Macy’s recently reported better-than-expected sales and profits, signaling some progress for its iconic brand. While this is a positive sign, the company still offered a cautious outlook for the coming year.
For this fiscal year, Macy’s anticipates sales between $21.4 billion and $21.65 billion, along with adjusted earnings per share of $1.90 to $2.10. These figures would mark a decline from last year’s $21.8 billion in revenue and an adjusted earnings per share of $2.15. Analysts had forecasted sales around $21.42 billion, but Macy’s earnings guidance fell short of the expected $2.17 per share.
Comparative sales, a key industry metric that filters out effects from store openings or closures, are projected to fluctuate between a 0.5% decrease and a 0.5% increase.
Macy’s CEO Tony Spring expressed optimism, noting that all their brands have experienced growth. For the first time in years, Macy’s comparable sales increased by 1.5% over the past year. He highlighted how consumers are still willing to spend on new clothing and trendy items.
However, Spring acknowledged the uncertainties facing Macy’s and other retailers. Questions about fluctuating gas prices, geopolitical conflicts, and the renewal of tariffs complicate predictions for the future.
The company’s guidance reflects this uncertainty, considering “macroeconomic and geopolitical factors.” Early in the year, they expect a significant impact from tariffs, with the first quarter facing the most significant challenges. If tariffs decrease later in the year, it could benefit Macy’s.
In the latest quarter, Macy’s net income reached $507 million, or $1.84 per share, compared to $342 million the previous year. Their fourth-quarter earnings exceeded expectations: $1.67 per share against forecasts of $1.53.
Macy’s is deep into a turnaround plan focusing on its namesake brand while boosting performance in its luxury divisions like Bloomingdale’s and Bluemercury. Spring mentioned their goal to close about 150 Macy’s stores by early 2027, having already shuttered over 80. While he didn’t reveal new store locations for Bloomingdale’s and Bluemercury, he’s optimistic about reaching new markets.
In the fourth quarter, comparable sales for Macy’s rose by 0.4%, but only grew 0.6% when considering stores that will remain open. Bloomingdale’s experienced a remarkable 9.9% growth, bolstered by a strong holiday season. Spring noted that shoppers are favoring higher-end gifts, including luxury fragrances and accessories.
Despite the holiday rush ending, Spring believes spending habits remain robust among middle- and upper-income shoppers, who are less focused on essentials right now. In this environment, Macy’s strategy of offering products at various price points has been beneficial.
Addressing previous criticisms, Macy’s has made numerous changes to revitalize its stores and enhance the customer experience. They’ve improved product selection and increased staff to serve customers better. These enhancements have shown results; stores receiving more investment outperformed others with a 0.9% sales growth.
Moreover, digital sales have surged to account for one-third of overall revenue, largely because of a stronger in-store experience. Macy’s has also added trendy brands to attract younger shoppers.
Macy’s shares have seen some ups and downs, closing recently at $16.92, with a market value of $4.5 billion. Although their stock has fallen about 23% this year, it’s still up nearly 25% compared to last year, outpacing the S&P 500.
As Macy’s continues to adapt to the changing retail landscape, the company remains focused on controllable factors in a challenging economic climate.
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