Macy’s Posts Earnings Beat, but Consumers Are ‘Choiceful’ Heading Into Holiday

Exterior view of Macy’s Herald Square store in New York City. (kena betancur / AFP/Getty Images))

Key Points

• Macy’s exceeds third-quarter earnings expectations but earnings guidance for the holiday quarter falls short of analysts’ estimates.
• Third-quarter revenue reaches $4.7 billion, exceeding analyst forecasts of $4.55 billion.
• Macy’s raises its fiscal year net sales guidance to $21.475 billion-$21.625 billion and earnings guidance to $2-$2.20 a share.

Macy’s , the department store chain, topped third-quarter earnings expectations and posted its strongest same-store sales growth in 13 quarters.

Yet investors had muted a reaction to the report Wednesday, reflecting their slight disappointment over the retailer’s outlook. Earnings guidance for the holiday quarter fell short of analysts’ estimates as the company takes what CEO Tony Spring calls a “prudent view” of the quarter.

“By prudent, I mean, sensible, thoughtful, well-informed—I’m not cautious or careful,” Spring said on a call with Barron’s early Wednesday. “We are excited about the holidays.”

Excited, but mindful that many aspirational customers in lower-middle-income households shop at Macy’s in the fourth quarter—customers that have proven to be value-focused and choiceful.

The company predicts that adjusted earnings per share will range between $1.35 to $1.55 for the fourth quarter, below analysts’ projections for $1.58, according to FactSet. The guidance for net sales—$7.35 billion to $7.5 billion—is slightly above forecasts for $7.3 billion.

Macy’s stock was up 1% in early afternoon trading, reversing earlier losses.

“The company is striking an appropriately cautious tone on 4Q, given the impact of tariffs on prices and somewhat waning consumer sentiment on spending,” wrote David Silverman, senior director of Fitch Ratings. “The holiday shopping season has just begun, and the trajectories of sales and promotional cadence over the coming weeks are uncertain.”

But Silverman believes Macy’s has the tools to navigate the environment, giving the company the opportunity to improve its longer-term position. And indeed, the company’s fiscal third quarter suggests that Spring’s turnaround strategy is starting to pay off.

Macy’s posted adjusted earnings of nine cents a share, coming in well above the loss of 13 cents analysts polled by FactSet were projecting. The beat was driven by better-than-expected sales and lower selling, general, and administrative expenses, Macy’s said. The company cut about $40 million in SG&A costs throughout the quarter.

Revenue of $4.7 billion was better than analysts’ projections for $4.55 billion, dipping 0.6% from a year earlier largely as a result of Macy’s ongoing store closures. Indeed, comparable sales at stores open for more than a year increased 2.5% year over year, better than the 0.6% decline analysts had penciled in.

The third-quarter sales were the strongest in 13 quarters, Spring said, which reflected the acceleration of his Bold New Chapter strategy, which aims to turn Macy’s businesses around by shutting down underperforming stores, enhancing merchandise assortment, and improving the shopping experience.

The company increased guidance for the fiscal year ending in January. Net sales will now range between $21.475 billion to $21.625 billion, higher than the September forecast calling for $21.15 billion to $21.45 billion. Fiscal-year earnings guidance also was tweaked higher to a range of $2 to $2.20 a share, up from $1.70 to $2.05.

Analysts had penciled in adjusted earnings of $2 a share on $21.3 billion in revenue.

“Macy’s benefited from accelerating momentum of their ‘Bold New Chapter’ strategy and consumer resilience within the majority of their middle-to-upper income consumer base, which gives us cautious optimism with respect to the margin outlook heading into 4Q25,” wrote TD Cowen analyst Oliver Chen in a research note Wednesday.

Write to Sabrina Escobar at sabrina.escobar@barrons.com