8-K: Macy's Exceeds Guidance, Returns to Sales Growth in FY25

Macy's, Inc. reported strong fourth-quarter and fiscal year 2025 results, exceeding guidance with a return to positive comparable sales growth and increased shareholder returns.

Summary

• Macy's, Inc. reported net sales of $7.6 billion for the fourth quarter of 2025, exceeding guidance.
• Comparable sales for Macy's, Inc. grew 1.8% in Q4 2025, also exceeding the company's guidance.
• For fiscal year 2025, Macy's, Inc. returned to positive comparable sales growth, up 1.5%.
• GAAP diluted earnings per share (EPS) and Adjusted diluted EPS for FY 2025 were $2.32, surpassing the company's most recent guidance range of $2.00 to $2.20.
• Bloomingdale's achieved its best holiday performance on record in Q4 2025, with comparable sales rising 9.9%.
• The company ended fiscal year 2025 with $1.2 billion in cash and cash equivalents and generated $0.8 billion in free cash flow.
• Macy's, Inc. returned $448 million to shareholders in FY 2025, comprising $197 million in cash dividends and $251 million in share repurchases.
• Macy's is expanding its strategic initiatives to 75 additional stores, creating 'Reimagine 200' for 2026.
• Fiscal year 2026 guidance projects net sales between $21.4 billion and $21.65 billion, comparable sales change between (0.5%) and 0.5%, and Adjusted diluted EPS between $1.90 and $2.10.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, demonstrating Macy's ability to exceed guidance and return to comparable sales growth, particularly with strong performance from Bloomingdale's, despite ongoing tariff headwinds and a cautious outlook for 2026.

Positives

• Fourth Quarter 2025 net sales of $7.6 billion exceeded guidance.
• Fourth Quarter 2025 comparable sales grew 1.8%, exceeding company guidance.
• Macy's, Inc. returned to positive comparable sales growth for fiscal year 2025, up 1.5%.
• GAAP diluted EPS and Adjusted diluted EPS of $2.32 for FY 2025 exceeded the most recent guidance range of $2.00 to $2.20.
• Bloomingdale's comparable sales rose 9.9% in Q4 2025, achieving its best holiday performance on record.
• Ended FY 2025 with $1.2 billion of cash and cash equivalents and generated $0.8 billion free cash flow.
• Returned $448 million to shareholders in FY 2025, including $197 million in cash dividends and $251 million in share repurchases.
• The board of directors declared a 5% increase in the regular quarterly dividend to 19.15 cents per share, payable April 1, 2026.
• Credit card revenues, net increased 17.1% in Q4 2025 to $205 million and 24.6% for FY 2025 to $669 million, reflecting a healthy credit portfolio.
• Operating income increased to $745 million in Q4 2025 from $500 million in Q4 2024.
• Net income increased to $507 million in Q4 2025 from $342 million in Q4 2024.
• The company has no material long-term debt maturities until 2030.

Negatives

• Gross margin rate decreased 50 basis points in Q4 2025, primarily due to an approximately 60 basis point tariff impact.
• Gross margin rate declined 40 basis points for FY 2025, attributable to a 40 basis point tariff impact and proactive markdowns.
• Asset sale gains were $3 million in Q4 2025 compared to $41 million in Q4 2024, reflecting fewer transactions.
• Asset sale gains for FY 2025 were $48 million, $96 million lower than FY 2024.
• Adjusted EBITDA decreased to $840 million in Q4 2025 from $903 million in Q4 2024.
• Adjusted EBITDA decreased to $1.8 billion in FY 2025 from $2.0 billion in FY 2024.
• Fiscal Year 2026 guidance for net sales ($21.4 billion to $21.65 billion) is lower than FY 2025 actuals ($21.8 billion).
• Fiscal Year 2026 guidance for Adjusted diluted EPS ($1.90 to $2.10) is lower than FY 2025 actuals ($2.15).
• Fiscal Year 2026 comparable sales guidance is flat to slightly negative (-0.5% to 0.5%).

Risks

• Ability to successfully implement its Bold New Chapter strategy and realize anticipated benefits.
• Competitive pressures from specialty stores, general merchandise stores, off-price and discount stores, manufacturers outlets, the Internet, and catalogs.
• General consumer spending levels, including the impact of the availability and level of consumer debt.
• Conditions to, or changes in the timing of proposed real estate and other transactions.
• Declines in credit card revenues.
• Possible systems failures and/or security breaches.
• Business, legal, and ethical challenges related to the use of artificial intelligence.
• Reliance on foreign sources of production, including risks related to the disruption of imports by labor disputes, regional or global health pandemics, regional political and economic conditions.
• Effect of potential changes to trade policies (tariffs).
• Effect of weather, inflation, inventory shortage, and labor shortages.
• Potential for the incurrence of charges in connection with the impairment of tangible and intangible assets, including goodwill.
• Ability to execute on strategies and achieve expectations related to environmental, social, and governance matters.
• Macroeconomic and geopolitical factors that could influence discretionary spend.

Future Outlook

Macy's provides fiscal year 2026 guidance, projecting net sales between $21.4 billion and $21.65 billion, comparable sales change between (0.5%) and 0.5%, and adjusted diluted EPS between $1.90 and $2.10. The guidance adopts a prudent approach due to potential macroeconomic and geopolitical factors influencing discretionary spend, anticipating a larger tariff impact in the first half of the year, particularly Q1, and reflecting ongoing investments in 'Reimagine 200' locations and luxury nameplates to support long-term top-line growth.

Management Comments

• "As we wrap up year two of the Bold New Chapter, I’m pleased with the growth and progress we’re making against our strategic priorities."
• "At Macy’s, we are offering more relevant brands, stronger storytelling and investing in our colleagues so we can better serve the customer."
• "Bloomingdale’s exceptional performance underscores its ability to elevate the customer experience and capture demand across premium contemporary to luxury businesses."
• "Looking to 2026 and beyond, we are ready to build on our progress."

Industry Context

StockSavvy.ai notes that Macy's return to positive comparable sales growth and strong performance from its luxury brand, Bloomingdale's, indicates resilience in a challenging retail environment. The focus on 'go-forward' stores and strategic initiatives like 'Reimagine 200' aligns with broader industry trends of optimizing physical footprints and enhancing customer experience to compete with e-commerce and off-price retailers. The tariff impact highlights ongoing global supply chain and trade policy challenges affecting the retail sector.

Comparison to Industry Standards

• Macy's comparable sales growth of 1.8% in Q4 and 1.5% for FY25, while positive, should be benchmarked against other major department stores and specialty retailers. For instance, Nordstrom reported a 2.3% comparable sales increase for its full-price business in Q4 2023 (fiscal year ending Feb 2024), and Kohl's reported a 4.3% comparable sales decrease in Q4 2023.
• Bloomingdale's 9.9% comparable sales growth in Q4 is a strong performance, potentially outperforming many luxury segments, which have seen mixed results. For example, LVMH reported 10% organic revenue growth in Q4 2023, indicating a robust luxury market.
• The dividend increase and share repurchases demonstrate a commitment to shareholder returns, a common practice among mature retailers with stable cash flows, but the magnitude should be compared to peers' capital allocation strategies.

Legal Proceedings

• Pre-tax income of $328 million was recognized related to the settlement of agreements to resolve credit card interchange fee litigation matters, net of legal fees, included in Q4 and FY 2025 results.

Stakeholder Impact

• Shareholders: Positive impact due to exceeding guidance, return to comparable sales growth, increased dividend, and ongoing share repurchase program.
• Employees: Investments in colleagues mentioned by CEO, suggesting potential positive impact.
• Customers: Focus on 'more relevant brands, stronger storytelling' and enhanced customer experience (especially at Bloomingdale's) aims to improve customer satisfaction.
• Creditors: Healthy credit portfolio and no material long-term debt maturities until 2030 indicate strong financial health.

Next Steps

• Continue implementing the 'Bold New Chapter' strategy.
• Expand strategic initiatives to 75 additional stores, creating 'Reimagine 200' for 2026.
• Ongoing investments in 'Reimagine 200' locations and luxury nameplates to support long-term top-line growth.
• Manage business model flexibility to respond to changes in the competitive landscape and external environment in 2026.
• Address tariff impacts, especially in the first half of 2026.

Key Dates

Recommendation

Macy's demonstrated better-than-expected performance for Q4 and FY25, returning to positive comparable sales growth and increasing shareholder returns. The 'Bold New Chapter' strategy shows traction, particularly with Bloomingdale's strong results. However, the FY26 guidance is cautious, projecting flat to slightly negative comparable sales and lower EPS, partly due to anticipated tariff impacts and ongoing investments. While the company is executing its strategy, the challenging retail environment and modest future outlook suggest a 'hold' position until there is clearer evidence of sustained growth acceleration and improved profitability projections.

Keywords

Macy's, Bloomingdale's, Bluemercury, Retail, Department Store, Financial Results, Earnings, Comparable Sales, Shareholder Returns, Dividends, Share Repurchase, Bold New Chapter, Reimagine 200, Q4 2025, FY 2025, FY 2026 Guidance, GAAP, Non-GAAP, EBITDA, EPS, Credit Card Revenue, Tariffs, Real Estate