Macy's has reported its fourth-quarter financial results. For the three-month period ending January 31, sales reached $7.6 billion, a decline of 1.7% compared to the same period last year when accounting for store closures. However, this figure surpassed expectations by $130 million. Comparable sales, which include owned, licensed, and third-party marketplace goods, grew by 1.8%. Net income for the quarter rose to $507 million, or $1.84 per share, compared to $342 million, or $1.21 per share, a year earlier. Excluding one-time items such as impairment and restructuring costs, adjusted earnings per share were $1.67, exceeding the anticipated $1.53.

The company's quarterly net sales, comparable sales, and profit all exceeded Wall Street forecasts. This performance was partly driven by a nearly 10% increase in comparable sales at its Bloomingdale's division. The core Macy's brand saw a more modest comparable sales increase of 0.4%. When considering only the locations Macy's plans to keep open, comparable sales growth was 0.6%. The company's high-end department stores also benefited as customers sought alternatives following the bankruptcy of competitor Saks Global Enterprises. Furthermore, Macy's affluent consumer base demonstrated stronger spending power compared to its mainstream shoppers. The company's Bluemercury cosmetics chain reported a 1.3% rise in comparable sales.

"The outstanding performance at Bloomingdale's highlights its ability to enhance the customer experience and capture market demand," said CEO Tony Spring in a statement. The results indicate that Macy's strategic initiatives are yielding results, with all three of its brands achieving growth during the fiscal year and the holiday season. This marks the fourth consecutive quarter that Macy's has surpassed Wall Street's sales expectations. For the full year, comparable sales increased by 1.5%, representing the first positive growth in three years.

Since taking leadership two years ago, Spring has focused on transforming Macy's into a smaller, more profitable enterprise. The strategy has involved closing 150 underperforming Macy's stores while increasing investments in displays, staff, and merchandise at the remaining locations. The company is also divesting some real estate assets. In the fourth quarter, Macy's generated $3 million from real estate sales, down from $41 million in the prior year. The company stated it "remains committed to closing underperforming locations" and is "adopting a prudent approach to transactions." As part of this plan, Macy's intends to close approximately 150 of its namesake stores—more than a quarter of the total—by early 2027.

Among the 125 stores that have already received increased investment, sales performance has outperformed other Macy's locations, with comparable sales growing by 0.9%. The company announced it will extend this strategy to an additional 75 stores, bringing the total number of "revitalized" locations to 200.

Despite the positive quarterly results, Macy's has joined other retailers like Walmart in expressing a cautious outlook for the coming year, citing new uncertainties that make performance harder to predict. The company attributed its "prudent" guidance to "macroeconomic and geopolitical factors that may impact consumer discretionary spending." As the largest department store chain in the United States, Macy's performance is closely watched as an indicator of consumer willingness to spend on apparel, accessories, home goods, and other non-essential items. The company also noted that rising tariffs are expected to cause higher costs in the first half of the year compared to the second half.

Looking ahead, Macy's full-year guidance for comparable sales and profit fell below analyst expectations, signaling a guarded assessment of how U.S. consumers will respond to factors such as geopolitical conflicts and tariffs. The company forecasts adjusted diluted earnings per share between $1.90 and $2.10, below the average analyst estimate. It expects comparable sales, a measure of performance for stores open at least a year plus online sales, to grow by up to 0.5%, also lower than anticipated. Total sales for the fiscal year are projected to be between $21.4 billion and $21.65 billion, with the midpoint slightly above expectations. Both the profit and revenue guidance are below the results reported for the fiscal year ended January 31, which saw total revenue of $21.8 billion and adjusted earnings per share of $2.15. The guidance excludes gains from real estate sales, a recent adjustment by the company; it is unclear if all analysts have updated their forecasts to reflect this change.

While many analysts and investors have praised Spring's strategy as a credible effort to reverse years of sales decline—a challenge faced by numerous U.S. department stores—there is uncertainty about whether it will be sufficient. Dana Telsey, an analyst at Telsey Advisory Group, noted in a recent report, "Right-sizing the store base should improve long-term profitability. In the near term, we believe sales and profit growth 'remain limited' due to macroeconomic pressures, headwinds from traffic and tariffs, and a competitive, potentially promotion-heavy retail environment."