Macy’s The group beat Wall Street’s quarterly sales and profit expectations on Wednesday, with the eponymous brand showing signs of progress, while giving a cautious outlook for the year ahead.
For the fiscal year, the company — which includes the Macy’s chain, upscale department store Bloomingdale’s and beauty retailer Bluemercury — said it expects revenue between $21.4 billion and $21.65 billion and adjusted earnings per share between $1.90 and $2.10.
Both figures would represent a decline from the last fiscal year, when revenue was $21.8 billion and adjusted earnings per share were $2.15. Macy’s sales outlook roughly matches or exceeds analysts’ expectations of $21.42 billion, but its adjusted profit forecast is below Wall Street’s expectations of $2.17 per share for the year, according to LSEG.
Macy’s said it expects comparable sales, an industry measure that doesn’t take into account short-term factors such as store openings and closings, to range from a decline of 0.5% to an increase of 0.5%.
In an interview with CNBC, CEO Tony Spring said Macy’s results show its strategy is working. All three of its brands saw growth during the fiscal and holiday quarter. This marks the fourth consecutive quarter that Macy’s has exceeded Wall Street sales forecasts. And for the first time in three years, Macy’s returned to positive growth, with comparable sales up 1.5% for the year as a whole.
Even in recent weeks, he said Macy’s shoppers have shown “continued resilience” as they spend on fresh clothing and shift to newer brands and trendier items.
Still, he said Macy’s and other retailers have new unknowns that make the coming year more difficult to predict and have caused the company to take a “cautious” approach in its outlook.
“Given the environment that we’re operating in, it makes sense for us not to throw a hockey stick and suggest that we have visibility into what the rest of the year is going to turn out to be,” Spring said.
“Where will gas prices be for the rest of the year? How long will the conflict in the Middle East last? Will tariffs be refunded? Will other tariffs be improved or increased? Will the resilient consumer continue?” he said. “We’re not economists. The team is really focused on controlling what they can control.”
The company’s full-year guidance takes into account “macroeconomic and geopolitical factors that could influence discretionary spending,” according to a press release. It said its outlook anticipates a greater impact from tariffs in the first half than in the second, with the first quarter “having the most significant impact.” This also includes the impact of the investments the company is making in reorganizing its stores, as well as the effect of a reduction in the number of store closures.
Spring said the company continued to include the level of tariffs before the Supreme Court ruling in its full-year guidance. He said he expects Macy’s tariff bill to ease later this year because it will offset the impact of tariffs from a year ago.
If the company gets a refund or prices return to a lower level, “that will be an advantage” for Macy’s, he said.
Here’s how the department store operator performed in its fiscal fourth quarter, compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $1.67 adjusted vs. $1.53 expected
- Income: $7.64 billion versus $7.62 billion expected
Macy’s shares were up about 5% in early trading.
Macy’s net income for the three months ended Jan. 31 was $507 million, or $1.84 per share, compared with $342 million, or $1.21 per share, for the year-earlier period. After adjusting for one-time items including impairment and restructuring costs, the retailer reported earnings per share of $1.67.
Sales fell from $7.77 billion in the year-ago quarter.
Macy’s has been about two years into a three-year effort to strengthen its struggling namesake brand, build on its better, more luxury-focused chains, Bloomingdale’s and Bluemercury, and ramp up the company’s supply chain and technology operations. This turnaround strategy was led by Spring, who took over the company’s leadership role about two years ago.
As part of its plan, Macy’s initially announced it would close about 150, or more than a quarter, of its namesake stores by early 2027.
So far, Spring told CNBC, Macy’s has closed just over 80 of its namesake stores and still plans to hit the 150 or so closure mark. He declined to share how many new Bloomingdale’s and Bluemercury stores the company might open and where they will be located, but said he sees plenty of opportunities to reach new markets.
During an earnings conference call, Chief Financial Officer Tom Edwards said the company is now extending the timetable for closing the approximately 65 remaining stores through 2028. He said the longer timeline will allow Macy’s “to wait out the most favorable real estate market in order to obtain the most value for our shareholders and for our company.”
Companywide, fourth-quarter comparable sales increased 1.8%. including owned and licensed merchandise and its third-party marketplace.
In the fourth quarter, comparable sales at the eponymous Macy’s brand increased 0.4%. Including only stores that Macy’s plans to keep open, comparable sales increased 0.6%. Comparable sales at Bloomingdale’s jumped 9.9% and Bluemercury’s rose 1.3%.
Bloomingdale’s had its best holiday season ever, which Spring attributed to the retailer’s assortment, strong in-store and digital experience and ability to attract shoppers of all generations.
Bloomingdale’s has also benefited from a shake-up in the luxury industry, including the bankruptcy filing of Saks Global, the parent company of Saks Fifth Avenue and Neiman Marcus.
Spring said during the earnings conference call that “disruption in the market only adds fuel to the fire.”
During the holiday season, Spring said Macy’s, Bloomingdale’s and Bluemercury attracted less frequent customers and seasonal shoppers who flocked to higher-priced brands and items, including perfume, sunglasses and shoes, in search of gifts.
And even since the gift-giving season has passed, Macy’s hasn’t seen a change in consumer spending, Spring said.
“The mid- and high-end consumer, which represents the majority of our business, is resilient,” he said. “They buy new things, fashionable things, wardrobe changes, [they’re] I’m not as interested in the basics right now, and then obviously the lower income levels have more choices.
He said the department store operator’s approach of offering products in a wide price range was “one of the best antidotes” to an unpredictable economic environment.
Led by Spring, the company attempted to address criticism that its Macy’s department stores sold expired merchandise, relied on too few staffs and had disorganized shelves and displays that had driven shoppers to competitors.
While closing some of its namesake stores, the company has committed to investing in the approximately 350 Macy’s stores that will remain open. It has increased its workforce, added new brands and refined its visual displays on a growing number of sites.
The company started with a test in 50 stores and has now expanded to more of Macy’s namesake locations. In the 125 locations where the company increased its investments, sales outperformed the rest of the Macy’s chain, with comparable sales growth of 0.9%.
Spring told CNBC that the company has now added 75 more stores, bringing the total to 200 “reimagined” stores. That represents about 60% of Macy’s namesake locations that it plans to keep open, he said.
Some of the biggest changes Macy’s is making at its namesake stores include hiring more employees who can help customers and giving local leaders the flexibility to assign those employees to parts of the store where they can make the biggest difference, Spring said.
“It always comes down to the quality of the assortment, the quality of the people and the quality of the experience. And I think we’ve tried to meet all three of those criteria,” he said. “We added brands. We edited brands. We made the commercial environment more pleasant, less dense, [with] better storytelling and we added people in stores.
He said increased store activity has boosted digital sales, which account for a third of the brand’s overall sales.
Along with these changes, more and more of Macy’s namesake stores now carry newer, trendier and often more expensive brands, including Theory, Reiss, Good American and Rodd & Gunn. Spring said these have been well received and Macy’s plans to add them to more locations.
Macy’s shares closed Tuesday at $16.92, bringing the company’s market value to $4.5 billion. As of Tuesday’s close, the company’s shares are up nearly 25% over the past year, outpacing the S&P 500’s gains of about 20% over the same period. However, Macy’s shares have fallen about 23% since the start of the year.