Macy’s (NYSE: M) has been part of my life for so long as I can keep in mind.
After I was rising up, it wasn’t only a retailer – it was the place my household went for back-to-school purchasing, for brand new costume shirts earlier than church, and for the Thanksgiving parade on TV. Even at the moment, I discover myself searching its racks extra usually than I care to confess.
It’s a kind of uncommon retailers that also feels acquainted, even because the world of purchasing has shifted on-line.
However sentiment and nostalgia don’t preserve a enterprise alive. Numbers do. And as I famous once I evaluated the inventory final November, Macy’s has spent the previous few years making an attempt to show that shops aren’t relics of the previous.
Macy’s isn’t simply the red-star model everyone knows. It’s a three-nameplate firm, with Macy’s, Bloomingdale’s, and Bluemercury beneath its roof. Collectively, they span every little thing from reasonably priced attire to luxurious purses to high-end skincare.
Administration’s “Daring New Chapter” technique is concentrated on trimming underperforming shops, reinvesting in digital, and giving prime actual property a facelift beneath the “Reimagine 125” program. The corporate’s purpose is to modernize the core Macy’s fleet whereas leaning into higher-growth banners like Bloomingdale’s and Bluemercury.
The second quarter of 2025 introduced some progress. Internet gross sales got here in at $4.8 billion, topping steerage, with comparable gross sales up 0.8% at company-owned shops and 1.9% together with licensed and market gross sales.
Bloomingdale’s continues to shine, posting 3.6% comparable gross sales development on an owned foundation and 5.7% together with licensed and market gross sales, marking its fourth straight quarter of beneficial properties. Bluemercury notched its 18th consecutive quarter of development at 1.2%. Even the 125 “reimagined” Macy’s shops managed 1.1% comparable owned development, outpacing the broader chain.
The corporate’s earnings have been combined. Adjusted earnings per share got here in at $0.41, which beat steerage however was down from $0.53 final 12 months. Gross margins slipped 80 foundation factors to 39.7% resulting from markdowns and tariffs. Adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) landed at $393 million and seven.9% of income, each of which have been down from a 12 months in the past.
Money stream was mild. For the primary half of 2025, Macy’s generated $255 million in working money stream, however after capital expenditures and software program investments, free money stream was -$13 million. That’s a worrying signal for an organization that wants money to each reinvent itself and pay shareholders.
Talking of which, Macy’s did nonetheless return capital. The board declared a dividend of $0.1824 per share and acquired again $50 million price of inventory final quarter, bringing its whole to $151 million price repurchased 12 months up to now. The stability sheet additionally appears to be like more healthy after the corporate trimmed long-term debt by about $340 million and pushed main maturities out to 2030.
Once we run Macy’s via The Worth Meter, the image continues to look nuanced.
Macy’s EV/NAV ratio is available in at 2.04, far cheaper than the universe common of 6.53. In plain English, you’re paying lower than one-third the “going fee” for Macy’s property in contrast with the common firm. That makes it look attractively priced from a stability sheet perspective.
Regardless of a uneven 12 months for retail, Macy’s continues to be producing money. Its FCF/NAV sits at 4.33%, in contrast with a universe common of -2.04%. Which means Macy’s is producing actual money relative to its sources, whereas many friends are burning via theirs. That effectivity offers it some respiratory room to speculate, purchase again inventory, or pay dividends.
The weaker spot in Macy’s profile is consistency. Over the previous three years, it grew its quarterly free money stream simply 36.4% of the time, under the universe common of 46.2%. Put otherwise, Macy’s has produced constructive quarters – however not as steadily as traders would love. Retail cycles, tariffs, and markdowns nonetheless make this money machine sputter every so often.
Total, Macy’s balances out. Its low cost valuation offsets its uneven money stream historical past.
However over the previous 12 months, shares have been on a curler coaster.
After peaking above $20 early in 2024 and at over $17 late within the 12 months, the inventory tumbled under $10 in April earlier than staging a modest restoration. Now, after the sharp post-earnings spike, Macy’s trades close to $17 – nonetheless properly off its highs however up greater than 40% from its spring lows.
Macy’s is doing lots of the proper issues: closing underperforming shops, refreshing prime places, and leaning into development banners like Bloomingdale’s and Bluemercury. However the challenges are simply as clear.
The Worth Meter charges Macy’s as “Appropriately Valued.”
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