Stocks of Macy's Fall as It Cuts Guidance in Light of External Uncertainties

Macy’s shares fell 4% in premarket trading on Thursday after the retailer lowered its profit outlook, citing "external uncertainties" as it continues efforts to revamp its business.

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The company stated that its reduced earnings expectations for the first quarter and the full fiscal year reflect an unpredictable environment for both its customers and its primary retail brands, including Macy’s, Bloomingdale’s, and Bluemercury. Macy’s emphasized that its fiscal year 2025 guidance takes a “prudent approach,” accounting for the challenges faced by both the company and its consumer base.

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The stock dropped 54 cents to $12.77 per share, marking its lowest point since late 2023.

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For the first quarter, Macy’s expects adjusted earnings between 12 cents and 15 cents per share—significantly below the 28 cents per share forecast by analysts. The company’s fiscal 2025 outlook is also lower than anticipated, with projected adjusted earnings ranging from $2.05 to $2.25 per share, compared to the $2.29 per share expected by Wall Street.

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Macy’s is not alone in offering a cautious profit outlook. Other major retailers—including Target, Abercrombie & Fitch, Best Buy, and Walmart—have also issued conservative forecasts as consumers feel the impact of newly imposed tariffs under President Donald Trump’s administration.

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Despite the profit warning, Macy’s fourth-quarter adjusted earnings surpassed expectations. The company reported adjusted earnings of $1.80 per share, exceeding both its internal projections and the $1.54 per share estimate from FactSet.

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Revenue for the quarter fell 4.3% year-over-year to $7.77 billion, slightly below the analyst forecast of $7.78 billion. Same-store sales, a key retail performance metric, declined by 1.1%. However, adjusted same-store sales, which account for new and closed locations, rose 0.2%, better than the anticipated 0.2% decline.

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Macy’s is pressing forward with its plan to shut down underperforming stores as part of a multi-year turnaround strategy. The company acknowledged that quarterly results may fluctuate throughout 2025 due to the evolving impact of its store optimization efforts, changes in asset sales, and broader market conditions.

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In the fourth quarter alone, Macy’s expanded its small-format store count by eight locations, bringing the total to 20. At the same time, the company closed 11 Macy’s Furniture locations, reducing the number to 34. Additionally, one Bloomingdale’s store was shut down, leaving 31 total locations, while two new Bloomingdale’s The Outlet stores opened, increasing that total to 23.

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The performance of Macy’s flagship locations remains a bright spot. The company’s top 50 stores reported a 1.2% increase in same-store sales during the fourth quarter. Bloomingdale’s also showed strength, with same-store sales rising 6.5% in the quarter.

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Macy’s store closure efforts are progressing faster than initially planned. In 2024, the retailer closed 64 of the 150 underperforming stores it targeted, exceeding its original goal of shutting down 50 locations. The company plans to continue this initiative into 2025 with a long-term aim of operating 125 “Macy’s Reimagine” locations—smaller, more efficient stores designed to enhance the shopping experience and drive profitability.

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The company’s cautious outlook highlights the ongoing challenges faced by the retail sector. Macy’s, like many traditional retailers, is navigating shifting consumer behaviors, increased competition from e-commerce, and broader economic uncertainty. The new tariffs imposed by the Trump administration add another layer of complexity, increasing costs and pressuring consumer spending.

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To adapt to these changing conditions, Macy’s is focusing on a combination of store closures, new store formats, and product adjustments. By accelerating the closure of underperforming locations and expanding small-format stores, the company hopes to streamline operations and improve profitability.

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While the near-term outlook remains uncertain, Macy’s stronger-than-expected fourth-quarter earnings suggest that some of its turnaround efforts are bearing fruit. However, with consumer sentiment and economic conditions still in flux, the company is taking a cautious stance on future performance.

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Looking ahead, Macy’s management acknowledges that 2025 will be a year of transition. The company’s focus will remain on executing its strategic initiatives while responding to external pressures. By continuing to refine its store portfolio and enhance customer engagement, Macy’s aims to position itself for long-term success despite the challenging retail landscape.

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In summary, Macy’s faces a difficult road ahead as it works through external uncertainties and evolving consumer behaviors. While recent earnings results provided some positive signals, the company’s reduced profit outlook and ongoing store closures underscore the complexities of its turnaround journey. With plans to continue optimizing its store network and adjusting to market realities, Macy’s is striving to navigate the current headwinds while laying the foundation for future growth.

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