Macy’s (M) Q4 2024 earnings

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Macy’s (M) Q4 2024 earnings

Macy’s delivered another quarter of mixed results on Thursday as investors wait and see how quickly CEO Tony Spring can pull off a turnaround of the business with yet another activist investor looking to take the chain private.

Across the business, which includes the Macy’s banner, Bloomingdale’s and Blue Mercury, comparable sales during the all-important holiday quarter were down 1.1%. But comparable sales across its owned and licensed businesses, plus its online marketplace, were up 0.2%, which is the highest the metric has been since the first quarter of 2022. 

Plus, the so-called First 50 locations – the stores that Macy’s is devoting more resources to as part of its turnaround plan – saw comparable sales up 0.8%, marking the fourth quarter in a row the metric has been positive. 

The two bright spots in an otherwise worse-than-expected set of results suggest Macy’s turnaround is showing some signs of life – it just might take a bit longer than expected. 

For fiscal 2025, Macy’s is expecting adjusted earnings per share of $2.05 to $2.25 and sales of between $21 billion and $21.4 billion, lower than Wall Street expectations of $2.31 per share and $21.8 billion, according to LSEG.

Shares of Macy’s were down more than 4% in premarket trading.

Here’s how the department store performed during its fiscal fourth quarter, compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: $1.80 adjusted vs. $1.53 expectedRevenue: $7.77 billion vs. $7.87 billion expected

The company’s reported net income for the three-month ******* that ended Feb. 1 was $342 million, or $1.21 per share, compared with a loss of $128 million, or a loss of 47 cents per share, a year earlier. Excluding one-time items including impairments and settlement and restructuring charges, Macy’s reported earnings of $507 million, or $1.80 per share. 

Sales dropped to $7.77 billion, down about 4% from $8.12 billion a year earlier. Like other retailers, Macy’s benefited from an extra selling week in the year-ago *******, which has skewed comparisons. 

Macy’s mixed results come just over a year into CEO Spring’s tenure as the legacy department store’s chief executive. While Bloomingdale’s and Blue Mercury saw another quarter of positive comparable sales, growing 4.8% and 6.2%, respectively, Macy’s namesake banner continues to be the company’s laggard with comps down 1.9%. 

To address long-standing issues at the legacy banner, Spring has implemented an aggressive store closure plan that includes shuttering 150 stores and a strategy to fix its better-performing locations. As Macy’s and other department stores have shrunk over the years, it’s faced criticism for neglecting its stores, not having enough staff and falling behind on the retail essentials that are necessary to win in any environment. 

Spring has started to address those issues by investing in 50 locations and providing better staffing, merchandising and visual presentation of the company’s varied assortment. So far, the plan appears to be working. Those locations have performed better than the bulk of the chain and the company plans to expand the strategy beyond those 50 stores.

Still, Macy’s will have about 350 namesake locations left over after it finishes closing stores, and it will take time – and capital – to extend its strategy to the bulk of the chain. Whether or not investors have the patience to see Macy’s strategy play out remains to be seen. 

In December, activist investor Barington Capital revealed it has a position in Macy’s and wants the company to cut spending, explore selling its luxury brands and take a hard look at its real estate portfolio. It’s the fourth activist push at the department store in the last decade.

Like the activists that had come right before it, Arkhouse and Brigade, many suspect that Barington is mainly after Macy’s lucrative real estate portfolio and is more interested in juicing it for profit than doing the work necessary to revitalize the chain. Still, Macy’s must act in the interest of shareholders and if it’s not doing enough to return value quickly, an activist could eventually win out.

Macy’s on Thursday announced its intent to resume share buybacks under its remaining $1.4 billion share repurchase authorization, “market conditions pending.” 

“Building on our momentum, we continue to elevate the customer experience, deliver operational excellence and make prudent capital investments,” Adrian Mitchell, Macy’s chief operating officer and chief financial officer, said in a statement. “We remain committed to generating healthy free cash flow and returning capital to shareholders through share buybacks and predictable quarterly dividends.” 

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