TLDR
- Q4 adjusted earnings per share reached $1.67, surpassing analyst projections of $1.57
- Quarterly revenue declined 1.7% annually to $7.64 billion, exceeding the $7.62 billion forecast
- Comparable sales increased 1.8%, crushing expectations for a 0.9% decrease
- Shares surged 9% during Wednesday’s premarket session, despite a 23% year-to-date decline
- Fiscal 2026 EPS outlook of $1.90–$2.10 trails the Street’s $2.20 estimate
Macy’s (M) delivered fourth-quarter results that exceeded Wall Street expectations on Wednesday, propelling shares 9% higher in premarket action following a challenging year for the retailer.
The iconic department store operator announced adjusted fourth-quarter earnings of $1.67 per share, topping the consensus estimate of $1.57. Top-line results registered at $7.64 billion, representing a 1.7% year-over-year decrease yet still outpacing the $7.62 billion analyst projection.
The sales contraction stems primarily from strategic store closures executed throughout the previous fiscal year. Adjusting for these planned shutdowns reveals a healthier underlying business.
Comparable-store sales — a critical retail performance indicator measuring locations open beyond one year — climbed 1.8%. This result crushed analyst predictions of a 0.9% contraction and represented one of the quarter’s strongest data points.
Chief Executive Tony Spring’s “Bold New Chapter” turnaround plan entered year two, with management accelerating the pivot toward upscale consumers. The brand-level performance reflected this strategic repositioning: the flagship Macy’s nameplate posted comparable sales growth of just 0.4%, while Bloomingdale’s surged 8.5% and Bluemercury contributed 2.5% growth.
With shares down 23% prior to the announcement, even a marginal earnings beat provided meaningful support.
Guidance Falls Short
For the current fiscal year 2026, management projected net sales between $21.4 billion and $21.7 billion, accompanied by adjusted EPS guidance of $1.90 to $2.10. Wall Street had anticipated $21.42 billion in revenue and $2.20 in earnings per share.
The revenue forecast brackets consensus estimates. The earnings projection, however, misses analyst expectations both at the midpoint and upper boundary.
Executives emphasized a “prudent approach” when constructing the outlook, highlighting macroeconomic volatility and geopolitical uncertainty. Consumer spending pressures persist, especially among budget-conscious shoppers still grappling with elevated inflation.
Planned store closures will eliminate approximately $145 million in sales during the current fiscal year. While anticipated, this drag remains material.
Tariff Impact Flagged for Q1
Trade policy represents another significant variable management is monitoring. The retailer maintains substantial sourcing operations in China and indicated that import duties will pressure margins most severely during the first quarter of 2026 — identifying that period as peak impact.
Macy’s indicated it expects tariff headwinds to diminish during the year’s second half. This perspective aligns with guidance from other major retailers, including Walmart and Kohl’s, which have similarly issued conservative annual forecasts.
A recent Supreme Court decision established a standardized 10% tariff rate, though companies that purchased inventory under higher duty structures continue facing near-term margin compression as existing stock flows through supply chains.
Retailers with Chinese supply chain exposure are particularly focused on first-quarter performance. For Macy’s, this translates to a more challenging first half before — assuming management’s outlook proves accurate — conditions improve later in the fiscal year.
The fourth-quarter performance provided investors with encouraging signals. Comparable sales advanced 0.4% for the Macy’s brand, 8.5% at Bloomingdale’s, and 2.5% at Bluemercury.
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