results. This performance reinforces our confidence that the A Bold New Chapter continues to gain momentum. Our initiatives are resonating, highlighted by six consecutive quarters of better-than-expected results, five consecutive quarters of comparable sales growth, and two consecutive quarters of net sales growth. This reflects the strength across Macy's, Bloomingdale's, and Bluemercury and underscores the benefits of being a multi-brand, multi-category, and multi-channel retailer serving customers from off-price to luxury.

Combined with a strong financial position, we are building a durable foundation that positions the company to deliver sustainable, long-term, profitable growth. With that, let me turn it over to Tom.

Thank you, Tony, and good morning, everyone. In the second quarter, the A Bold New Chapter continued to deliver strong financial and operational results. Our strategies are gaining traction, driving top and bottom-line performance. These results are made possible by the skillful execution and customer focus of our dedicated colleagues and teams across the company. Looking at a detailed view of the quarter, beginning with Macy's, Inc., net sales grew 1.1% to $4.9 billion, compared to $4.8 billion last year. Net sales grew 1.9%, adjusting for a roughly $35 million impact from the 14 store closures at the end of last year. Comparable sales on a reported basis rose 2.7% on top of 1.9% growth last year, and go-forward comps grew 2.8%. By nameplate, Macy's comparable sales rose 1.1%. We continue to be encouraged by the performance of the Reimagine 200 locations, which grew 1.9%.

Bloomingdale's comparable sales were up 11.3%, and Bluemercury comparable sales increased 6.2%. Total revenue rose 1.2% to $5.1 billion. On a go-forward basis, total revenue increased 2% to $4.9 billion. Other revenue, which includes credit card and Macy's Media Network, was $193 million, up 3% versus last year. Within that, credit card revenue was $156 million, up 2%, supported by a healthy credit portfolio and stable net credit card losses. Macy's Media Network revenue was $37 million, up 9%, reflecting partner engagement on our advertising platform. Gross margin was $2 billion, or 41.5% of net sales, compared to 39.7% last year. Excluding both the net tariff refund benefit and the incremental impact of ongoing tariffs and fuel, our underlying gross margin rate increased approximately 10 basis points versus last year.

Underlying gross margin expansion was driven by favorable brand mix as well as the continued benefits of Reimagine 200 expansion, partially offset by channel mix. Ongoing tariff and fuel costs impacted the quarter by approximately 10 basis points, which was favorable to our prior estimate of 20 basis points-40 basis points, driven by lower tariffs. Our SG&A rate was 38.7%, an improvement from 38.9% last year, reflecting leverage on higher sales. SG&A dollars of $1.96 billion were 1% above prior year of $1.944 billion, reflecting higher variable costs driven by sales growth, as well as investments in A Bold New Chapter initiatives, partially offset by our always-on approach to expense savings. Adjusted EBITDA was $457 million, or 9% of total revenue, compared to $373 million, or 7.5% of total revenue last year. Adjusted EPS of $0.63 compared to prior year second quarter of $0.35.

Second quarter results included a roughly $0.23 net tariff refund benefit. Excluding the net tariff refund benefit, adjusted EPS would have been up 14% versus prior year and above the high end of our guidance. Our disciplined approach to cash flow generation and balance sheet management continues to support our strong financial position. During the first half, operating cash flow was an inflow of $586 million versus $255 million last year. Free cash flow was an inflow of $262 million versus an outflow of $88 million last year. End of quarter inventory dollars were up 2.5% compared to last year, in line with our expectations and comp sales growth. We believe the composition and level of inventories are well-positioned heading into the fall season, with a good balance of newness and evergreen product.

In the first half of 2026, we returned $201 million to shareholders through $101 million of quarterly cash dividends and $100 million of share repurchases, including $50 million during the second quarter. This leaves approximately $1 billion remaining on our buyback authorization. Capital expenditures were $324 million, compared to $343 million in the prior year. Monetization proceeds were $35 million, compared to $75 million last year. We ended the quarter with $1.3 billion of cash on our balance sheet, compared to $829 million last year. Now, I would like to provide some additional perspective on our end-to-end initiatives and efforts to optimize and scale enterprise-wide organizational excellence. Two examples of these efforts highlight our focus on building efficiency and improving the customer experience. The first relates to delivering products to our customers.

We have made significant enhancements over the past years, and this fall we will continue to improve service times, provide more transparency around order status, and reduce costs. In addition, the ramp-up at China Grove continues to progress, and over time, we believe the automation improvements will support faster, more reliable service for customers and a more scalable operating model. Another example of our end-to-end initiatives is focused on inventory replenishment, a critical area centered on having the right product in the right place at the right time. We are adding an AI forecast overlay capability to replenishment, moving from pilot to broader execution to improve in-stocks and deploy our inventory more efficiently. In total, we expect to realize supply chain efficiencies in the second half of 2026, which will benefit gross margin.

Looking further ahead, we are confident we can build on these and other initiatives to drive revenue, improve the customer experience, and reduce costs. Before moving to detailed guidance, I would like to discuss our tariff and fuel outlook for the year. Second quarter tariff impacts were lower than anticipated. For the second half of 2026, we now anticipate tariffs being a tailwind compared to the prior year.

For fuel and transportation costs, we are factoring in the current outlook based on what we know today. We now forecast full year combined tariff and fuel gross margin net headwind of 5 basis points-15 basis points, compared to prior guidance of 20 basis points-30 basis points. Turning to tariff refunds, in the second quarter, we received $98 million of proceeds and $18 million following quarter end for a total of $116 million. We have now received all of our expected refunds.

We are taking a balanced approach to deploying the proceeds to both the bottom line and for reinvestment. From an EPS perspective, we are flowing through approximately $0.05 to the bottom line, representing about $20 million. We are using the remaining funds to invest in Macy's brand building, accelerate reimagined store pilots to support 2027 program expansion, strengthen our value proposition, and mitigate the uncertainty of fuel headwinds. Now moving to guidance. For the full year, we are raising our outlook on the top and bottom lines. From a sales perspective, we are flowing through the entire second quarter outperformance and are maintaining second half sales consistent with our prior outlook. Our EPS assumptions reflect our better results and confidence in the A Bold New Chapter strategy, as well as a pass-through of a portion of our tariff refunds.

Consistent with our past practice, we are taking a thoughtful approach to quarterly and annual guidance, allowing us to respond to changes in the macroeconomic and geopolitical environment. Looking at detailed third quarter guidance, we expect net sales of $4.65 billion-$4.7 billion. Last year's store closures contributed about $30 million to sales in the comparable period. Comparable sales of down 0.5% to up 0.5%. Adjusted EBITDA as a percent of total revenue of 3.7%-4.0%. Adjusted diluted EPS of a loss of $0.19-$0.23. It's important to note that our outlook includes disciplined reinvestment of tariff refunds, which nets to approximately $0.18 of EPS in the second half of 2026. For more details, please see slide 23 of our earnings presentation. For the full year, we increased net sales to $21.675 billion-$21.825 billion.

Store closures contributed roughly $145 million to net sales in the prior year. Comparable sales of up 1.0%-1.5%. Other revenue of $920 million. Gross margin as a percent of net sales of 38.5%-38.7%. SG&A up 1.5%-2.25% on a U.S. dollar basis compared to last year. Adjusted EBITDA as a percent of total revenue of 7.8%-8.0%. Interest expense of roughly $90 million. We have increased our adjusted diluted EPS to $2.15-$2.35. In summary, we are pleased with second quarter performance as we continue to deliver and execute the A Bold New Chapter strategy. We are well-positioned to navigate the near-term environment, and we remain focused on executing our strategic initiatives to deliver long-term profitable growth. This is supported by our healthy balance sheet and disciplined approach to investment and capital allocation.

Now let me turn the call back to Tony for closing remarks.

Thanks, Tom. In closing, the second quarter is another proof point for the A Bold New Chapter and our ability to deliver growth. Our strategy is gaining traction, and we're excited to continue to scale the initiatives that are resonating so well with the customers. Looking at the back half, we are well positioned for the fall and holiday seasons, and longer term, we're focused on building on our progress, delivering for our customers, and increasing shareholder value. With that operator, we're now ready for questions.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. In the interest of time, we do ask that you please limit yourself to one question and one follow-up. Again, that's star one to register a question at this time. Today's first question is coming from Blake Anderson of Jefferies. Please go ahead.

Good morning. Congrats on a nice quarter. I wanted to start off with, it sounded like you held the second half sales expectations mostly despite the Q2 outperformance. Can you provide any color on the quarter to date comp versus the flat guide at the midpoint, which implies a step down? How much of this is recent run rate versus maybe prudence for the macro or a tougher compare? Any color you can provide there or other puts and takes for Q3 comp would be helpful.

Sure. Thanks, Blake. Appreciate the question. We had a strong first quarter, second quarter. You saw that we beat guidance in both and we raised for the year each time. We look at the third quarter as being the strongest comp that we're up against for the year, 3.2%. There's actually a slight acceleration on a stacked basis. That being said, there is nothing unusual unfolding about the quarter. We sat here right after Memorial Day in the first quarter. We sat here right after Labor Day now in the second quarter. I feel exactly the same way. We have the right strategy, the right team, the right culture, the right execution. We're really well prepared. You go back a year ago, we were scrambling with tariffs and reforecasting the business and canceling orders and repricing merchandise.

We are focused solely on the customer and the quality of the experience. I think we have opportunity to obviously deliver beyond what we've guided. Tom?

Tony, I'd add that, Blake, we've raised our guidance now two quarters in a row. We started out the year at $1.90-$2.10, added $0.10 in Q1, and now an additional $0.15, and that really highlights the confidence we have in our business and in the Bold New Chapter. Your insight into the second half is exactly correct. When you take out all the puts and takes, our second half expectations are exactly in line with what we had at the prior quarter. We think that's important as we're moving forward, and look forward to talking more about that as we continue the call.

Great. Thank you. If I could ask you as a follow-up, wanted to unpack AUR a bit more. There are some moving factors there. You have made a lot of progress on accelerating AUR. How do we think about the AUR sustainability into the second half? How much runway do you have left for premiumizing brand mix and then maybe lower promotions despite what sounds like more price investments across the industry and perhaps with your tariff refunds as well?

Yeah, Blake, I think we have opportunity to continue to increase our AUR. It may not be at the rate that it has been for the last 12 months, but we can premiumize, whatever the right word is, our assortments across all three brands. The customer continues to respond most favorably to newness, to trends, to the expansion of brands, to additional points of distribution. I think you heard on the call the comments about brand expansions at both Macy's and Bloomingdale's, so that naturally is going to have a positive benefit to our AUR. But I think the other piece is making sure that we are not undershooting the customer's expectations. So there is an interest in buying certain products and certain brands, and when we have them, we can convert that to a higher AUR.

We are using a portion of the tariff refund to sharpen our pricing in a couple of categories, furniture and fine jewelry being two of them, where we want to make sure we are capturing our fair share of the business.

I would add, Blake, that AUR is really part of our broader model of building a healthier business. We saw AUR up in the quarter around 9%, and it is driven, as Tony mentioned, by more relevant brands, a refined assortment, a better omni-channel experience. Our traffic is very steady and very significant and predictable. We do see a slight offset in conversion, but our overall basket size has been higher and AUR trends growing. It has been a multi-year effort. We see this continuing over time and a big part of our model going forward.

Thank you. Best of luck for the back half.

Thank you. The next question is coming from Alex Straton of Morgan Stanley. Please go ahead.

Thanks so much, and congrats on a nice quarter. Tom, I just wanted to clarify quickly just on the updated full-year guidance. It is clear that your back half sales assumptions are the same as last quarter, but excluding tariffs, has your back half margin outlook evolved at all across gross or SG&A? I just have one quick follow-up.

Sure. Our back half margins are consistent with our prior outlook, so we do anticipate on the gross margin side expansion, and this is a little more weighted to Q4. In the prepared remarks, I referenced some supply chain activities and other initiatives that are improving our cost structure, as well as delivering importantly for the customer and providing better service and better transparency, as well as some AI initiatives that are helping us to forecast better and put the right inventory in the right place at the right time for areas like replenishment. So we see that coming to fruition in our highest volume quarter in Q4.

For SG&A, excluding the other puts and takes related to refunds, we had always noted that our investments would be made more in the third quarter, so we see higher SG&A investments in Q3, and that was part of our initial guide for the year, as well as in Q4, and that is part of supporting our A Bold New Chapter. That is more Reimagine stores as we expand it to Reimagine 200, supporting Bloomingdale's continued growth and other initiatives like digital. So the net is the same as it was before, and it is really investments to support A Bold New Chapter and delivering for our customer.

Perfect. That is super clear. Maybe turning to Reimagine, do you have any details that you can share around how the oldest Reimagine cohort, so the first 50, is performing today? I am just curious, as those stores mature, are you seeing the comp uplift strengthen? Is it holding steady or is it moderating? I would just love to understand how those stores are performing. Thanks a lot.

Sure. Alex, it's Tony. What we'd say is that all cohorts of stores are growing. Since we don't break out the individual year cohorts, I can't offer anything more specific than that. I think what's exciting is that all cohorts are growing and that the stores continue to benefit from the investment in staffing, the better assortments, the better execution, and the improvements in our customer experience. I mean, 10 points of net promoter score growth, and actually the Reimagine 200 stores are higher over the 2.5 years of the program, I think underscores the reaction the customer is giving us to the changes we're making in the Macy's store experience.

Our confidence in the Reimagine program is one of the reasons why, as part of the tariff spend back, we allocated a portion to pilot some additional stores at the end of this year, which will allow us to get a head start as we expand the program in 2027.

Thank you. The next question is coming from Matthew Boss of JPMorgan. Please go ahead.

Tony, could you elaborate on the strategies that are gaining traction and the comments that you made earlier? Specifically at the Macy's banner, you lapped the inflection to positive low single-digit comps a year ago. You showed acceleration on a two-year stack this quarter, and Bloomingdale's posted both their best one- and two-year comps this quarter. What initiatives or strategies at the Macy's banner, where do you see opportunity remaining, and what inning do you see this market share momentum at Bloomingdale's in today?

Sure. Thanks for the question, Matt. It starts with product. We are in the early innings, third inning, fourth inning, in terms of the improvement and the quality of our assortments. That is the right balance of best, better, good. That is a part of the AUR growth that we are seeing at both Macy's and Bloomingdale's. Luxury on the Bloomingdale's side, contemporary on the Macy's side. It is the respect and treatment of product in our stores, so it is a better flow of inventory. It is better presentation and storytelling. You see today on both of our websites, the Celebrate American Designers campaign at Macy's, focused on trends, focused on newness. You see the launch of Hotel Bloomingdale's, focused on trends, focused on newness. Both stores, brands doing activation events in the stores in the course of September.

I believe the focus continues to be making sure we have relevant assortments, making sure we are rooting out the redundancy within our assortments, improving the variety, and making sure that top of funnel, we are spending enough time from social to CRM to audio and video on how we communicate our enthusiasm for fashion of the season. As I mentioned on the call, newness and fashion and trends are selling. We are excited about suede brown, the boot assortment, animal prints, new treatments in denim. There is so much to convey to the consumer, and we just got to make sure that we balance that with the other messages that we are communicating out throughout the season.

Tom, on maybe multi-year or just the bottom-line opportunity tied to Tony's top-line answer there, could you speak to gross margin drivers from here and what comp is needed to leverage SG&A on a multi-year basis?

Well, Matt, thanks for the question. I would say in the first couple of quarters we have levered SG&A, held it flat, and it is slightly lower on a percent of sales basis in Q2 with low single-digit comp growth. That is the area I would point to with a model of low single-digit growth on the top line, mid-single digit in the middle, and a little higher growth at the bottom when we look at EPS. So that is, I believe, the model that we have talked about and can continue to deliver, and it is the one that we actually have delivered. So in the first half of the year, we have grown the top line and the bottom line. Last year, in fiscal year 2025, excluding the tariffs on a go-forward basis, we grew both the top line and the bottom line.

We're committed to deliver long-term profitable growth, and I'd say and can point to that we are doing that.

I'd just add inventories in a healthy position. We see opportunities for margin expansion as we get to the end of the year and we go into next year and controlling SG&A below the rate of inflation. I think if we have the low single-digit comp growth, we can lever, and we can deliver greater profitability for our shareholders.

Thank you. The next question is coming from Brooke Roach of Goldman Sachs. Please go ahead.

Good morning, and thank you for taking our question. Tony, with the success of the Reimagine format at the Macy's banner, how are you thinking about the pacing of expanding that to the remainder of the fleet and additional investments in Reimagine ahead?

Thanks, Brooke. We're excited about the Reimagine performance. Nine of 10 quarters of growth, of continued outperformance versus the rest of the fleet. I think, as I said before, it's this great recipe of great product and a better experience, more people in the stores, and adding in local empowerment has made the difference in continuing to grow and comp the comp across all cohorts of stores.

We save the fourth quarter call for the expansion of the store fleet, but you can bet, based on our piloting of additional store initiatives in the fourth quarter, that we're going to be adding more Reimagine stores next year, and the aim will be to reimagine all of our go-forward fleet. We said that at the beginning of the Bold New Chapter, that there were approximately 350 go-forward stores. We began with 50 stores. We added 75 stores. We added another 75 stores. I think you have pretty much our cadence of expansion. We'll leave that for the fourth quarter call.

Brooke, I'd add that we take a very disciplined approach to rolling out initiatives and delivering ROI, and our Reimagine stores are working. They are delivering results and very pleased. They are capital light as well, so our investments are in associates, in eventing, and in bringing in new brands and assortments. These investments are driving growth. Importantly, we're learning and iterating as we've moved along, so our investments are becoming even more efficient as we go from one cohort to the next, and we look forward to continuing to build on that.

Great. Then just a follow-up for Tom. Can you unpack the proportion of the reinvestment of tariff dollars is being put into price versus the other buckets? Then how should we be thinking about the baseline margin rate from which you can grow into 2027 as you cycle these refunds and reinvestments into next year from a margin rate perspective?

Sure, Brooke. I'm happy to help with that. So on the reinvestment piece, the majority of our reinvestments are in the Bold New Chapter strategy and supporting our long-term growth. There is a portion, as Tony mentioned, that's supporting our value proposition for some very selective and surgical areas, such as big ticket and fine jewelry. But the other areas are brand marketing, particularly for Macy's, for top of the funnel to build out our brand, to do our Reimagine pilots. Of course, we're holding a little back just due to the realities of the situation and dynamics of the external environment related with fuel. But the longer term is what we are focused on. Then as we look at 2027, these initiatives are designed to give us a head start and continue the momentum and traction of the Bold New Chapter.

I don't look at it so much as lapping as so much as helping us maintain and build on the momentum of our strategies.

Thank you. The next question is coming from Oliver Chen of TD Cowen. Please go ahead.

Hi, Tony and Tom. The AUR was impressive. What factors offset that? As we think about guidance, what is incorporated, and what you are thinking for longer-term AUR trends. Second question was just on your thoughts on the younger customer and the initiatives that you are conducting to target that younger customer, embrace the younger customer, while at the same time, of course, maintaining your loyal customer base. On the guidance as well, merchandise margins and promotions and markdowns versus last year. Should we expect that to be flattish? Would also love your comments on the consumer, meaning did anything incrementally change since we last spoke? We have been seeing some additional pressure at the middle to lower, but would love your thoughts on any changes or optimism. Thank you.

Thanks, Oliver. Let me try to take the first few parts of the questions, then I will let Tom finish out. AURs continue to grow because our product assortment continues to improve. The assortment of better quality things, whether it be third pieces, whether it be leather versus faux, whether it be brands that command a higher price point. We are in the early innings of continuing to better and improve the quality of our assortments. The growth of Ralph Lauren, the growth of Coach, the continued growth of areas like watches, fine jewelry at Bloomingdale's, all leads to a higher AUR. That is the confidence of our colleagues. That is the impact of our website on the better goods that we sell, that the customer wants to buy them from Macy's and Bloomingdale's and Bluemercury.

In terms of the younger customer, just coming off of a great prom season, great graduation season. I mean, our watch business is on fire because it is two graduation gifts. It is the great birthday gifts. It is a great entree to the younger customer, as is the prom business, as is our wedding registry, which continues to grow. I think we just have many opportunities. We have a young next-gen fashion component at Macy's. We have the launch of Hotel Bloomingdale's. A part of that is the new Aqua collab with Nicky Hilton, which is obviously geared a little more younger. So there is so much within the assortment based on the brand matrix to cater to multi-generation of customers and certainly the younger customer. Tom?

I would add, we are not seeing anything dramatically different in the competitive environment right now and expect our promotional activity to be in line with last year. Importantly, we are positioned very well from an inventory perspective. Inventory up 2.5% in Q2, in line with our growth, and a lot of newness positioned for the fall. So feel like we are heading into the fall and holiday in a good spot. Our consumer skews more to the middle and higher end, and we have seen more consistent performance at that level. As we have noted before, at the lower end, a little more choiceful, but those trends have remained. I would point out, as Tony was mentioning, we also have a wonderful ecosystem across Macy's.

We have our credit card, our loyalty program with visibility into over 70% of our customers, every transaction, and a chance to really engage with them as we now have the product and the Reimagine 200 stores built out to 75% of our go-forward volume. So feel good about how we are positioned for fall.

Great. Best regards. Thank you. Nice job.

Thank you. Our next question is coming from Michael Binetti of Evercore ISI. Please go ahead.

Hey, guys. Thanks for taking our question here. A couple from me. I think this is the second quarter in a row with really big AUR gains, but modest gross margin expansion. In your mind, is there a transition point where AUR starts to offset any of the gross margin headwinds in the business that leads to a higher rate off the strong AUR strategy? Or is it best to think that AURs come with ongoing higher costs? They're driving a nice top line and gross profit dollar growth, but the rate is kind of the investment for that top line.

Tony, I think one thing that investors in the sector are wrestling with is comments across the sector that tariff refunds are going to be redeployed into investments and sharper prices in the second half, but there is generally a lack of increasing same-store sales guidance into the back half, despite more investment or even slowing multi-year stacks. I would love your perspective on that. You have got a lot of investment in third quarter, like Tom mentioned, and you are putting some of the tariff refund back to work. But there is a range in 3Q and 4Q comps that allows for slightly negative comps. I would just love to get your perspective on that for the industry.

Sure. Let me take a shot at both, and then I am sure Tom will want to add as well. I would love to separate AUR from gross margin because I think it is a false narrative to say higher AURs lead to higher margins because we have businesses with high AURs that have high margins naturally. We have businesses with high AURs that have naturally lower margins. So it really is category and brand dependent. A higher AUR will ultimately allow us to flow fewer units through the system, which will lower our cost base, will allow us to improve the quality of the experience for the customer because we are maybe moving fewer units through a colleague per hour. So there is a lot of advantages to selling, if you can, a higher AUR product.

It has been a mission of ours across both Macy's, Bloomingdale's, and Bluemercury to have the right proportion. We want to have best, better, good. We want to have a range of brands and price points to offer, but higher AUR really just gives you more of an opportunity to lever on the expense side than it does to deliver more on the margin side. In terms of your other question about the investment of tariffs and the comp guide, I think our investment of tariff refunds is disproportionately focused on the long-term health of our brand and business. So while there will be some benefit to the short term, most of it, when you talk about top-of-funnel brand building, when you talk about piloting Reimagine 200 store initiatives, when you talk about defraying fuel costs in the fourth quarter, those things do not have a short-term sales benefit.

They are yet the right thing to do for the business. If you go back to the middle of 2025 and you say, what were the things that we were wrestling with as we faced the impact of tariffs? We started to pull back on marketing. We started to change the piloting program for Reimagine 200 stores. So we stopped doing the things we should be doing because we had to navigate the impact of tariffs. So in my mind, this reinvestment program is doubling down on the benefits of the A Bold New Chapter, which if you strip everything away, strip all the tariff headwinds and tailwinds away, the core of our business is actually performing better.

I'd emphasize that point, Tony, that our tariff refund reinvestment is focused on the long term, the short term is more surgical. We're not overly investing in any one specific area. So it's not meaningful in terms of the broader overall business. Michael, when we look at AUR, I'd just add on to your point that we look to grow margin dollars with top-line growth. There are longer-term margin expansion opportunities because better best brands do ultimately help drive margin, but they do come with costs in the short term. With gross margin, we look to improve our assortment, continue to manage and improve the efficiency of managing our inventories. We can expand our private brands, continue with our store and online initiatives to build margin as we go forward.

As I noted earlier, from an SG&A perspective, we can lever the P&L at a low single-digit level, we certainly always have our always-on savings approach. So look forward to delivering margin dollars along with top-line growth as we move forward.

Okay. Thanks for that thoughtful answer, guys. I really appreciate it.

Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead.

Hi. Good morning, everyone, and nice to see the progress. One of the things that you mentioned in the deck at least, was AI, and AI both for Macy's and for the Bloomingdale's brand. How do you see AI as a revenue driver and an expense enhancer? Then just lastly, obviously, with the new activations and the stores do look great. I've seen the Bloomingdale's almost all over the country, and each one is special in terms of what they're doing. How are you thinking about brands that, where are you in brand newness? Is there more brands that are added or brands being subtracted? How do you think of the flow? Thank you.

Thanks, Dana, for the questions. I'll give you a small piece on AI and let Tom finish, then talk more about the brand additions. We view AI in three parts: driving revenue, improving the experience for our colleagues and customers, and creating greater efficiency and reducing costs for our company. I think our initiatives are geared that way. We have a number of pilots, a number of things that are proof of concept, and a number of things that are rolling out that are in those three buckets. If you want to say 1/3, 1/3, 1/3, that's as good a way to look at it as any, because I think the embracement of AI also comes with the belief that humanity has a role within the retail business, particularly in the relationship selling that we do at all three of our brands.

In terms of the brand additions, we still have plenty of opportunity to edit and add, and I think that's the great part of where we are in the Bold New Chapter. If we were done, where's the upside? We are in the early innings. There is plenty more to do. We are seeing more excitement. We're adding at Macy's, Kurt Geiger. We'll have Tory Burch launching at Herald Square in the fourth quarter. So there's plenty of opportunity for growth at all three of our brands by making the case in the market that we are a dependable, consistent, well thought of, great balance sheet, strong partner, believe in the importance of fashion and newness in our business, and have great regard for our brand partners where we really just want to be the very best partner they can work with.

Tony, on AI, I would just add that they are very thoughtful around the return on investment. The example of our replenishment initiative is a good one. That started out as a pilot and has moved through testing to prove itself out, and then to further roll it out more broadly, to improve how we are allocating our inventory to stores. That is a great example of making sure we do it thoughtfully and get a return. We also have customer-facing activities like the AI assistant that has been rapidly rolled out from Macy's digital to Macy's stores and now Bloomingdale's digital. That helps customers really choose what products they want, and we have seen much better engagement, end results, and basket size and conversion from people who are using it.

We want to make sure we are doing the right thing for the business as well as for our customer, and look at a lot of different opportunities going forward on this.

Macy's (M) Q2 2027 Earnings Call Transcript

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