TLDR
- Q4 adjusted earnings reached $1.67 per share, surpassing analyst expectations of $1.57
- Quarterly revenue of $7.64 billion exceeded forecasts despite a 1.7% year-over-year decline
- Comparable sales delivered a positive 1.8% increase, defying analyst predictions of a 0.9% drop
- Shares climbed 9% during premarket hours Wednesday following a 23% year-to-date decline
- Fiscal 2026 EPS forecast of $1.90–$2.10 trails Wall Street’s $2.20 projection
Macy’s (M) delivered fourth-quarter results that exceeded Wall Street expectations on Wednesday, propelling shares 9% higher in premarket activity following a challenging year for the retailer.
The iconic retailer announced adjusted fourth-quarter profits of $1.67 per share, topping the Street’s $1.57 consensus estimate. Total revenue registered at $7.64 billion, representing a 1.7% year-over-year decrease yet managing to edge past the anticipated $7.62 billion.
The top-line contraction stemmed primarily from strategic store shutdowns executed during the previous fiscal period. When accounting for these closures, underlying performance tells a more encouraging story.
Comparable-store sales — a critical metric tracking locations operating for at least twelve months — jumped 1.8%. This result crushed analyst projections calling for a 0.9% contraction and represented one of the report’s standout achievements.
CEO Tony Spring’s “Bold New Chapter” transformation entered year two, with continued emphasis on attracting affluent consumers. This strategic pivot manifested clearly across brand performance: the flagship Macy’s banner posted modest 0.4% comparable growth, while Bloomingdale’s surged 8.5% and Bluemercury contributed 2.5% gains.
With shares having tumbled 23% prior to the earnings release, investors welcomed even marginal outperformance.
Guidance Falls Short
Looking ahead to fiscal 2026, the company projected net sales ranging from $21.4 billion to $21.7 billion, alongside adjusted earnings per share of $1.90 to $2.10. Wall Street had anticipated $21.42 billion in revenue and $2.20 in earnings per share.
While the revenue projection brackets consensus estimates, the earnings forecast misses at both the midpoint and upper boundary.
Executives emphasized a “prudent approach” when crafting their outlook, pointing to macroeconomic uncertainty and geopolitical volatility. Consumer spending patterns remain under pressure, especially among budget-conscious shoppers grappling with persistent inflation.
Planned store closures will eliminate approximately $145 million in sales during the current year. Though anticipated, this headwind still represents a meaningful drag on performance.
Tariff Impact Flagged for Q1
Trade policy represents another significant variable in Macy’s forward outlook. With substantial sourcing from China, management indicated that tariff-related costs will most heavily impact margins during the first quarter of 2026 — representing the period of maximum pressure.
The company anticipates tariff headwinds will moderate during the year’s second half. This perspective aligns with commentary from peer retailers, including Walmart and Kohl’s, both of which have issued measured full-year projections.
Following a Supreme Court decision establishing a uniform 10% tariff rate, companies that secured inventory under previous higher duty structures continue facing near-term margin compression as existing stock cycles through their systems.
Retailers with significant China exposure are scrutinizing Q1 performance closely. For Macy’s, this translates to a challenging first-half outlook before anticipated relief materializes in subsequent quarters — assuming current projections hold.
The fourth-quarter performance provided investors with tangible positive momentum. Comparable sales growth registered at 0.4% for the Macy’s nameplate, 8.5% for Bloomingdale’s, and 2.5% for Bluemercury.
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