Macy's pleasantly surprises Wall Street again, by reporting sales growth and a profit

By Tomi Kilgore

The full-year earnings outlook was raised, but that includes guidance for the current quarter that was below expectations

Macy's reported an unexpected profit - and surprise growth in a key sales metric - but the stock gave back some of its stellar recent gains.

Macy's Inc. delivered another stellar earnings report, which again included surprise growth in a key sales metric, to confirm the notion that the troubles the department-stores chain had been facing for years are now in the past.

The company (M), the parent of Bloomingdale's, Bluemercury and its namesake store brands, also reported a profit for the latest quarter - Wall Street was projecting a loss - and raised its full-year outlook, as the company's efforts to reduce the impact of tariffs worked better than anticipated.

For the quarter to Nov. 1, comparable sales, or sales of stores open more than a year, rose 2.5% from the same period a year ago, while the average analyst estimate compiled by FactSet called for a 0.6% decline. That follows 0.8% growth in comparable sales in the second quarter, which snapped a 12-quarter streak of declines.

What's helping fuel the sales gains is that Macy's core customer base is made up of middle- to upper-income consumers, who have generally remained resilient, much more so than those from lower-income households, in the face of economic uncertainty and stubborn inflation.

Meanwhile, the stock seesawed to a loss of 0.2% in recent morning trading, and has traded in an intraday range of being up as much as 1.2% and down as much as 5.8%. What's giving investors pause, is that the new full-year earnings guidance includes an outlook for the important holiday quarter that was below analyst projections.

But keep in mind that the stock had shot up 68.3%, from when the company reported second-quarter results before the Sept. 3 opening bell through Tuesday's close. Before that rally, the stock was down 20.3% in the year to date.

The company has undergone a number of changes to turn the sales tide to growth, including the closing of dozens of stores, announcing a revamp of its management team and the selling off some assets, as part of the "Bold New Chapter" turnaround plan implemented after Tony Spring was named chief executive in early 2024.

It's working, as on top of the two straight quarters of comparable sales growth, total revenue inched up to $4.91 billion from $4.90 billion. That snapped a 13-quarter streak of year-over-year revenue declines, and beat FactSet consensus, which called for revenue to fall to $4.71 billion.

And while net income fell 60.7% to $11 million, adjusted earnings per share of 9 cents beat the FactSet consensus for a per-share loss of 13 cents.

That led Macy's to boost its full-year adjusted EPS guidance range to $2 to $2.20 from $1.70 to $2.05. But that the new guidance includes an EPS outlook for the current quarter of $1.35 to $1.55, which was below the FactSet consensus of $1.58.

Jefferies analyst Ashley Helgans said she believes the fourth-quarter outlook reflects management "conservatism," which she believes is prudent given that December is the company's biggest month of the year.

Macy's also raised its guidance ranges for net sales to $21.48 billion to $21.63 billion from $21.15 billion to $21.45 billion. That includes a fourth-quarter sales forecast of $7.35 billion to $7.5 billion, compared with analyst projections of $7.35 billion.

The stock has run up 33.9% in 2025, while the State Street SPDR S&P Retail ETF XRT has gained 7.3% and the S&P 500 index SPX has advanced 16.3%.

-Tomi Kilgore

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12-03-25 1122ET