TLDR
- Macy’s reported Q4 profit of $342 million ($1.80 adjusted EPS), beating expectations despite 4.3% sales decline
- Comparable sales increased 0.2% overall, with Bloomingdale’s (+6.5%) and Bluemercury (+6.2%) outperforming while Macy’s namesake stores declined (-1.9%)
- The company’s “First 50” upgraded stores showed positive results with 0.8-1.2% sales growth
- CEO Tony Spring’s turnaround plan includes closing 150 stores while investing in better-performing locations
- Macy’s 2025 outlook ($2.05-$2.25 EPS) fell below analyst expectations amid consumer spending caution and tariff concerns
Macy’s posted a return to profitability in its fourth quarter but faced continued sales challenges as CEO Tony Spring’s turnaround strategy shows early signs of progress. The department store chain reported net income of $342 million for the quarter ended February 1, reversing a $128 million loss from the previous year.
The company’s adjusted earnings per share reached $1.80, significantly exceeding analyst expectations of $1.54. However, sales fell 4.3% to $7.77 billion, slightly below Wall Street’s forecast.
Comparable sales across Macy’s entire business grew by a modest 0.2%, marking the highest growth rate since early 2022. This overall figure masks a split performance between Macy’s brands.
The company’s namesake Macy’s stores continued to struggle with comparable sales dropping 1.9%. This underperformance has been a persistent challenge for the retailer.
In contrast, Bloomingdale’s delivered strong results with comparable sales growth of 6.5%. Bluemercury, the company’s beauty chain, reported its 16th consecutive quarter of comparable sales growth at 6.2%.
Macy’s is making progress with its store modernization campaign. The first 50 locations that have received upgrades showed positive comparable sales growth of 0.8-1.2%.
CEO Tony Spring, who is just over a year into his tenure, has implemented an aggressive transformation plan. This includes closing 150 underperforming Macy’s stores while investing more resources in better-performing locations.
The strategy focuses on improving staffing, merchandising, and visual presentation across the chain. Early results from the “First 50” upgraded stores suggest this approach is working.
However, transforming the entire fleet of stores will take time and significant capital investment. After completing the planned closures, Macy’s will still operate approximately 350 namesake locations.
For the 2025 fiscal year, Macy’s expects earnings of $2.05 to $2.25 per share on revenue between $21 billion and $21.4 billion. This outlook falls short of analyst expectations for earnings of $2.29-$2.31 per share.
The company’s conservative forecast reflects ongoing consumer spending caution and uncertainty around new tariffs. President Trump’s recent imposition of tariffs on imports from Mexico, Canada and China has created additional concern for retailers.
Macy’s announced plans to resume share buybacks
Macy’s announced plans to resume share buybacks under its remaining $1.4 billion authorization, pending market conditions. This move aims to return capital to shareholders through both buybacks and quarterly dividends.
The company continues to face pressure from activist investors. In December, Barington Capital revealed it had taken a stake in Macy’s and wants the retailer to cut costs, explore selling its luxury brands, and monetize its real estate portfolio.
This marks the fourth activist campaign targeting Macy’s in the past decade. Some analysts believe these investors are primarily interested in Macy’s valuable real estate holdings rather than the long-term health of the retail business.
As Macy’s works through its transformation, investors remain watchful of both the pace of improvement and the company’s ability to navigate challenges in the retail landscape.
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