Dive Brief:
- Macy’s Inc. got through the holidays largely unscathed. The company reported a 4.3% net sales decline to $7.8 billion, with a week less to work with compared to a year ago. Accounting for that week, comps edged up 0.2% (including owned, licensed and marketplace sales).
- Macy’s net sales fell 5.3%, with comps down 0.9%. Go-forward comps (at stores staying open after planned closures are complete) fell 0.5%, and first-50 comps (at stores with merchandising and store upgrades) rose 1.2%. Bloomingdale’s net sales rose 2%, with comps up 6.5%, and Bluemercury net sales rose 2.4% with comps up 6.2%.
- Gross margin rate contracted 80 basis points to 35.7%, though that plus inventory metrics were skewed by Macy’s switch to cost accounting last year. The company swung into the black, reaching net income of $342 million from last year’s $128 million net loss.
Dive Insight:
Macy’s Inc. may not have had the most exciting holiday season, but Q4 provided enough ballast for the company to embark on another turnaround year for its namesake banner, its largest business.
Macy’s first-50 locations reported their fourth straight quarter of positive comps, for example. Plus its luxury Bloomingdale’s banner once again notched positive comps for the year, and its Bluemercury beauty business marked its fourth straight year of positive comps. The company also lowered capital expenditures by 11.2%, and generated $679 million in free cash flow.
“We are pleased with our accomplishments, but recognize there is still more work to be done,” Macy’s Inc. CEO Tony Spring told analysts Thursday. “Recent results give us confidence that we've made the right strategic shifts and investments to successfully improve the overall Macy's Inc. customer experience. Now we must scale these changes in order to achieve our long-term goals.”
Already, beginning in February, the company began to apply the customer experience improvements made at its first-50 stores, including lessons learned, to another 75 locations. This means that 36% of the Macy’s stores that are staying open will be revamped, compared 14% last year, according to Spring. He also said that upgrades at Macy’s many private labels are bearing fruit, with more to come, though some “are more nascent or needing more work and reimagination.”
The subdued results from the Macy’s banner are not all that surprising, considering that weaker stores, slated to close at some point, are still in the mix, according to GlobalData Managing Director Neil Saunders. Executives declined to say how many stores will close this year, but reiterated their commitment to close 150 by the end of fiscal 2026. So far, 66 have been slated for closure, with 64 closed so far, they said.
“However, from our data, Macy’s is still struggling to pull in customers and drive share of wallet in the way that it ideally needs to,” Saunders said in a Thursday research note, adding that the success at the first-50 stores makes transforming more locations all the more important.
While Macy’s has begun the next phase of its turnaround with some strength, it also faces a new wave of uncertainty — what Chief Operating Officer and Chief Financial Officer Adrian Mitchell called “operating in an environment with some knowns and many unknowns” — due to tariffs and renewed challenges to the consumer.
GlobalData analysts are more optimistic about Macy’s than they have been in a while, thanks to its leadership, Saunders said, noting improvements in private labels and merchandising.
“Some may be impatient about the pace of change at Macy’s. However, we have always recognized that transformation of such a huge and complex business is a journey with many steps,” he said. “The year ahead will be a choppy one for Macy’s with comparable sales likely to decline by 0.5% to 2.0%. Admittedly the consumer environment is soft, but 2025 will also be another year of catching-up. However, Macy’s is now at least headed in the right direction in the retail race, and it is training itself to become faster.”
