Macy's (M.US) comfortably surpassed Wall Street expectations in its most recent quarter and raised its performance guidance for the remainder of the fiscal year, signaling continued consumer spending despite economic concerns. The company released its Q3 report before the market opened on Wednesday, Eastern Time, with revenue reaching $4.7 billion, exceeding the consensus estimate of $4.56 billion. Adjusted earnings per share came in at $0.09, outperforming analysts' forecast of -$0.13. Comparable sales, calculated on an owned-plus-licensed-plus-third-party basis, grew by 3.2%, surpassing the company's previous guidance range.
"Our Q3 sales were the strongest in the past 13 quarters," said Macy's CEO Tony Spring in a statement. "As we enter the holiday season, we are well-prepared." The stronger sales drove better-than-expected quarterly profits, with tariff relief measures and cost-cutting efforts also contributing positively.
Despite the strong performance, Macy's shares fell over 6% in pre-market trading, as multiple retailers' upbeat reports had already raised market expectations. The stock has surged 34% year-to-date, with significant gains in the past week.
The company raised its full-year adjusted EPS guidance to a high of $2.20, up from its September projection of $2.05. The largest U.S. department store chain also lifted its revenue guidance range to $21.5–$21.6 billion, above prior expectations.
Macy's updated guidance suggests management expects consumers to maintain some of the spending momentum seen during Black Friday and Cyber Monday shopping events. This performance may bolster Wall Street's confidence in CEO Spring's turnaround strategy. Since taking the helm in 2024, he has focused on investing in Macy's stores with the highest sales potential, enhancing staffing, marketing, and store displays.
The New York-based company reported significant year-over-year net sales growth at its Bloomingdale's chain in the latest quarter, while Bluemercury also saw rising sales.
Following Kohl's (KSS.US) upward revision of its full-year outlook in late November, some Wall Street firms had already raised expectations for Macy's. Best Buy (BBY.US) and Dick's Sporting Goods (DKS.US) also lifted their guidance late last month, further indicating U.S. consumers remain willing to spend at retailers offering desired products at competitive prices.
However, challenges remain for Spring in reviving Macy's former glory. UBS analyst Jay Sole noted in a December 1 research report that the department store has lost over a quarter of its market share since 2012 to discount retailers, brand-owned stores, and Amazon. The company plans to close about 150 underperforming stores by 2026.
Still, signs suggest Macy's is gaining momentum. Analysts Marie Rose Gilbert and Poonam Goyal highlighted Bloomingdale's particularly strong performance, taking market share from Saks Global, which has seen double-digit sales declines. Macy's store revamp efforts are also progressing. "Our surveys indicate improvements in Macy's women's apparel assortment and merchandise presentation—both in stores (especially remodeled locations) and online," they noted.