Macy’s Inc. (M) reported a Q2 net sales increase of 1% year over year to $4.87 billion, exceeding estimates of $4.82 billion. Adjusted earnings per share (EPS) reached $0.63, boosted by a $0.23-per-share benefit from tariff refunds, though adjusted EPS stood at $0.40 when excluding this benefit. The department store’s comparable sales rose 2.7%, marking five consecutive quarters of positive comps. The company also raised its fiscal 2026 outlook, projecting net sales between $21.68 billion and $21.83 billion and adjusted EPS of $2.15 to $2.35.
Macy’s generated $586 million in operating cash flow in the first half of the year, significantly up from $255 million in the prior year, allowing it to cover its dividend payments of $101 million. The company ended Q2 with $1.3 billion in cash, up from $829 million a year earlier, against $2.4 billion in total debt. Macy’s dividend of $0.1915 per share signifies a pay-out ratio of about 34% based on updated EPS guidance.
Despite its recent earnings report, Macy’s shares dropped by as much as 8%. The stock is currently trading at around 9x forward earnings and less than 1x forward sales, offering a potentially attractive entry point given ongoing improvements in sales and cash flow.
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