Macy's Posts Strong Q4 Results Amid Strategic Overhaul, Yet Warns of 2025 Sales Decline

Macy's Inc. delivered a strong finish to its fiscal year on Wednesday, beating Wall Street expectations for quarterly earnings and revenue while unveiling a cautious outlook for 2025. The department store giant, which operates the Macy's namesake brand, luxury-focused Bloomingdale's, and beauty retailer Bluemercury, reported adjusted earnings of $1.67 per share on $7.64 billion in revenue for its fiscal fourth quarter—topping analyst projections. Yet despite these signs of progress in its two-year turnaround effort, Macy's forecasted a sales decline for the coming year, projecting revenue between $21.4 billion and $21.65 billion, down from $21.8 billion in 2024, as CEO Tony Spring acknowledged persistent economic uncertainties.

Macy's Beats Q4 Estimates as Turnaround Strategy Shows Early Success

Macy's fiscal fourth-quarter performance underscored the early success of its "Bold New Chapter" initiative, a three-year restructuring plan launched under CEO Tony Spring in early 2023. The company reported net income of $507 million, or $1.84 per share, for the three months ended January 31, 2025—up sharply from $342 million, or $1.21 per share, in the same period a year ago. Adjusted for one-time costs such as impairment and restructuring charges, earnings came in at $1.67 per share, exceeding LSEG's consensus estimate of $1.53. Revenue totaled $7.64 billion, modestly outpacing the $7.62 billion expected by analysts.

All Three Brands Report Growth Despite Headwinds

Macy's three retail banners—Macy's, Bloomingdale's, and Bluemercury—each recorded positive comparable sales growth during the quarter, marking a significant turnaround after years of declining performance. Comparable sales across the entire portfolio rose 1.8% year over year, driven by strong results at Bloomingdale's, which posted a 9.9% increase. The luxury-focused chain achieved its best holiday season in company history, fueled by a refined assortment, enhanced in-store and digital experiences, and a vacuum in the high-end market created by Saks Global's bankruptcy and the financial troubles of Neiman Marcus. Bluemercury, the beauty-focused subsidiary, grew comparable sales by 1.3%, while the Macy's namesake banner saw a more modest 0.4% gain. However, when isolating only the stores slated to remain open, Macy's comparable sales improved to 0.6%, signaling the early benefits of the company's reinvestment strategy.

2025 Outlook: Sales Expected to Decline as Tariffs and Economic Uncertainty Loom

Despite the positive momentum, Macy's struck a cautious tone in its full-year 2025 guidance, projecting revenue between $21.4 billion and $21.65 billion—a contraction from 2024's $21.8 billion. Adjusted earnings per share are expected to fall to $1.90 to $2.10, below the $2.15 reported in 2024 and shy of Wall Street's forecast of $2.17 per share. CEO Tony Spring emphasized the unpredictability of the economic landscape, citing variables such as fluctuating gas prices, the ongoing Middle East conflict, potential tariff changes, and the durability of consumer spending.

Given the environment that we operate in, it makes sense for us to not put a hockey stick out there and suggest that we have visibility into what the remainder of the year is going to reveal itself to be. We're not economists. The team is really focused on controlling what they can control.

Store Closure Plan Extended as Macy's Prioritizes Real Estate Value

As part of its turnaround strategy, Macy's initially announced plans to close approximately 150 of its 500 namesake stores by early 2027. The company has since closed over 80 locations and extended the timeline for the remaining roughly 65 closures through 2028, citing an unfavorable real estate market. Speaking on the earnings call, CFO Tom Edwards explained that the extended timeline allows Macy's to "wait for the most favorable real estate market in order to get the most value for our shareholders and for our business."

Investments Focus on 200 Reimagined Macy's Locations

Macy's has redirected its resources toward approximately 200 "reimagined" namesake stores—about 60% of the locations it plans to keep open—where it has increased staffing, expanded brand offerings, and improved store layouts. These efforts began as a pilot in 50 locations and have since scaled to 125 stores, where comparable sales growth of 0.9% has outpaced the broader Macy's chain. Spring highlighted key improvements, including hiring more floor associates, granting local leadership flexibility in staff deployment, and enhancing visual merchandising to create a more inviting shopping experience. 'It always comes down to the quality of the assortment and the quality of the people and the quality of the experience,' Spring said. 'We've added brands. We've edited brands. We've made sure the shopping environment is more pleasant, less dense, [with] better storytelling, and we've added people to the stores.'

Tariff Uncertainty and Consumer Resilience Shape Financial Outlook

Macy's full-year guidance accounts for macroeconomic and geopolitical risks, including the potential impact of tariffs. The company has built its 2025 forecast assuming pre-Supreme Court tariff levels, anticipating that the first half of the year will face a larger hit than the second half. Spring noted that the first quarter is expected to feel the most meaningful impact. However, he added that if tariffs are refunded or reduced later in the year, Macy's would benefit from the tailwind. 'If the company gets a refund or if tariffs wind up at a lower level, that will be a benefit,' he said.

Consumer Spending Holds Strong Among Middle- and Upper-Income Shoppers

Spring emphasized that Macy's core customer—middle- and upper-income shoppers—has remained resilient, continuing to spend on fashion and trend-driven items even as economic concerns persist. 'The middle- and upper-end consumer, which is the majority of our business, is resilient,' Spring said. 'They are buying new things, fashionable things, wardrobe changes.' He noted that lower-income tiers are being more selective with discretionary purchases, but the retailer's strategy of offering a wide range of price points has helped mitigate broader economic volatility. 'One of the best antidotes' to an unpredictable environment, he added, 'has been carrying products across a wide range of prices.'

Market Reaction: Macy's Stock Rises on Earnings Beat

Shares of Macy's closed at $17.72 on Wednesday, up nearly 5% following the earnings release. Over the past year, the stock has surged approximately 30%, outpacing the S&P 500's 18% gain during the same period. However, Macy's shares are down about 20% year to date, reflecting ongoing investor caution amid the mixed 2025 guidance.

Key Takeaways: What Investors and Shoppers Need to Know

• Macy's beat Q4 earnings and revenue estimates, marking the fourth consecutive quarter of topping Wall Street expectations under CEO Tony Spring.
• The company projects a 2025 sales decline to $21.4B–$21.65B, citing tariff uncertainty and geopolitical risks, despite signs of turnaround progress.
• Bloomingdale's posted its best holiday season ever with 9.9% comparable sales growth, benefiting from market disruption at high-end rivals.
• Macy's has closed over 80 stores so far and extended the closure timeline through 2028 to maximize real estate value amid a challenging market.
• The retailer has reinvested in 200 'reimagined' Macy's locations, where sales growth has outpaced the broader chain, driven by better staffing and merchandising.

Why This Matters: The Future of Traditional Department Stores

Macy's performance reflects broader challenges and opportunities facing traditional department stores in an era dominated by e-commerce and shifting consumer preferences. Once the backbone of American retail, department stores have struggled to adapt to digital disruption, changing shopping habits, and the rise of fast fashion. Macy's turnaround strategy—centered on store closures, luxury expansion, and experiential enhancements—mirrors efforts by competitors like Nordstrom and Kohl's, which are also focusing on omnichannel integration and curated product offerings. The success or failure of Macy's 'Bold New Chapter' could serve as a bellwether for the survival of the department store model in a rapidly evolving retail landscape.

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