Macy’s, the American retail giant, announced better-than-expected third-quarter financial results on Wednesday, December 3rd, surpassing Wall Street’s projections. The company’s sales reached its strongest growth in three years, showing that its strategy to turn losses into profits is starting to pay off.
According to data from the London Stock Exchange Group (LSEG), Macy’s reported third-quarter revenue of $4.71 billion, exceeding Wall Street’s estimate of $4.62 billion. Adjusted earnings per share were 9 cents, higher than the predicted loss of 14 cents per share.
Comparable sales for the quarter, including owned and licensed brands and third-party markets, increased by 3.2%. Excluding stores set to close in the future, the growth was 3.4%. This marks the third consecutive quarter that Macy’s has exceeded market expectations.
In addition, Macy’s raised its full-year sales and profit forecast for the second consecutive quarter. The company now expects adjusted earnings per share for the 2024 fiscal year to be between $2 and $2.20, up from the previous estimate of $1.70 to $2.05 per share. The estimated full-year net sales are projected to range from $21.48 billion to $21.63 billion, higher than the previous expectation of $21.15 billion to $21.45 billion.
Macy’s anticipates that comparable sales will remain flat or grow by approximately 0.5% compared to last year. However, the projected full-year sales are expected to be lower than the $22.29 billion from the previous year, mainly due to the closure of 64 stores in the previous fiscal year and early in the current financial year, resulting in an estimated $700 million revenue loss.
In a press release, Macy’s stated that challenges such as selective consumer spending and increased tariffs will persist during the holiday season.
Macy’s CEO Tony Spring, in an interview with CNBC, expressed a cautious outlook for the fourth quarter, citing higher year-over-year comparisons and uncertainty surrounding aspirational customers’ willingness to spend during the holiday season.
He stated, “We are pleased with the current performance in the fourth quarter, but the upcoming holiday season is crucial.” Spring emphasized that Macy’s business model excels during the festive season due to its wide range of products and prices, from discounted items to luxury goods.
Among its brands, Bloomingdale’s showed the strongest performance under Macy’s umbrella, with a 9% increase in comparable sales year-over-year, while beauty chain Bluemercury saw a 1.1% growth in comparable sales.
To revitalize the Macy’s core brand, the company has implemented a series of new measures in recent years, including increased staffing, enhanced product offerings, introduction of new brands, and store layout improvements. These initiatives, initially tested in 50 stores, have now expanded to 125 stores, accounting for over one-third of the planned 350 stores.
Simultaneously, Macy’s has initiated a large-scale store adjustment plan, aiming to close approximately 150 stores by 2027 while pushing for expansions of Bloomingdale’s and Bluemercury brands.
Spring noted that consumers have responded positively to Macy’s improved in-store experience. He revealed his satisfaction with the overall presentation after visiting several stores on Black Friday, November 28th.
He said, “I like our current image. We look fresh, clean, eye-catching, and inviting, offering a pleasant shopping experience.”
He expects that promotions in Macy’s stores and websites during the holiday season will be on par with those of last year as well as their competitors.
As of Tuesday’s closing, Macy’s stock price has surged by about 34% this year, outperforming the S&P 500’s 16% growth during the same period, with a market value of approximately $6.1 billion.