Macy’s (NYSE:M) executives said fiscal 2025 marked an inflection year as the company delivered four consecutive quarters of results that exceeded prior expectations, returned to positive comparable sales for the enterprise and the Macy’s nameplate, and finished the year with adjusted earnings above guidance despite tariff pressure and lower-than-expected asset sale gains.
Fourth-quarter results beat guidance as comps turned positive across nameplates
Chairman and CEO Tony Spring and COO/CFO Tom Edwards said fourth-quarter performance exceeded the company’s guidance for net sales, comparable sales, and core adjusted EBITDA. Macy’s, Inc. posted net sales of $7.6 billion, above its guidance range of $7.35 billion to $7.5 billion, and down from $7.8 billion a year earlier. Edwards said the year-over-year decline was attributable to the impact of 64 non-go-forward stores that closed at the end of fiscal 2024; excluding that roughly $200 million headwind, sales grew 0.9%.
- Macy’s go-forward comparable sales rose 0.6%, including Reimagine 125 growth of 0.9%.
- Bloomingdale’s comparable sales rose 9.9%, which management said benefited from its best holiday result on record.
- Bluemercury comparable sales increased 1.3%.
Adjusted diluted EPS was $1.67, exceeding the guidance range of $1.35 to $1.55. Edwards attributed part of the quarter’s headwinds to tariffs (approximately $0.13 of EPS impact) and lower asset sale gains (about $0.04 of EPS impact), noting the company recorded $3 million of asset sale gains versus expectations for $15 million to $20 million.
Merchandising, marketing, and events supported holiday performance
Management pointed to favorable customer response to merchandising and marketing, supported by what Spring described as an improved omni-channel shopping experience. Spring said holiday destination categories such as fragrances, jewelry, and handbags outperformed at Macy’s, alongside women’s contemporary, denim, dresses, and children’s. At Bloomingdale’s, he cited strength across most categories, with standouts including fragrances, women’s contemporary, designer apparel, and fine jewelry.
Executives also emphasized the brand reach from major events. Spring said the Macy’s Thanksgiving Day Parade drew a record 34 million+ viewers and generated over 3 billion earned social media impressions, up about 30% year over year. He added that Bloomingdale’s “Happy Together” campaign generated roughly 15 billion unique impressions per month in earned media for November and December.
Fiscal 2025: improved comps, cash flow growth, and shareholder returns
For the full year, executives said Macy’s, Inc. exceeded expectations for net sales, comparable sales, EBITDA, and core adjusted EBITDA. Adjusted diluted EPS was $2.32, above the company’s most recent guidance of $2.00 to $2.20. Spring said the year’s results were above initial guidance even with the “unanticipated impact of tariffs” and lower-than-expected asset sale gains.
By banner, Spring said fiscal 2025 comparable sales were led by luxury, with Bloomingdale’s up 7.4% and Bluemercury up 1.6%. He said Macy’s achieved 0.6% go-forward comparable sales growth, with the Reimagine 125 locations posting 1% comparable sales growth.
Edwards said operating cash flow for the year was $1.4 billion versus $1.3 billion last year, and free cash flow was $797 million versus $679 million. The company ended the year with $1.2 billion of cash. He said the balance sheet was strengthened through financing transactions, leaving the company with “no material long-term debt maturities until 2030,” and an adjusted debt-to-adjusted EBITDAR leverage ratio below its 2.5x target.
Inventories ended the year at $4.4 billion, down 1.3% year over year, and management said inventory composition improved with more newness and less aged goods. Capital expenditures were $740 million, down from $882 million in 2024, reflecting completion of projects including the China Grove distribution center.
On capital return, Edwards said the company returned $448 million to shareholders in fiscal 2025, including $197 million in dividends and $251 million in share repurchases, leaving approximately $1.1 billion remaining on the authorization.
Store strategy: Reimagine expansion and extended closure timeline
Spring said the company expanded its store improvement program by adding initiatives to 75 additional locations, creating the Reimagine 200. He said nearly 60% of the go-forward Macy’s store base now has the full suite of initiatives, accounting for roughly 75% of go-forward Macy’s store sales.
Edwards said the target go-forward fleet remains approximately 350 Macy’s locations and the company still plans to exit approximately 65 additional stores to complete the previously announced 150 closures. However, management extended the expected timing of closures through 2028, citing flexibility from cash flow and the ability to be patient to maximize value in real estate transactions.
Edwards also said the company increased expected cash proceeds from monetization initiatives to $650 million to $700 million, up from $500 million to $650 million previously, noting roughly $250 million to $300 million remained after approximately $400 million had been monetized.
Fiscal 2026 outlook: cautious stance amid macro uncertainty and tariffs
Executives said customers have remained resilient and the company was “pleased” with quarter-to-date results, but both Spring and Edwards stressed a prudent approach to guidance given macroeconomic and geopolitical uncertainty. Edwards said the company expects fiscal 2026 net sales of $21.4 billion to $21.65 billion and comparable sales in a range of -0.5% to +0.5%.
Other key fiscal 2026 guideposts included:
- Other revenue of about $920 million.
- Gross margin of 38.3% to 38.6% of net sales, including an estimated tariff impact of roughly 20 to 30 basis points.
- SG&A expected to be up 1% to 2% in dollars year over year, reflecting investments in growth and less benefit from store closures versus the prior year.
- Adjusted EBITDA margin of 7.7% to 7.9% of total revenue.
- Interest expense of roughly $110 million.
- Adjusted diluted EPS of $1.90 to $2.10, including an estimated $0.10 to $0.20 tariff impact.
For the first quarter, Edwards guided net sales of $4.575 billion to $4.625 billion, comparable sales up 0.5% to 1.5%, adjusted EBITDA margin of 4.9% to 5.1%, and adjusted EPS of approximately -$0.01 to +$0.01. He said tariffs were expected to negatively impact first-quarter EPS by roughly $0.05 to $0.10 and gross margin by roughly 40 to 60 basis points.
Looking ahead, Spring said the company plans to build on initiatives around assortment, staffing, events, and localization, while continuing to modernize digital. He also pointed to expanding use of AI, noting management had reviewed more than 35 use cases intended to support customers and colleagues. Edwards added that fiscal 2026 capital expenditures are expected to be approximately $800 million, with an increased allocation to Bloomingdale’s based on what management described as significant growth opportunity.
About Macy’s (NYSE:M)
Macy’s, Inc is a leading American omnichannel retailer operating under the Macy’s brand, as well as specialty divisions Bloomingdale’s and Bluemercury. The company’s retail portfolio encompasses full-line department stores, fashion-focused specialty outlets and a high-end beauty chain, offering consumers a wide array of apparel, footwear, accessories, cosmetics and home furnishings. Through its integrated network of physical stores and digital platforms, Macy’s seeks to deliver a seamless shopping experience that blends in-store service with online convenience.
The company’s product assortment spans men’s, women’s and children’s clothing, beauty and personal care products, housewares and home décor.
