Macy’s Outperforms Guidance with Return to Comparable Sales Growth—Bloomingdale’s Delivers Record Holiday

Macy’s Outperforms Guidance with Return to Comparable Sales Growth—Bloomingdale’s Delivers Record Holiday

Macy's, Inc. (NYSE:M) provided a rare bright spot in retail with its fourth quarter and fiscal 2025 results, beating its own expectations for both sales and earnings—even as the broader sector faces stiff headwinds. The company has pivoted successfully back to comparable sales growth, and Bloomingdale’s delivered its best holiday performance on record, underscoring momentum behind the group’s multi-banner strategy.

Sales Growth Returns as Strategic Efforts Gain Traction

For the first time since 2021, Macy’s returned to positive annual comparable sales growth—up 1.5% for 2025—while total net sales landed at $21.76 billion. After a transformational year, the company credited its “Bold New Chapter” strategy and investments in go-forward stores and digital offerings for the outperformance. Fourth-quarter comparable sales rose 1.8%, with go-forward channels up 2.0%, signaling operational headways despite store closures and tariff pressures.

Bloomingdale’s proved a particular standout, posting 9.9% comparable sales growth in Q4 and an 8.5% jump in net sales—its best holiday quarter ever. Macy’s core stores expanded strategic initiatives, launching “Reimagine 200” for 2026, extending the prior “Reimagine 125” project that drove 0.9% comparable store growth this quarter.

Profitability and Cash Flow Exceed Targets

Earnings also outperformed. Adjusted diluted EPS hit $2.32 for the year, topping guidance and outpacing management’s $2.00-$2.20 range. Free cash flow reached $797 million, up strongly year-over-year, enabling the company to boost share buybacks and dividends. Macy’s ended the year with over $1.2 billion in cash and reduced total debt by more than $340 million.

While gross margins saw a modest 40-50 basis point decline due to tariffs and inventory actions, disciplined cost controls—including benefits from store closures—helped keep selling, general and administrative (SG&A) expenses in line.

Shareholder Returns and Financial Strength Remain Solid

The company returned $448 million to shareholders this year—including $251 million in share repurchases and $197 million in dividends. The quarterly dividend was increased by 5% for April 2026, reflecting confidence in Macy’s cash position and future prospects. At year-end, the company maintained robust liquidity with $1.2 billion cash on hand and available borrowing capacity of $2 billion, with no material long-term debt coming due until 2030.

2026 Guidance Takes a Cautious View Amid External Uncertainties

Looking ahead, Macy’s management adopted a notably cautious stance for fiscal 2026. The company expects net sales between $21.4 and $21.65 billion and adjusted EPS between $1.90 and $2.10, reflecting the anticipated tariff impact, ongoing investment in store and digital upgrades, and more modest comparable sales performance (guidance of -0.5% to +0.5%). EBITDA margins are forecast in the 7.7-7.9% range.

Key Takeaway: Strong Execution with Prudent Outlook

After delivering on its transformational roadmap and achieving a long-awaited return to top-line growth, Macy’s heads into a challenging year with increased flexibility and strong brand momentum. While 2026 guidance assumes softer discretionary spending and macro volatility, the results reaffirm the benefits of focused portfolio management—and show that its premium banners, digital investments, and store reinventions are bearing fruit.

Investors and market-watchers will be paying close attention to whether Macy’s can maintain this momentum, especially as it navigates shifting consumer habits and competitive dynamics in the months ahead.

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