Macy's Turnaround Succeeds
Macy's Raises Fiscal Outlook After Strong Q1 Sales Growth, Turnaround Gaining Traction
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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
1
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.”
2
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.”
3
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.
4
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.
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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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