Macy’s and RH Report Thursday Into a Sector on Edge

Consumer discretionary is among the worst-performing S&P 500 sectors in 2026, and it is in the red year to date as of the latest market close. The national average price for a gallon of regular gasoline remained above $4 every day in August for the first time, according to AAA. Nike shares closed at $38.12 on September 1, after closing at $39.09 on August 17, its weakest finish in roughly 12 years and nearly 78% below its November 2021 peak. That is the backdrop. Into it, two more consumer names report Thursday: Macy’s before the bell, RH after the close.

This is not about whether two retailers can beat a number. It is about whether a sector already absorbing Lululemon’s guidance reset can find a floor. The answer from the options market, so far, is: probably not without a catalyst.

What the Numbers Say

Wall Street analysts forecast that Macy’s will report quarterly earnings of $0.37 per share, pointing to a year-over-year decline of 9.8%. Revenues are anticipated at $4.82 billion, an increase of 0.2% compared to the year-ago quarter. The guidance Macy’s issued for Q2 coming into the quarter was $0.29 to $0.34 EPS, so consensus sits above the company’s own midpoint. That gap matters: if Macy’s lands inside its own range rather than clearing Street estimates, the reaction will likely be negative regardless of the headline beat or miss.

Macy’s did earn credibility in Q1. The company beat Q1 earnings expectations, posting $0.13 per share versus the $0.02 consensus, and revenue came in above forecasts at $4.89 billion versus $4.61 billion expected. It also posted its strongest first-quarter comparable sales growth in four years, with comparable sales up 3%. Thursday measures whether that momentum held through a summer defined by $4-plus gasoline and a consumer spending less on discretionary goods.

RH carries a different set of expectations. The current EPS estimate for RH’s September 10 report is $0.42. The company’s full-year fiscal 2026 outlook calls for revenue growth of 4.5% to 8%, adjusted EBITDA margin of 14.2% to 16%, and adjusted free cash flow of $300 to $400 million. Pre-opening and start-up costs for international expansion are expected to impact adjusted EBITDA margin by negative 380 basis points in Q2 specifically. RH guided for second-half acceleration, so Thursday’s report is less about Q2 absolute results and more about whether management reconfirms the back-half thesis in Gary Friedman’s shareholder letter.

The Lululemon Reference Point

Markets don’t need a beat or a miss. They only need to know what happens next. Lululemon demonstrated this last week with brutal precision. Lululemon shares fell more than 17% in pre-market trading after the athletic apparel retailer lowered its fiscal 2026 guidance again, despite reporting second-quarter adjusted earnings above analyst expectations. Third-quarter diluted earnings per share were forecast at between $0.93 and $0.98, compared with the consensus estimate of $2.41. Revenue declined 4% year over year to $2.4 billion, below the $2.46 billion consensus estimate.

The Q2 EPS beat was real but partially manufactured. The figure included $0.86 per share from tariff refunds and associated interest. Strip that out and the underlying result was unremarkable. The options market had priced an implied move of roughly plus-or-minus 9.3% heading into that report. The actual move crushed it. That pricing failure is the direct lesson for Thursday: implied moves on earnings in this sector are not wide enough when guidance is the real variable.

Options Market Analysis

Macy’s stock may move 5.2% on the September 10 earnings report, according to options-based estimates compiled by Bloomberg and circulated in market coverage heading into the week. That is a compressed expected move for a stock that has swung roughly 9% on each of the prior two prints. In the most recent earnings report on June 3, Macy’s stock rose 0.6% against an implied move of 8.9%. A 5.2% implied move into a quarter landing inside a sector’s worst stretch of the year is, on its face, cheap volatility if guidance disappoints.

The options market has priced in an earnings reaction of plus-or-minus 12.44% for RH heading into September 10. That is structurally higher, reflecting RH’s history of large post-earnings swings and the elevated uncertainty around the international expansion drag. In the last 10 unusual options trades logged on RH, there were 6 calls and 4 puts, suggesting a mild directional lean toward the upside, though far from a consensus bet. RH stock is down 24.3% over the past 30 days, a move that has already compressed valuation ahead of the report.

Structured Trade Framework

Macy’s (M): Reports before market open, September 10. Expected move: plus-or-minus 5.2%. For traders expecting a beat and guide-raise: a defined-risk bull call spread, buying the at-the-money call and selling the strike one expected move above, with expiration at the nearest weekly close, limits premium at risk while targeting the upper bound. For traders expecting guidance disappointment: a put spread buying the at-the-money put, selling a strike one expected move below, captures downside if Macy’s repeats the Lululemon pattern of beating Q2 while cutting the forward outlook. A neutral structure: an iron condor positioned one expected move in each direction collects premium if the stock stays inside a 5.2% range, which the prior two prints both did.

RH: Reports after market close, September 10. Expected move: plus-or-minus 12.44%. If you believe Gary Friedman’s shareholder letter reaffirms second-half acceleration and international gallery momentum: a bull call spread two strikes out-of-the-money still fits inside the implied range, with defined risk. For traders skeptical that the Q2 EBITDA margin drag at negative 380 basis points has been priced accurately: a put spread targeting the lower bound of the implied move captures downside without naked exposure. Given the 24.3% sell-off in the stock over 30 days, a short strangle is higher-risk on the put side; the asymmetry favors defined structures over premium-selling into this one.

Risk Analysis and Forward Outlook

The sector risk is not company-specific. The Consumer Discretionary Select Sector SPDR faces mounting pressure as inflation and weakening consumer sentiment erode discretionary spending. JPMorgan has downgraded Nike to underweight, warning a China marketplace reset and rising tariff costs could pressure earnings through fiscal 2028, while Hoka and On keep taking share in North America. These are not temporary headwinds.

For Macy’s, the specific risk is that the Q1 comparable sales recovery at 3% growth stalls in Q2 as fuel costs absorb consumer discretionary budget. For RH, it is whether the second-half acceleration thesis can survive a luxury buyer who is also watching gas prices and a market-cap-weighted stock portfolio that has underperformed for a month. Both stocks will trade Thursday on guidance, not history.

Action Checklist

• Macy’s Q2 consensus: $0.37 EPS, $4.82 billion revenue. Company’s own Q2 guidance was $0.29 to $0.34; a print inside the guidance range but below consensus is the bear case.
• RH consensus: $0.42 EPS. Watch the shareholder letter for any revision to full-year revenue growth guidance of 4.5% to 8%, and any update on Q2 EBITDA margin drag from international expansion.
• Options implied move: M at 5.2%, RH at 12.44%. Both are candidates for defined-risk structures rather than naked directional bets given sector conditions.
• Lululemon’s Q3 guide of $0.93 to $0.98 against a $2.41 consensus is the sector’s most recent data point on what guidance risk looks like in discretionary retail. Price that risk into both Thursday reports accordingly.
• Monitor XLY for sector confirmation: a gap lower in the ETF Thursday morning before M reports would suggest the market is already discounting bad news from the sector before results land.