Sarah Travers
Macy’s has recently adjusted its full-year sales outlook, reflecting the difficulties the department store chain faces as it contends with increasingly selective consumers and intensified promotional activities. The retailer now expects net sales to range from $22.1 billion to $22.4 billion, down from its earlier projection of $22.3 billion to $22.9 billion. This forecast marks a decline compared to the $23.09 billion in net sales recorded for fiscal 2023.
The company also revised its expectations for comparable sales, which it now predicts will decline by 2% to 0.5%. Previously, Macy’s had anticipated a potential decline of 1% or a modest increase of up to 1.5%. This metric, which includes both owned and licensed sales, is vital as it provides insight into the overall performance of the retailer’s core business, excluding the impact of store openings and closures.
Macy’s recently reported mixed results for its fiscal second quarter. The company exceeded Wall Street’s earnings expectations with earnings per share of 53 cents, but it fell short on revenue, generating $4.94 billion compared to the projected $5.12 billion. Following the announcement, Macy’s shares dropped by more than 9% in premarket trading, reflecting investor concerns about the retailer’s future trajectory.
To address these challenges, Macy’s has been striving to regain its stability and achieve sustained growth. Earlier this year, the company announced plans to close approximately 150 of its namesake stores—nearly a third of its total—by early 2027. The focus will shift to the remaining 350 locations, with plans to invest in revitalizing these stores. Additionally, Macy’s is expanding its presence in suburban strip malls with new, smaller store formats and is increasing the number of locations for its stronger-performing brands, Bloomingdale’s and Bluemercury.
Despite these efforts, the latest quarter’s results underscore the hurdles Macy’s faces in its turnaround efforts. The Macy’s brand remains the weakest link, with comparable sales dropping by 3.6% on an owned-plus-licensed basis, which includes sales from its third-party marketplace. Bloomingdale’s performed slightly better but still saw a 1.4% decline in comparable sales, while Bluemercury, a beauty brand under Macy’s umbrella, recorded a 2% increase in sales, marking its 14th consecutive quarter of growth.
Even when excluding the impact of store closures, sales at Macy’s remaining locations have been underwhelming. Comparable sales for the stores that will stay open, including online sales, decreased by 3.3% on an owned-plus-licensed basis.
Macy’s has seen some progress in its turnaround strategy, which was launched earlier this year. At the first 50 stores to receive additional investment, comparable sales increased by 1% on an owned-plus-licensed basis, marking the second consecutive quarter of growth for these locations. These stores have outperformed other Macy’s locations, even in challenging categories like handbags. Moving forward, Macy’s plans to extend this strategy to additional stores and will bolster staffing in key departments such as women’s shoes and handbags.
Complicating matters, Macy’s recently faced pressure from activist groups pushing to take the company private. However, Macy’s board unanimously decided last month to cease negotiations with these groups, choosing to stick with its current strategy.
As of the latest update, Macy’s stock has declined by about 12% this year, lagging behind the S&P 500’s roughly 17% gain during the same period. Macy’s ongoing efforts to revitalize its business will be closely monitored as the company navigates a challenging retail landscape.
