Macy's Inc. (NYSE: M) stock fell in Thursday premarket trading after the retailer reported second-quarter fiscal 2026 results that topped Wall Street expectations but issued a weaker-than-expected third-quarter earnings outlook.

Adjusted EPS was 40 cents, excluding a 23-cent net tariff refund benefit, beating the 37-cent consensus estimate.

Sales rose 1.1% year over year to $4.866 billion, topping the $4.826 billion estimate. Sales increased 1.9% excluding the impact of fiscal 2025 store closures.

Macy's Earnings Snapshot

Comparable sales increased 2.7%, while go-forward comparable sales rose 2.8%. Macy's comparable sales increased 1.1%, including 1.9% growth at its Reimagine 200 locations.

Bloomingdale's comparable sales surged 11.3%, reaching the highest second-quarter sales volume in the brand's history. Bluemercury comparable sales rose 6.2%.

Macy's received $98 million in IEEPA tariff refunds during the quarter and another $18 million after quarter-end, bringing the total to $116 million.

The company expects about $20 million of the proceeds to benefit full-year EPS. It plans to invest the remaining $96 million in 2026 to support customers and its Bold New Chapter strategy.

Gross margin expanded 180 basis points to 41.5%. Excluding tariff-related benefits and costs, gross margin improved 10 basis points.

Adjusted EBITDA rose to $457 million from $373 million a year earlier. Adjusted EBITDA margin increased to 9.0% from 7.5%.

Merchandise inventories rose 2.5% year over year. Macy's ended the quarter with $1.3 billion in cash and cash equivalents and $2 billion of available borrowing capacity. Total debt stood at $2.4 billion.

Macy's Chairman and CEO Tony Spring said the company's second-quarter performance reflected continued progress under its Bold New Chapter strategy.

He pointed to strong results from the Reimagine 200 Macy's stores, double-digit growth at Bloomingdale's and another solid quarter at Bluemercury.

Looking ahead, Spring said Macy's plans to expand the brands, assortments, events and experiences that are connecting with customers while maintaining disciplined execution to support sustainable, profitable growth.

Dividend And Buybacks

On Aug. 28, Macy's board declared a quarterly dividend of 19.15 cents per share, payable Oct. 1 to shareholders of record as of Sept. 15.

The company repurchased 2.2 million shares for $50 million during the quarter. About $1 billion remained under its $2 billion share repurchase authorization.

Macy's Guidance

For the third quarter, Macy's expects an adjusted loss of 19 cents to 23 cents per share, compared with an estimated loss of 6 cents. Sales are projected at $4.65 billion to $4.70 billion versus the $4.68 billion estimate.

Macy's raised its fiscal 2026 adjusted EPS outlook to $2.15-$2.35 from $2.00-$2.20, compared with the $2.25 estimate.

The company also raised its sales outlook to $21.675 billion-$21.825 billion from $21.50 billion-$21.75 billion. The consensus estimate is $21.914 billion.

Price Action

M Price Action: Macy's shares were down 2.98% at $20.87 during premarket trading on Thursday, according to market data.