Quick Facts

• Macy’s received $116 million in IEEPA tariff refunds since the start of Q2 2026, directing $96 million back into the business and $20 million to profits.
• Q2 comparable sales rose 2.7%, the fifth straight quarter of growth, beating the 0.8% Wall Street estimate.
• Macy’s raised full-year adjusted EPS guidance to $2.15 to $2.35, up from $2.00 to $2.20, the second consecutive guidance increase.

Macy’s is using its tariff refund windfall differently than most retailers. While competitors have largely passed savings to shoppers through price cuts, Macy’s is putting the bulk of its $116 million refund toward store renovations, brand-building, and managing fuel costs.

The Supreme Court struck down IEEPA tariffs in February, triggering refunds across the retail sector. Macy’s collected $98 million during the second quarter and an additional $18 million after quarter-end, totaling $116 million received since the start of Q2.

CEO Tony Spring said the company will reinvest $96 million of that total back into the business. Only a portion will go toward price reductions, targeting furniture and fine jewelry, categories where tariffs hit harder than expected. Spring told The Wall Street Journal that Macy’s furniture business was more exposed to tariff pressure than the company had anticipated.

Q2 results beat estimates across the board. Macy’s reported second-quarter revenue of $4.9 billion, above the $4.83 billion analyst consensus and up 1.1% from a year earlier. Gross margin expanded 180 basis points to 41.5%. Adjusted EBITDA hit $457 million, or 9% of total revenue, compared to $373 million in the prior-year period.

Adjusted EPS came in at $0.63, including $0.23 from tariff refunds. Strip out the refunds and adjusted EPS was $0.40, still ahead of the $0.37 estimate and up 14% year over year.

Spring said Thursday’s report marks six straight quarters of better-than-expected results, five straight quarters of comparable sales growth, and two straight quarters of net sales growth.

Performance varied by brand. Bloomingdale’s posted 11.3% comparable sales growth, the highest second-quarter sales volume in the brand’s 154-year history. Bluemercury grew 6.2%, led by dermatological skin care and makeup. The flagship Macy’s brand rose 1.1%, while the 200 stores undergoing the company’s Reimagine renovation program grew 1.9%.

The Reimagine stores have now posted 1.9% comparable sales growth over five consecutive quarters. Macy’s says those gains are driven by payroll investment and merchandising changes rather than discounting.

Spring was direct about where the tariff money is going. “Our investment of tariff refunds is disproportionately focused on the long-term health of our brands and business,” he said. “When you talk about top-of-funnel brand building, when you talk about piloting reimagine store initiatives, when you talk about defraying fuel costs in the fourth quarter, those things do not have a short-term sales benefit. They are yet the right thing to do for the business.”

The company updated its gross margin outlook, now expecting a net headwind of 5 to 15 basis points from tariff and fuel costs combined, improved from the prior estimate of 20 to 30 basis points.

Guidance moved higher for the second consecutive quarter. Macy’s now expects full-year net sales of $21.6 billion to $21.8 billion, up from $21.5 billion to $21.75 billion. Same-store sales guidance rose to 1.0% to 1.5%, from 0.5% to 1.2%. CFO Tom Edwards noted that adjusted EPS guidance has climbed from $1.90 to $2.10 at the start of the year to the current range of $2.15 to $2.35.

Retail analyst Neil Saunders of GlobalData offered a blunt assessment of the shift in narrative: “In the past, every single Macy’s earnings day was a tale of gloom and decline. That now isn’t the case.”

The question heading into the back half of the year is whether the investments in store renovations and brand marketing sustain the momentum once the tariff refund tailwind fades.

Read more: Macy’s plows tariff refunds into its rebound