Macy's Turnaround Succeeds
Macy's Raises Fiscal Outlook After Strong Q1 Sales Growth, Turnaround Gaining Traction
Macy’s raised its fiscal-year outlook as its “Bold New Chapter” turnaround gained traction, projecting adjusted profit of $2.00 to $2.20 per share and annual net sales of $21.50 billion to $21.75 billion. In the first quarter, the department-store operator reported its first sales growth in nearly four years, with sales rising 1.8% to about $4.68 billion and comparable sales increasing 1.8% to 3.0% depending on the metric used. Performance was strongest at Bloomingdale’s, where comparable sales jumped 10.2%, while Bluemercury rose 6.4% and Macy’s namesake stores edged up 1.6%. Macy’s also posted GAAP diluted earnings per share of $0.23 and adjusted diluted EPS of $0.13, above expectations. The company attributed the improvement to higher demand for high-end apparel and accessories and its strategy of shifting toward full-price sales, investing in higher-potential locations, and closing underperforming stores.
Key Points
CEO Tony Spring said the results show the turnaround is gaining traction, noting: “We’re off to a strong start to the year, exceeding expectations for the fifth consecutive quarter… Customers are responding,” and added Macy’s is focusing “with discipline… on what matters most – our customers.” He also tied the quarter to a broader company push for engagement, pointing to “our year of celebrations… including the 50th anniversary of Macy’s Fourth of July Fireworks, as we mark the nation’s 250th.”
Beyond the headline comparable-sales figure, Macy’s reported that “go-forward” comparable sales rose 3.1%—a metric it highlighted as exceeding its own guidance. The company also said comparable sales were positive “at each of the company’s nameplates.”
Macy’s broke out “other revenue” and credit performance: it said credit card net revenues increased $18 million (up 11.7%) to $172 million, attributing it to a “healthy credit portfolio.” It also said Macy’s Media Network net revenue fell $2 million (down 5.0%) to $38 million, reflecting the timing of advertising spend.
In describing what powered the quarter, Macy’s said it delivered its strongest first quarter in four years and that the gains were “led by Reimagine 200 stores,” identifying a specific transformation initiative behind the sales momentum.
Wall Street expectations at the time of the guidance increase were higher than the prior range: analysts polled by FactSet expected full-year adjusted earnings of $2.09 per share, according to the report on Macy’s revised outlook.
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