Q4 2025 Earnings Summary
- Macy's investments in customer experience are yielding positive results, with initiatives in the first 50 stores showing growth, and the company has expanded these changes to an additional 75 stores, totaling 125 reimagined locations representing 36% of the Macy's go-forward store base. These investments are expected to drive further sales growth as they are scaled across more locations.
- Improved inventory management has resulted in more newness and less aged inventory entering fiscal 2025, positioning Macy's well to meet customer demand and potentially improve margins. The company reports that inventories were up only 2.5% year-over-year, with a better composition and higher in-transit inventory due to improved supply chain speed.
- Macy's is committed to closing underperforming stores, with plans to close approximately 150 stores by the end of fiscal 2026. This allows the company to focus on its go-forward stores, invest savings into growth initiatives, and return capital to shareholders through share buybacks and dividends. Last year, they closed 64 stores, exceeding expectations and resulting in asset sale gains.
- Macy's executives express concerns about the uncertain macroeconomic environment, including inflationary pressures and potential tariff impacts, which could negatively affect consumer spending and the company's performance.
- The home business is under pressure due to high interest rates, weak housing starts, and competitive pressures, and the company's private brand refresh in this category won't launch until mid-2025, indicating ongoing weakness in that segment.
- Management acknowledges ongoing consumer pressure without short-term relief and the persistent promotional environment, which could continue to pressure margins and affect sales.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Down 4.4% (from $8.375B in Q4 2024 to $8.007B in Q4 2025) | Total revenue fell by 4.4% despite overall operational improvements, indicating that external pressures—likely including softer consumer demand or competitive headwinds—persisted from the previous period, reflecting ongoing macroeconomic and marketplace challenges. |
Operating Income | Turnaround from an operating loss of $71M to $500M | Operating income improved dramatically, shifting from a loss to a $500M profit. This turnaround suggests that company-specific initiatives such as cost control, operational efficiency improvements, and strategic expense management effectively reversed prior losses while offsetting the revenue decline. |
Net Income | Shift from a loss of $70M to $342M | Net income moved sharply into profitability, climbing from a $70M loss to $342M in Q4 2025. This reversal was driven by the same factors underpinning improved operating income—better expense discipline and enhanced profitability—which more than compensated for the modest revenue drop. |
Basic EPS | Recovery from ($0.26) to $1.23 | Basic EPS rebounded sharply from a negative figure to $1.23, reflecting the overall positive impact of the cost-control measures and operational improvements that drove the turnaround in net and operating income, thereby restoring shareholder value relative to the prior period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Sales (Quarterly) | Q1 2025 | no prior guidance | $4.4 billion to $4.5 billion | no prior guidance |
Macy's Inc. Comparable Sales (Comps) | Q1 2025 | no prior guidance | Down 4.5% to down 2.5% | no prior guidance |
Core Adjusted EBITDA as a % of Total Rev. | Q1 2025 | no prior guidance | 6.4% to 6.6% (versus 7.3% last year) | no prior guidance |
Adjusted EPS | Q1 2025 | no prior guidance | $0.12 to $0.15 | no prior guidance |
Net Sales (Annual) | FY 2025 | no prior guidance | $21 billion to $21.4 billion | no prior guidance |
Macy's Inc. Comparable Sales (Comps) | FY 2025 | no prior guidance | Down 2% to down 0.5% | no prior guidance |
Macy's Inc. Go-Forward Comps | FY 2025 | no prior guidance | Down roughly 2% to flat | no prior guidance |
Other Revenues | FY 2025 | no prior guidance | $835 million to $845 million, up roughly 75 basis points as a % of net sales | no prior guidance |
Credit Card Revenues | FY 2025 | no prior guidance | Expected to contribute roughly 55 basis points of improvement | no prior guidance |
Gross Margin as a % of Net Sales | FY 2025 | no prior guidance | Expected to improve by 10 to 40 basis points compared to fiscal 2024 | no prior guidance |
SG&A Expenses | FY 2025 | no prior guidance | Down low single digits on a dollar basis, but as a percent of total revenue about 100 basis points higher | no prior guidance |
Asset Sale Gains | FY 2025 | no prior guidance | Approximately $90 million | no prior guidance |
Asset Sale Monetization Proceeds | FY 2025 | no prior guidance | Approximately $175 million | no prior guidance |
Adjusted EBITDA as a % of Total Rev. | FY 2025 | no prior guidance | 8.4% to 8.6% | no prior guidance |
Core Adjusted EBITDA as a % of Total Rev. | FY 2025 | no prior guidance | 8% to 8.2% (versus 8% in fiscal 2024) | no prior guidance |
Adjusted Diluted EPS | FY 2025 | no prior guidance | $2.05 to $2.25 | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | Approximately $800 million | no prior guidance |
Net Sales (Quarterly) | Q4 2024 | no prior guidance | $7.8 billion to $8 billion (with 13‐week outlook: down ~1% to up ~1.5%) | no prior guidance |
Other Revenues | Q4 2024 | no prior guidance | $206 million to $216 million, including credit card revenues of ~$138–$148 million | no prior guidance |
Gross Margin Rate | Q4 2024 | no prior guidance | Approximately 35.3% to 35.7%, including an 85 basis point accounting adjustment for delivery expense | no prior guidance |
Adjusted Diluted EPS | Q4 2024 | no prior guidance | $1.40 to $1.65, including an approximately $0.17 adjustment for delivery expense | no prior guidance |
Asset Sale Gains | Q4 2024 | no prior guidance | Approximately $32 million | no prior guidance |
Net Sales (Annual) | FY 2024 | no prior guidance | $22.3 billion to $22.5 billion | no prior guidance |
Comparable Sales | FY 2024 | no prior guidance | Macy’s, Inc. comps: Down 1% to roughly flat; Macy’s nameplate go-forward: Down 1% to roughly flat; Luxury nameplates: Up 2% to 2.5% | no prior guidance |
Other Revenues | FY 2024 | no prior guidance | $680 million to $690 million, including credit card revenues of $500–$510 million | no prior guidance |
Gross Margin as a % of Net Sales | FY 2024 | no prior guidance | 38.2% to 38.3%, including a 40 basis point adjustment for delivery expense | no prior guidance |
SG&A as a % of Total Revenue | FY 2024 | no prior guidance | 36.5% to 36.3% | no prior guidance |
Asset Sale Gains | FY 2024 | no prior guidance | Approximately $135 million | no prior guidance |
Asset Sale Monetization Proceeds | FY 2024 | no prior guidance | Approximately $275 million (up from a prior outlook of $150 million) | no prior guidance |
Adjusted EBITDA as a % of Total Rev. | FY 2024 | no prior guidance | 8% to 8.4%, including a 35 basis point adjustment for delivery expense | no prior guidance |
Adjusted Diluted EPS | FY 2024 | no prior guidance | $2.25 to $2.50, including a $0.21 adjustment for delivery expense | no prior guidance |
Capital Expenditures | FY 2024 | no prior guidance | Approximately $895 million (down from $993 million last year) | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
First 50 Initiative | Consistently highlighted with positive comp results (e.g., 3.4% in Q1, 1% in Q2, 1.9% in Q3) and expansion drivers (e.g., staffing, digital channels) | Continued success with positive comps across all fiscal 2024 quarters and further expansion (added 75 stores to reimagined locations) | Consistently positive and expanding, reinforcing its role as a growth engine. |
Store Modernization | Emphasized across Q1–Q3 through pilot initiatives focused on improved customer experience and merchandising adjustments | Featured as a key part of the Bold New Chapter strategy with 125 reimagined stores now representing 36% of the store base | Sustained and escalated focus that builds on earlier pilots to drive operational transformation. |
Store Closures and Portfolio Optimization | Addressed in Q1 with plans to close 150 stores and in Q2–Q3 with adjusted numbers (50 to 65 closures) and asset monetization strategies | Reiterated with actual closures (64 stores in fiscal 2024) and asset sale gains of $144 million, alongside an expanded reimagined fleet | Consistent focus with increasing scale, underscoring efforts to optimize the portfolio and redeploy capital. |
Inventory Management and Supply Chain Enhancements | Detailed in prior periods with metrics on modest YoY increases, improved order fulfillment speeds, and disciplined inventory composition | Noted a 2.5% YoY increase (attributed partly to cost accounting changes) and significant improvements in fulfillment speed and inventory quality | Steady improvements reflecting continued investments in efficiency and inventory discipline. |
Macroeconomic Uncertainty and Consumer Spending Pressure | Cautious tone noted in Q1 (consumer under pressure) and maintained through Q2 and Q3 with a focus on discriminating discretionary spending | Emphasized ongoing consumer pressure from high food, housing costs, and inflation along with overall macro uncertainty | Persistent caution that continues to weigh on consumer sentiment despite internal improvements. |
Luxury and High-Margin Segment Performance | Moderately positive in Q1 (modest comp gains) and mixed in Q2 (slight declines for Bloomingdale's, steady Bluemercury) with incremental improvement in Q3 | Q4 delivered robust performance—with Bloomingdale's achieving a 6.5% comp increase and Bluemercury marking its 16th consecutive positive quarter | Markedly improved sentiment – turning trends in the luxury segment into a notable bright spot. |
Digital Transformation and E-commerce Initiatives | Q1 launched new digital initiatives, Q2 and Q3 showcased investments in SEO, site enhancements, and omni-channel improvements | Q4 reported further digital enhancements (site navigation, competitive pricing algorithms) and positive digital sales growth | Consistent, positive momentum, reflecting ongoing refinements and customer experience improvements. |
Small Format Store Expansion | Actively mentioned in Q1 (new store in NJ, 11 more planned), Q2 (six openings in spring and six planned in fall), and Q3 (reaching 24 locations) | Not mentioned in Q4 discussions | Topic no longer mentioned, suggesting a possible strategic shift or lower priority in this period. |
Credit Risk and Consumer Financial Stress | Covered in Q1 (better-than-expected credit revenue and stable portfolio), Q2 (increased credit card revenue and stable net losses), and Q3 (consistent performance relative to forecasts) | Q4 noted stabilized credit card revenues with better profit sharing and controlled net credit losses despite consumer financial stress | Steady management with consistent risk controls amid an environment of sustained consumer financial pressure. |
Reduced Emphasis on Home Business and Tariff Concerns | Barely mentioned in prior periods—with Q1 noting home business challenges without tariff discussion | Q4 explicitly addressed home business softness (due to interest rates and housing starts) and highlighted a case-by-case approach to tariff uncertainty | Emerging as a new focus in Q4, indicating a strategic pivot in response to external headwinds for the home segment. |
Competitive Pressures and Merchandise Margin Challenges | Discussed across Q1 (80 bp margin decline), Q2 (margin benefits from lower discounting but persistent promotional pressures), and Q3 (70 bp margin decline due to product mix and discounting) | Q4 did not explicitly label these challenges but noted that favorable shortage trends partly offset product mix issues, with a balanced pricing strategy | Challenges persist, yet the Q4 narrative appears more balanced with indications of mitigating actions. |
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Same-store Sales Guidance
Q: What's driving pressure on same-store sales and margins?
A: Our reimagined stores show strength, leading to the best comps in 11 quarters, but untouched stores lag. We're cautious due to the uncertain environment but confident in our strategy. -
Consumer Health Outlook
Q: What's the consumer health outlook for the year?
A: Consumers remain under pressure from inflation and costs yet seek indulgences. We don't expect relief soon and focus on compelling offerings. -
Promotional Environment
Q: What's your outlook on promotional levels?
A: The promotional environment is consistent. Inventory is up 1.5% to 2%, slightly above target but better than competitors, with more newness and less aged inventory. -
Private Label Strategy
Q: How will private label impact your business?
A: Private label penetration is at an all-time low, offering margin opportunity. We've reimagined over 20 brands, insulating us from tariff uncertainty. -
Store Closures
Q: What's the plan for store closures in 2025?
A: We're committed to closing approximately 150 stores by end of fiscal 2026. This improves viability and provides monetization opportunities. -
Category Performance
Q: How are key categories performing and what's expected?
A: Ready-to-wear, handbags, and women's shoes are strong, especially in invested stores. Home is soft due to interest rates; we're refreshing it mid-2025. -
Credit Trends
Q: Any notable changes in credit trends and losses?
A: Credit card revenues stabilized in 2024; we expect growth in 2025 with no meaningful changes in payment rates or losses quarter-to-date. -
Tariffs and Inflation Impact
Q: How are tariffs and inflation affecting your outlook?
A: Uncertainty persists with tariffs and inflationary pressures. We're managing inventory and sourcing to mitigate impacts; no tariff effect in Q1.