TLDR
- Macy’s third-quarter comparable sales jumped 3.2%, the strongest performance in over three years
- Earnings of 9 cents per share crushed analyst predictions of a 14-cent loss
- Full-year earnings guidance raised to $2.00-$2.20 per share from $1.70-$2.05 previously
- Bloomingdale’s drove results with 9% comparable sales growth, fifth straight quarterly increase
- Shares dropped 5% premarket as company cautioned on holiday spending and ongoing tariff pressures
Macy’s delivered a surprise earnings beat on Wednesday. The department store operator reported adjusted earnings of 9 cents per share, crushing the expected 14-cent loss.
Revenue hit $4.71 billion, topping the $4.62 billion forecast. The results mark three consecutive quarters of sales beats for the retailer.
Comparable sales grew 3.2% companywide, representing the best performance in 13 quarters. CEO Tony Spring attributed the gains to the company’s turnaround efforts at its namesake stores.
The retailer has invested in additional staffing and refreshed merchandise displays. These changes first rolled out to 50 locations and have now expanded to 125 Macy’s stores.
Macy’s lifted its full-year earnings projection to $2.00-$2.20 per share. The company also raised revenue guidance to $21.48-$21.63 billion, up from $21.15-$21.45 billion.
Shares fell nearly 5% in premarket trading despite the strong results. Macy’s warned that selective consumer spending and tariff costs will continue through the holiday period.
Bloomingdale’s Leads Growth
Bloomingdale’s posted the strongest performance across Macy’s brands. The upscale chain saw comparable sales surge 9%, marking its fifth consecutive quarterly increase.
Bluemercury comparable sales rose 1.1%. The 125 upgraded Macy’s locations grew comparable sales by 2.7%, outperforming the broader Macy’s nameplate.
Spring said customers are responding to store improvements. New brands like MacKenzie-Childs home goods and increased staff availability have boosted traffic.
October’s cooler weather helped sales too. Shoppers bought sweaters, coats and boots as temperatures dropped.
Tariff Impact Continues
Macy’s implemented price increases across nearly every category. Some reflect quality improvements while others stem directly from higher import costs.
The company worked with vendors to minimize tariff impact. Third-quarter margin pressure came in lower than expected due to these mitigation efforts.
However, Spring acknowledged that tariff costs will persist. The company expects promotional levels to match last year during the holiday season.
Spring said Macy’s is taking a cautious view of the fourth quarter. The retailer faces tough comparisons and uncertainty about spending from financially stretched customers.
Net income dropped to $11 million in the quarter versus $28 million a year ago. The company returned $99 million to shareholders through dividends and buybacks.
Macy’s closed 64 stores at the end of last fiscal year and early this year. These closures account for about $700 million of anticipated annual sales decline.
The retailer announced plans in early 2024 to shut 150 namesake stores by 2027. It will keep 350 Macy’s locations while expanding Bloomingdale’s and Bluemercury.
Macy’s stock has climbed 34% this year through Tuesday’s close. That outpaces the S&P 500’s 16% gain during the same period.
The company’s gross margin rate declined 20 basis points to 39.4%, primarily due to tariff impacts.
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