Macy's is set to release its latest earnings report on December 3, 2025 (before the U.S. market opens). The market is keenly watching the impact of the retailer's holiday season inventory and promotional strategies on revenue and margins, as well as any revisions to its full-year guidance.

Market Forecast

The market consensus estimates that total revenue for this quarter will be approximately $4.60 billion, representing a year-over-year (YoY) decline of 3.72%. The EPS for the quarter is projected at -$0.16, down roughly 9.37% YoY. EBIT is expected to report a loss of $36.66 million, a significant YoY decline of about 196.14%. If Macy's management did not provide detailed guidance on gross margin, net profit, net margin, or adjusted EPS for this quarter in the previous earnings call, the market forecast will be the primary reference.

In terms of business segments, women’s accessories, lingerie, footwear, cosmetics, and fragrances remain the central highlights, generating $1.954 billion in revenue last quarter. High-growth areas include the beauty and accessories segment with higher-margin product lines, benefiting from holiday demand and an increase in average gift transaction prices. This segment, which generated $1.954 billion (the highest share among Macy's categories) last quarter, is expected to support holiday season profitability.

Last Quarter Review

Last quarter, Macy’s revenue totaled $4.812 billion, down 2.53% YoY. The gross margin was 41.99%, with YoY changes undisclosed. Net profit attributable to shareholders was $87 million, a sequential increase of 128.95%, with a net margin of 1.74% (YoY changes undisclosed). Adjusted EPS stood at $0.41, down 22.64% YoY. The company's disciplined approach to inventory and discount management provided positive surprises in net margin and EPS, supported by a high-margin product structure.

By category, women’s accessories, lingerie, footwear, cosmetics, and fragrances collectively contributed $1.954 billion, accounting for approximately 39.09% of total revenue—Macy’s most significant segment. Women’s apparel brought in $1.094 billion, while men’s and children’s apparel generated $1.028 billion. Other apparel contributed $736 million, with miscellaneous categories generating $187 million.

Outlook for This Quarter

Balancing In-Store Traffic, Online Order Fulfillment, and Promotional Strength

The key to revenue performance during the holiday season lies in managing foot traffic in physical stores and online order fulfillment. The market expects revenue of around $4.60 billion, down 3.72% YoY, indicating that the company is seeking an equilibrium between cautious promotions and efficient inventory turnover to balance profitability and top-line results. Excessive promotion may boost short-term traffic and conversions but could erode margins. On the other hand, insufficient promotional strength might weaken revenue and turnover speed, thereby suppressing same-store sales and GMV.

Last quarter’s gross margin of 41.99% reflects Macy’s ability to control procurement and discounts. If Macy’s continues applying targeted SKU-level discounts and gift set strategies during the holiday season, it could theoretically mitigate margin pressures. However, the market anticipates a challenging profitability scenario for the quarter, with a projected EPS of -$0.16 and negative EBIT. This suggests that Macy’s holiday-season revenue structure may lean on volume-driven sales through lower-price promotions, presenting pressure on margins.

Online fulfillment costs and in-store staffing arrangements will also influence net margin and operating expense rates. Initiatives such as in-store pickup, appointment-based makeup trials/fashion styling, and membership incentives could convert some fulfillment activities into in-store service experiences, helping reduce pure delivery costs while increasing upselling opportunities and average transaction sizes.

Structural Support from High-Margin Categories and Gift Transaction Values

Women’s accessories, lingerie, footwear, cosmetics, and fragrances remained the highest revenue-contributing category last quarter at $1.954 billion, approximately 39.09% of total revenue. These categories typically exhibit stronger gift-driven momentum and margin advantages during the holiday season. By maintaining 「gift sets + exclusive shades/scents + members-only gift boxes」 as a bundled strategy, Macy’s could improve average transaction value and add-on purchase rates, alleviating margin pressure from direct discounts.

Cosmetics and fragrances often enjoy stable repeat-purchase and gifting demand. Combined with brand-driven marketing and counter-based experiential activities, these categories can drive incremental store traffic and cross-category purchases, such as scarves, gloves, and leather goods in the accessories category, boosting overall transaction values.

Negative market projections for EBIT and EPS this quarter highlight ongoing profitability pressures. If Macy’s manages inventory turnover and promotional execution effectively in the high-margin gift category, it could offset end-of-season clearance pressures from other apparel segments. Conversely, excessive discounts or inventory mismatches in the gift segment could weaken profit recovery.

Seasonality and Inventory Turnover in Core Apparel Categories

Women’s apparel, along with men’s and children’s apparel, collectively generated approximately $2.122 billion in revenue last quarter, serving as another pillar of Macy’s scale. Holiday apparel typically follows a cycle of 「promotion-driven volume sales—end-of-season clearance.」 If new arrivals are introduced at the right time with adequate size/style coverage and tiered discounts or member pre-order strategies, revenue declines could moderate.

Apparel margins are especially susceptible to end-of-season clearance dynamics. Given market expectations of pressure on EPS and EBIT this quarter, apparel promotions are likely to intensify compared to the previous quarter. The focus will be on enhancing turnover efficiency and reducing obsolete inventory and return rates. Improved reverse logistics and size exchange services in logistics can minimize losses from returns.

If Macy’s improves in-store displays and online visual styling for conversions and coordinates cross-category sales strategies with holiday gift cards and bundled products, apparel and beauty/accessory linkages can optimize overall margin structure.

Analyst Opinions

Over the past six months, analysts have predominantly adopted a cautious outlook on Macy’s upcoming quarterly performance. Market projections for Revenue, EBIT, and EPS for this quarter are all YoY negative, reflecting a consensus bearish stance. Analysts have focused on three core concerns: insufficient same-store sales recovery, promotional strength potentially compressing margins, and inventory/category structure facing clearance pressure later in the holiday season.

Market consensus estimates point towards revenue of approximately $4.60 billion (down 3.72% YoY), projected EPS of -$0.16 (down 9.37% YoY), and expected EBIT of -$36.66 million (down 196.14% YoY). These figures embody bearish expectations, highlighting concerns about prioritizing volume over pricing control, leading to profitability pressures.

Bears argue that if Macy’s intensifies discounts on women’s or mass-market apparel to maintain foot traffic and turnover, margins could suffer despite the 41.99% gross margin achieved last quarter. Even with structural advantages in high-margin gift categories, weaker-than-expected results from brand partnerships and membership conversions could limit their ability to offset clearance-related margin losses in apparel segments. Analysts are also monitoring cost pressures from online fulfillment and reverse logistics. If order fluctuations reduce efficiency, net margins could decline compared to last quarter’s 1.74% level.

Conversely, the few bullish outlooks focus on Macy’s potential SKU optimization, inventory discipline, and strategies to enhance in-store experiences and private-member channels to boost average transaction values. However, these views lack strong quantitative support to challenge the prevailing consensus forecasts.

In conclusion, the consensus expectation leans towards cautious conclusions. Key aspects to watch include the balance between promotional depth and gross margin for the holiday season, the pulling power of women’s accessories and beauty segments, inventory turnover and end-of-season clearance pace, online fulfillment cost controls, and whether management provides more transparency on full-year profit paths during the December 3, 2025, guidance.