Macy's (M) Q1 FY27 earnings call: guidance and Q&A

Asked about recent comp trends, drivers of Q2 upside, and confidence in H2 positive comps given macro factors.

Management noted consistent performance throughout Q1 with no monthly vagaries and broad category strength. They are pleased with Q2 performance to date and raised full-year guidance, including H2, while maintaining a prudent approach due to macro uncertainties. They aim for continued execution and good inventory levels.

“We obviously have a prudent guide relative to the geopolitical and macroeconomic factors. But the things that are within our control, we feel really good about.”

asked by Blake Anderson · answered by Antony Spring

Inquired about the impact and opportunities from cross-functional collaboration between Macy's and Bloomingdale's, and the drivers of Q1 gross margin and expected H2 expansion.

Collaboration involves sharing insights, brand opportunities, and talent while preserving brand uniqueness. It aims to make Macy's more fashionable and Bloomingdale's maintain its luxury positioning. Q1 gross margin was flat ex-tariffs, with future expansion driven by Reimagine program, improved assortment, new brands, and better inventory management leveraging AI.

“We can absolutely be better collaboratively and at the same time, make sure that we have the distinction that's necessary for both brands.”

asked by Matthew Boss · answered by Antony Spring

Asked about the drivers of comp acceleration, the proportion from traffic vs. ticket, and trends in Average Unit Retail (AUR).

The company is seeing continued AUR growth and consistent traffic, with an overall basket size increase. AUR expansion is driven by merchandise mix (more expensive materials, higher-end products), and less clearance. This algorithm of higher AUR, consistent traffic, and higher basket size has been observed over multiple quarters.

“We are seeing continued AUR growth and consistent traffic. And I think we're balancing the improvements in AUR with a slight reduction in conversion, but still an overall basket size increase.”

asked by Brooke Roach · answered by Antony Spring

Inquired about the acceleration in Reimagine Macy's stores and the current promotional environment.

Reimagine stores are performing well, with 8 of 9 quarters of growth, driven by a recipe of better merchandise, presentation, service, and local empowerment. The promotional environment is comparable to previous years, with no significant changes due to inventory levels or consumer demand.

“What I love about the program is it's a recipe. It's not 1 idea, it's the merchandise, it's a better assortment, it's the presentation, it's better storytelling, it's more people in the stores, it's better service, record Net Promoter Scores even higher in the Reimagine stores.”

asked by Dana Telsey · answered by Antony Spring

Asked for more specifics on the significant AUR acceleration (8.3%) and the drivers, and the performance of the beauty business across the total company.

AUR growth is due to merchandise mix, categories sold (e.g., jackets vs. T-shirts), and less clearance. Macy's AUR was ~5%, Bloomingdale's 9-10%. The beauty business is strong across all three brands, driven by newness in skincare and fragrances, and enhanced service from beauty advisors.

“The AUR has been growing for the last couple of years at both brands. It's both the mix of business, as I was saying before, the different fabrication, the categories we're selling, more jackets versus T-shirts, the introduction of linen versus cotton, the breadth of brands that we're selling...”

asked by Michael Binetti · answered by Antony Spring

Inquired about back-to-school catalysts, managing value vs. premium, and how AI will impact labor, merchandising, and inventory.

Excited about back-to-school, especially the healthy kids' business with a compelling assortment. AI strategy is integrated into the Bold New Chapter, aiming to drive revenue, improve colleague/customer experience, and create supply chain efficiencies, with a focus on ROI.

“Our AI strategy is our Bold New Chapter. First is we start with the Bold New Chapter. And how do we power the Bold New Chapter? It's through our belief that AI can help us drive revenue, make sure that we're giving our colleagues an easier experience and our customers a better experience, and making sure that we're creating efficiencies like in the supply chain example you were raising.”

asked by Oliver Chen · answered by Antony Spring