Macy’s has revised its full-year sales forecast downward, reflecting the challenges faced by department stores as they grapple with increasingly selective shoppers and heightened promotional activities. The iconic retailer now anticipates net sales to range between $22.1 billion and $22.4 billion, a reduction from its earlier forecast of $22.3 billion to $22.9 billion, meaning a decline of $23.09 billions in a year.
The company also adjusted its expectations for comparable sales, which are now expected to decline between 2% and 0.5%. Previously, Macy’s had forecasted a potential decline of 1% to a modest gain of 1.5%. This metric, which includes owned and licensed sales, is crucial as it reflects the overall health of the retailer’s core business, stripping out the effects of store openings and closures.
In its recent fiscal second quarter, Macy’s delivered mixed results. While the company surpassed Wall Street’s earnings expectations with 53 cents per share, it fell short on revenue, bringing in $4.94 billion compared to the anticipated $5.12 billion. Following the announcement, Macy’s shares dropped by over 9% in premarket trading, signaling investor concern over the retailer’s future performance.
The retailer has been working diligently to regain its footing and achieve sustained growth. Earlier this year, Macy’s announced plans to shutter approximately 150 of its namesake stores—nearly a third of its total—by early 2027. The focus will shift to the remaining 350 locations, with additional investment aimed at revitalizing these stores. Furthermore, Macy’s is expanding its presence in suburban strip malls with new, smaller store formats and is adding more locations for its better-performing brands, Bloomingdale’s and Bluemercury.
Despite these efforts, the recent quarter’s results highlight the ongoing challenges Macy’s faces in its comeback attempt. The namesake Macy’s brand remains the company’s weakest performer, with comparable sales declining by 3.6% on an owned-plus-licensed basis, including sales from its third-party marketplace. Bloomingdale’s fared slightly better but still saw a 1.4% decline in comparable sales, while Bluemercury, a beauty brand under Macy’s umbrella, managed a 2% increase in sales, marking its 14th consecutive quarter of growth.
Even with the store closures factored out, sales at Macy’s remaining locations have been lackluster. Comparable sales for the go-forward Macy’s brand, which includes stores that will remain open and online sales, fell by 3.3% on an owned-plus-licensed basis.
Macy’s has made some progress in its turnaround plan, which was rolled out earlier this year. At the first 50 stores to receive additional investment, comparable sales rose by 1% on an owned-plus-licensed basis, marking the second consecutive quarter of growth for these locations. These stores have outperformed other Macy’s locations, even in challenging categories like handbags. Moving forward, Macy’s plans to extend this strategy to more stores and will increase staffing in key departments such as women’s shoes and handbags.
Adding to its challenges, Macy’s recently faced pressure from activist groups seeking to take the company private. However, Macy’s board unanimously decided to end negotiations with these groups last month, opting to stay the course with its current strategy.
As of the latest report, Macy’s stock has fallen about 12% this year, trailing behind the S&P 500’s gain of approximately 17% during the same period. The retailer’s efforts to turn around its business will be closely watched as it navigates a challenging retail environment.
