Macy's, Inc. (subsidiary issuer): Solid momentum offset by looming inflation; maintain Marketweight

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Macy's, Inc. (subsidiary issuer): Solid momentum offset by looming inflation; maintain Marketweight

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Macy's, Inc. (subsidiary issuer)

Solid momentum offset by looming

inflation; maintain Marketweight

Earnings Review

Maintain Marketweight despite looming headwinds 04 June 2026

We maintain our Marketweight on Macy’s Sr Notes under coverage as we believe Macy’s High Yield Credit

has solid strategies in place given the current environment. The company has expanded United States

its offering of higher-priced brands, which led to an 8% increase in Average Unit Retail Retailing

(AUR) in 1Q. We believe this positions the company well given the K-shaped economy.

However, we also believe that tax refunds have significantly benefited recent results and William M. Reuter

Research Analyst

that this will fade through the year. Therefore, we expect slightly softer results in 2H26. BofAS

We believe this will make it unlikely that bonds appreciate from current levels. +1 646 855 6363 william.m.reuter@bofa.com

1Q was well above our estimates MichaelResearch DeRienzoAnalyst

1Q26 Adj EBITDA decreased 4% to $304 million due to (1) modestly higher costs of BofAS +1 646 855 7973

tariffs and (2) elevated SG&A, partially offset by modest comparable sales growth. michael.derienzo@bofa.com

Results were well above our Adj EBITDA estimate of $269 million. Total revenue

increased 2% to $4.89 billion, with Net Sales +2% and Other Revenue +8%. Comparable

sales increased 3% year over year. Comparable sales by banner: Macy’s 2%;

Bloomingdale’s +10%; and BlueMercury +6%. Gross margin decreased 30 bps to 38.9%

due to tariffs (-30 bps). SG&A increased $39 million to $1.95 billion due to investments

in (1) Reimagined locations and (2) digital. Based on debt of $2.44 billion and cash of