Macy's Q1 Earnings Beat Expectations with Raised Full-Year Guidance, but Wall Street Remains on the Sidelines
Claire Weston
Macy's posted Q1 adjusted EPS of $0.13 — more than triple the Street's $0.04 estimate — with all three brands in positive comp growth, then raised full-year guidance. JPMorgan still rates the stock Neutral; the real question is whether the momentum holds into the back half.
What exactly beat?
Adjusted EPS came in at $0.13 versus Wall Street's $0.04 — more than three times expectations.
Comparable-store sales — revenue from the same set of stores versus a year ago — rose +3.0%, nearly double the +1.4% consensus and accelerating from last quarter's +1.8%.
Gross margin hit 38.9%, adjusted EBITDA margin reached 5.9%, and SG&A expense ratio of 39.9% beat estimates by roughly 70 basis points. This means → the beat was not just top-line; cost discipline surprised as well.
How did each brand perform?
Bloomingdale's surged +10.2% in comp sales — its seventh consecutive quarter of positive growth — driven by luxury labels like Chloé.
BlueMercury grew +6.4%, marking 17 straight quarters of positive comps, led by skincare and fragrance.
Macy's flagship stores posted +1.6% — the slowest of the three but on the largest base. Reimagined-door customer satisfaction scores hit an all-time Q1 high.
In plain terms = the luxury and beauty lines are running fastest, the core brand is steadily keeping pace, and none of the three is falling behind.
How much did full-year guidance go up — and what about tariffs?
Full-year adjusted EPS guidance rose to $2.00–$2.20 (from $1.90–$2.10); comp-sales guidance shifted from "possibly negative" to +0.5% to +1.2%.
The key assumption changed: management cut its tariff assumption from ~20% to the current ~10% rate, but the savings were offset by higher fuel costs.
JPMorgan nudged its FY26 EPS estimate to $2.20 and FY27 to $2.39. This means → the analyst accepted the raise but barely moved the needle — confidence in further acceleration is still limited.
Why is Q2 guidance so conservative?
Management guided Q2 comp sales to flat to +1.0%, a roughly 250 basis-point step-down from Q1's +3.0%.
The CFO explicitly called this "prudent" — reserving room for business that has not yet materialized.
JPMorgan ran the math: on a three-year stacked comparable basis, if May's growth pace continues, Q2 comps could reach roughly +3%, well above the guided ceiling. This means → the market may be overestimating Q2 downside risk; the odds of beating guidance are meaningful.
Will the second half slow materially?
The high end of full-year guidance implies H2 comp growth of just +0.5%, versus ~+2.0% implied for H1 — management is baking in a clear deceleration.
JPMorgan's bottom-up brand model shows H2 comps have at least a +2% growth opportunity.
In plain terms = management built a wide safety cushion. If the three brands hold their current momentum, full-year results have real room to surprise to the upside.
Why is Wall Street still on the sidelines?
JPMorgan kept its Neutral rating and raised its December target to $27 (from $21), based on 4.2× FY27E EBITDA — below the pre-pandemic historical average of 4.6×.
Across the Street: 1 Buy, 11 Hold, 2 Sell — sentiment leans cautious.
This reflects the core tension: all three brands are genuinely improving, but reinvestment in store labor plus an ongoing closure program keep eroding the absolute pool of operating profit — the brands are getting better, but the profit base is not expanding at the same rate.
Content is for reference only, not financial advice.