We are ready to get started. It is 8:10 A.M. Thank you very much for joining us here today. I'm Dana Telsey, and I'm thrilled to be joined by Tom Edwards, the COO and CFO of Macy's. Tom joined just less than six months ago, but has obviously been very involved with many consumer brands that sell to Macy's, that have been involved, whether it's Wyndham, whether it's Kraft, whether it's Brinker. Now at Macy's, he understands the consumer and the trajectory of what brands do. Like what we said, activating the consumer, exciting the consumer. That's Tom. We know that Macy's is transforming the company through their bold new chapter strategy by strengthening and reimagining the Macy's nameplate, which is nearly 450 doors. I think accelerating, differentiating luxury with both Bloomingdale's and Bluemercury, and simplifying and modernizing the end-to-end operations. Tell us, since you've been there, what do you see as the opportunities for the bold new chapter strategy and where you are? Thank you, Dana. First, thanks for having me here. It's great to be here on the first fireside chat of your first conference with Santander. It's a real pleasure, and it's an honor. It's an honor to be part of the Macy's team. I've been here a little over three months now, but I've been a Macy's partner from different brands for over eight years. I understand the strength and the power that Macy's brings, both as a brand and as a business, to its partners and to consumers. That's really what brought me here. The strength of the brand, the bold new chapter strategy, which is working, and I look forward to telling you more about that, and the opportunity to create a significant amount of value. When I think about what matters now, I think first about the Q2 results, which are a great example of how everything can come together with a bold new chapter and really changing how Macy's is presenting itself to consumers and winning in the market on a day-to-day basis. For Q2, we over-delivered on the top line, on the bottom line, and on adjusted EBITDA. We had the best growth in the last 12 quarters with Macy's Inc and Macy's growing comps and growing both Reimagine 125, which is our new stores that we are reinvesting in and changing how we're interacting with consumers. That was incredible results. Bloomingdale's grew almost 6% comp, and Bluemercury around 2%. Our luxury business is also performing. We're really making meaningful differences, and we're seeing it happen. As you think about the bold new chapter strategy, which are the elements that you see have the opportunity going forward? I think all of the elements. We have three elements to the bold new chapter. It's very exciting. The first is strengthening and repositioning the Macy's nameplate. That is happening. The best example is the Reimagine 125, where we reinvested in staffing in the stores. We've put in new brands and increased our focus on merchandising them. We have eventing and local activity and local activation. We're doing the right things for the brand in the market. We're seeing it work, and we're seeing the results in our second quarter. The second platform is accelerating and differentiating our luxury businesses. That starts with Bloomingdale's and also includes Bluemercury. Bloomingdale's was growing. It's four quarters of comp growth now. It is gaining share in the market. We're bringing on new brands, and we're really well positioned in this market environment to continue to gain share. We're also expanding our footprint there, as we have some new formats for Bloomingdale's, the Bloomie's smaller format and the Bloomie's Outlet, which we've added to over the past year and plan to do so in the future. Of course, Bluemercury is differentiated with a skincare focus and a real consultative approach. We feel we have a positioning in that area as well. The last leg of the stool for a bold new chapter is our end-to-end modernization. We want to simplify and modernize our supply chain and also our back-office functions to drive synergies and to better serve our customer. In the supply chain area, this is both generating savings, but it's also making sure people get their packages faster. We're in stock more in stores. We're utilizing different capabilities like hold and flow to make sure we're better utilizing inventory and satisfying customer needs. What I see is a really great balance here between serving the customer first. If there was a theme here, it's we're changing from operationally led to customer led, and all of the pieces around that support it. The The savings will then help me reinvest in the business and ultimately grow top line and grow that top line profitably as we return Macy's, Inc to growth. That's a very good setup. Zooming out, what is your view on the consumer? How do you see them navigating the volatility of the macro? We see the consumer has been very resilient. As we mentioned in our Q2 comments, the consumer was resilient in the quarter. At the time of our call, we also noted that translated into the first month of our third quarter. The consumer has been resilient in the face of tariffs and other macro changes. We have seen differentiation in our consumer with the higher end and middle tier doing better, the lower end maybe a little more pressured. I would point out that we are positioned with our customer more towards the middle and higher with our average income at a higher level, both for Macy's and of course for Bloomingdale's, which has a more luxury focus and a more luxury consumer. As we look forward, we are, and as we discussed in Q2, embedding in our outlook a little more choiceful consumer in the back half. This is really something that we're prepared for. We're looking and ready to compete and to win in holiday. We've come out of the quarter with inventories down in very good shape, very clean, open to buy with a lot of newness in our inventory. That is one thing I'd point out, the consumer is responding to newness. As we have put that out on the floor, they have responded. That's one of the reasons we're growing. I would say that Macy's, Bloomingdale's, Bluemercury are well positioned to compete in this environment as the consumer navigates through the more macro. How do you see tariffs and the sustainability of the consumer? For tariffs, just as a little backdrop, we have embedded in our prior guidance 40- 60 basis points of a tariff impact. That was increased in Q2 from 20 to 40 basis points. We're working across our supply chain and with our partners to mitigate tariff impacts. This includes working with our factory partners, working with our brand partners, and ultimately, in some instances, pricing. The whole balance is the 40- 60 basis points. Right now, we have not seen a significant impact for that for consumers. That's where we say they have been resilient. On the other hand, we do believe that it will flow through and that they will become a little more choiceful in the future. Again, we're positioned well to compete regardless. I think our multi-channel, multi-brand, multi-category model that we're priced high to low gives us the ability to better respond to tariffs because we can buy at different levels, whether it be good, better, best, whether it be different brands, whether it be leaning into different channels and formats within our own ecosystem to make sure we're providing to the consumer product they want at prices that they feel are good value. It is not a one-size-fits-all, and we're using all the levers, but there are a lot of levers. I think that's one of the benefits of our scale and our ecosystem. Got it. Lower interest rate environment, what does it mean for Macy's? A lower interest rate environment, I think it means a couple of things. First, I look at it in the broader macro context. To the extent all other things being equal, lower interest rates are good for consumers. What's good for consumers is good for Macy's in the overall retail environment. That could be a positive. When I say all other things being equal, there are a lot of other things. That's why we have built in a little more choiceful consumer. On the other hand, we're well positioned to address that. The other piece is that lower interest rates support higher asset sale values and puts us in a great position where we're not in any rush to monetize assets to make sure we get the absolute best for our shareholders to drive value. As we looked over the past year, last year we monetized and received cash proceeds of a little over $280 million. Year to date, $75 million with a guidance of $190 million. We are on our way to adjusting our fleet size to make sure we're in a position where we can win with the go-forward fleet. As we saw in Q2, it is winning, it is growing. The fact that interest rates could be lower puts us in an even better position there, Dana. You mentioned it, the differentiation in banners. What do you see from Macy's, Bloomingdale's, and Bluemercury? What is the size of the fleet? How do you think of digital versus physical? How do you distinguish? Sure. I'll start with Macy's. As we mentioned at the beginning, a bold new chapter with around 500 stores. We announced that we would close approximately 150 to get to a fleet size of approximately 350. We're continually evaluating that to determine which stores and how that works. In the last year, we closed 64. We made headway there. The key is that we're going to be in places where we can win, grow the business, grow profitably, deliver value, and continue to maintain the scale and presence across the U.S. so we're serving customers. Digital is a key component of that. We're staying in markets to make sure we have a physical presence because that really helps the digital presence as well. We're investing in digital. If you have a chance to log on to check out the website, it has recently been revamped. I think you'll find that it is looking and feeling great in talking to our brands and to usage occasions, as well as to value with a really balanced approach and a great look and feel. That piece is critical. Macy's will ultimately get to that level of around 350, and there could be some pluses and minuses as we work through it. Bloomingdale's has the opportunity to grow its footprint. Part of that is that we're in very few, only 14 of the largest DMAs in the country. There is opportunity. We have a small format, the Bloomie's, of which there are four, and an outlet of which there are around 20. There is opportunity to grow that footprint and continue to gain share in luxury. As we gain new outposts in different areas, that then augments the digital business as we've seen. Bluemercury, we also have been growing that and it's growing comps, as I said, 18 quarters in a row. We feel like there's an opportunity to continue to grow Bluemercury as a brand. Loyalty programs are very interesting also for each of the brands. The loyalty programs are great. If I could say it is all connected. We have digital where we have a great loyalty program which tiers up from bronze to platinum. We have a credit card that's integrally related to it, and that forms the basis of the communications to consumers on a day-to-day basis. Of course, it all comes together with data and data analytics. Macy's and Bloomingdale's talks to 40 million active consumers a year. We have information on them from the credit cards, from the loyalty program, and really understand where they're at in their lives and what they're buying. We have the data analytics capabilities on the back end with data science and analytical tools to be able to adjust our approach because it's all about connecting to the consumer, not just to inundate them with emails, but to really talk to what they are interested in and to understand how they segment into groups because obviously not everyone wants to buy the same thing. I think that broad ecosystem is what makes Macy's Inc and Macy's special. It's also what makes our Macy's Media Network attractive. People are interested in working with us because they can then have access to these 40 million customers and speak to them on a more regular basis. I look at it as a broad ecosystem that really combined has a lot of power. Got it. When you think about private label, that seems to be an energizer for the different brands. What's the opportunity? Sales, margins, how do you see it evolving? The answer is yes. The opportunity is sales, margins, all of those items. In addition to reimagining our stores, we've reimagined private label and pared down brands, introduced new brands, and we really look at it as filling in white space to meet consumer needs that are not met elsewhere. The private label brands have a real purpose and meaning, whether it be style, price point, or many other factors of what they're delivering. At our height, we had a penetration of around 20%. We're now in the low teens. Private label historically has had higher margins because we're directly working with our partners and own that more directly. We look at this as an opportunity to continue to fill in white space. It has to make sense for consumers and to grow profitability as we expand it and broaden our base. It's a win across the board. This goes for both Macy's, Bloomingdale's, and Bluemercury as we're introducing different products within beauty, Bloomingdale's at different levels of luxury, and of course at Macy's across any number of private labels. One of the things that's different about Macy's now, because let's go out with the old, I don't like the word department stores, that's from the past. When Pam came up with the bold new chapter name and really differentiated what Macy's is, how do you see the uniqueness going forward, given what you just outlined with the three different brands? Because you've sold to both, you've had brands sell to Macy's, and now you're curating the assortment. Yes, you said it very well. We're multi-channel, we're multi-brand, and we're multi-category, and we work from high to low, from off-price to luxury. That is a key strength. It gives us the ability to respond to consumer needs, to move into different trends and brands, and really to help drive growth overall. On the other hand, it helps make us be a preferred partner for our brand vendors. That is very meaningful as we have been bringing on new brands, filling in space, and making sure we're delivering against consumer needs. I believe that that combination is really critical. The other thing that's critical is the scale of Macy's, Inc and the capability. When you think of scale, it's the breadth of consumers we're talking to. It's the coverage of the U.S. It is the different formats that we work in. It's also the capabilities of delivering omnichannel, understanding the data, being able to respond to it, and quickly react and talk to our consumers really on a daily basis, but do it in a way that's meaningful for them where they're continuing to engage and want to engage more for the brand. From your perspective, has the competitive environment or the competitive set changed? The competitive set, we're competing broadly across retail to bring consumers in. I think this is, we're, and we compete on a daily basis. What I wanted to mention, and I think it's really important, underpinning all of the bold new chapter and the reimagine is the refocus on the customer. If you come away with one thing, I would ask you to come away with that, changing from operationally led to customer led. That's where, no matter who we're competing with, that's what will make a difference. It's your interaction with the associate in the store who knows about the product, who can talk to you about the product, and who can then bring you in so that you have a great experience. We have seen the benefits of this in Q2 with our results, but also with our net promoter scores. We believe it's a great measure of how we will perform in the future. Across the board, we had our highest Q2 net promoter scores ever for both Macy's and Bloomingdale's, and we're continuing to work on it. We're rolling out and building out a culture of customer service and of hospitality. That links back to my background because I've worked in hotels and restaurants and know that the hospitality is critical. How you feel about the brand is also how you feel about the individual who is serving you, who is the face of that brand. There's a tremendous amount of focus, time, energy on making sure we make that interaction very, very meaningful. Now, when you think about the financials and the algorithms, over $21 billion in sales today, what's your thought on holiday? Promotional, not as promotional? How do you view it? If I could take the financial algorithm first. We're looking forward to and have driven growth in the quarter. We're looking forward to driving growth in the future. I'd point out that over the course of the bold new chapter, the reimagined stores, first the $50 million and then the $125 million, have driven outsized performance and comp performance as well as comp growth for six straight quarters. That's an incredible, I think, trend that we are building off of. That's the underpinning of everything as we look forward. From an algorithm point of view, we're also generating savings. Our end-to-end initiatives and always-on attitude to driving savings allow us to reinvest in our brands, ultimately support and maintain margins and margin growth, and are part of that algorithm to drive profitable growth of both single-digit top line and, as we mentioned at the beginning of our bold new chapter, mid-single-digit EBITDA growth. Underpinning that is also a strong balance sheet and cash flow. We recently strengthened our balance sheet. We further pushed out maturities. We do not have a maturity for debt until 2030, five years of which to do the right things of reinvesting in our business with a tremendous amount of flexibility. Strong free cash flow, which we have, of course, reinvested in the business, and we see those dividends paying off. Speaking of dividends, provided a consistent dividend over the course of the last years and the future of around $50 million a quarter. Year to date have returned cash to shareholders of $150 million. This all works together as a great cycle and feel really, really good about how that is panning out. In terms of holiday, in our guidance, we did note that the consumer would be more choiceful, yet they have been more resilient. Our goal is to be ready to serve the consumer with product that is a great value and product that they want. We're just well positioned to do that. Whatever the environment is, our multi-channel, multi-category, different price points, and different brands, we are positioned well. Our inventory is down. We have ample open to buy. We have great newness in that inventory. Having just toured our holiday set for the Christmas and the overall season, I have to say it is amazing. I think that the teams are incredibly, incredibly well prepared. Got it. Going with that financial algorithm, what does it take to leverage SG&A? How do you think of the buckets? Sure. There are a couple of things. First, I'd point out in Q2, we did leverage SG&A in terms of it being down $30 million versus prior year. We grew comp. We were reinvesting in the business, and that is part of the overall of pairing the fleet size down as well as driving end-to-end savings. Going forward, we, number one, will continue to drive and look for efficiencies in the business. Number two, we'll grow the top line, which enables us to lever the P&L below. I'd have to be remiss if I didn't add that there's a huge opportunity as well in gross margin. The adding of new brands and the right brands that consumers want, how we merchandise them in the stores, how we use inventory and build out that hold and flow, which makes us more efficient on the back end in inventory buying, but also more efficient in having product that consumers want and can sell it at full price in the stores when they need it. Our end-to-end savings, which also help gross margin, and private brands, which you mentioned before. There are a lot of levers, and we're working on all of them as we move forward because they're all part of the overall system. What does AI mean? What could it mean? AI means a lot. I think it will be a tremendous asset to the business and allow us to make many, many positive changes. We are in the very, very early innings, as I'm sure everyone is aware. What we're doing as a company now is testing, learning, and looking at areas where we think it can make an impact. As we see those work through, we will then be even more aggressive in how we roll it out. Some of those areas from a consumer-facing point of view are personalization. How are we using and taking our data analytics tools that we already have, already robust, and making it even better to understand what the consumer wants, how they want it, and to take new data in, not just the data in our system? It allows us to have a much broader lens, a broader aperture to how the consumer is reacting. It can help us in demand planning, forecasting, replenishment, everything around managing inventory to make sure we have the right inventory that we're upfront from an assortment point of view all the way to how we allocate and replenish to consumers and to stores. On the end-to-end savings, we're using AI. It helps us determine where we place inventory. We're also using robotics in a new facility we just opened that is state-of-the-art and allowing us to significantly reduce cost as well as serve the customer better. The other piece where AI is working is in the support areas. How can we be more effective in just running the day-to-day business? It has a huge opportunity there and in areas like a call center. Got it. Now, your background, you used to sell to Macy's. Now you're at Macy's. What's the biggest difference? The biggest difference is that scale and the breadth of the business. I can now see, I appreciated it before because Macy's was a preferred partner. I can see now when we're talking about the brands, categories, off-price to luxury, that we really have everything to offer the customer and can move you around that. We have the scale and capabilities back of house in analytics and understanding the customer. The very foundation of the bold new chapter was a customer study where we talked to 60,000 customers who were customers or were relapsed customers and understood what they wanted to have a better experience that would make them come to the brand, come back to the brand, use it more often. Everything was data-oriented to understand that. Some of the simpler things were takeaway. We would like to see more associates, more knowledge, more people on the floor. That's where we made investments in staffing. We made investments in staffing in areas like shoes and fitting rooms, as well as the different brand assortments, and are changing how we're managing day-to-day, the staffing to make sure people are there when needed and in areas where they have expertise. Part of this is science. Part of it is art. It is people. At the end of the day, I think retail is serving people's needs and engaging and creating a lasting bond with an individual consumer. Coming in and looking at the company from before I joined, I already loved Macy's as a consumer. Now I see that there's so many people that have that love, and we're turning it now into them engaging more and to the results you see in Q2. Are those the reimagined stores also? Yes, those are the reimagined stores as well. We have invested in staffing. We have added in new brands that are on trend. We're driving areas like contemporary, home, fine jewelry, all the different things that our consumers want. We see it happening, and we're well positioned for the future. Now wrapping it up with our speed dating questions. Yes. Big picture, what are the most important factors driving your outlook, whether it's tariffs, interest rates, global macro? On a scale of one to 10, how do you rate the current economy and consumer spending in the second half of the year? The most important thing driving our outlook is us. It's a bold new chapter. We're going to perform whatever the environment is and deliver value to our consumers. There may be other macro considerations, but we're there for the consumers. We're poised, we're ready to deliver in whatever environment it takes. I think that is the most important thing. On a scale of one to 10, I would rate the consumer resilient. We've seen resiliency up through our first month of our third quarter. The American consumer, never count them out, but we're prepared to deliver against their needs. Second question. Yes. Holiday sales. Do you think overall retail sales will be up, down, or flat versus last year? As I mentioned before, in Q2, we noted that we had built in a more choiceful consumer. I don't know how, I don't want to translate that into numbers, but we have built in a more choiceful consumer. The important point I'd like to take away is we're ready to deliver against the consumer regardless of what the environment is, and we want to make sure we're prudent in our outlook. Last one, next year, 2026, how do you expect revenue growth to be versus 2025? What are the one or two items you're most excited about and most concerned about? For 2026, it's a little early to provide guidance on that. At our Q4 earnings, we'll provide a more robust and fulsome outlook on 2026. What I see is momentum is building for Macy's Inc for all of our brands. We're doing the right things across all of the bold new chapter initiatives. We're well positioned to continue to deliver. I think that as we move into the next year, we're going to continue to every area, customer service, brands, end-to-end, delivering against luxury, we'll be well positioned to do well. We'll be well positioned to deliver our algorithm of growth on the top line at the low single-digit area and mid-single-digit EBITDA growth over the longer term. Tom, this is your first Thanksgiving Day parade. Yes. So enjoy. Thank you. Hopefully, it won't be raining. I want to thank Tom very much for being our keynote speaker on our first conference. Thank you, Tom. Thank you, Macy's. Thank you, Pam. Thank you for joining us. Thank you. Thank you. This presentation has now finished. Please check back shortly.