Macy's (M.US) Posts First Positive Same-Store Sales in Three Years! Stock Price Surges Over 20% in a Single Day
According to Jinse Finance APP, shares of the well-known American department store retailer Macy’s (M.US) soared more than 20% by the close of U.S. trading on Wednesday. Its large-scale strategic reversal led to the first positive same-store sales growth in three years. However, the company still plans to further close stores to continue improving operating profit, attempting to simultaneously advance both “store revitalization” and “store closure for efficiency” plans.
In the second quarter, the retailer reported an overall same-store sales increase of 1.9% year-on-year, marking the largest increase in three years and the first positive same-store sales data since the first quarter of 2022. “This is just the beginning of our growth momentum,” said CEO Tony Spring, who has been at the helm since February 2024, to Wall Street analysts during the earnings call on Wednesday local time.
In the earnings report released on Wednesday, Macy’s raised its fiscal year revenue and profit forecasts, while narrowing the range of its same-store sales expectations, indicating that management is more optimistic about the improvement in same-store sales. Macy’s now expects its overall same-store sales (including company-operated stores as well as authorized and platform sales) to decline by 0.5% to 1.5% compared to last year, a smaller drop than the maximum decline of about 2% predicted in May.
Macy’s latest earnings report and outlook show that overall revenue in the second quarter fell 2.8% year-on-year to $4.81 billion, while the market expected $4.76 billion. Adjusted earnings per share were $0.41, compared to the market expectation of $0.18. The retailer said on Wednesday that, given the company’s strong overall performance, it has raised its full-year revenue and profit guidance, both of which are above market expectations. It now expects net sales for the fiscal year to reach as high as $21.45 billion, slightly higher than the previous maximum estimate of $21.4 billion and above analysts’ consensus expectations; the company also raised its range for adjusted diluted earnings per share guidance—to between $1.70 and $2.05, compared to the previous forecast of $1.60 to $2.00.
“Consumers are resilient right now,” said Spring. “But in terms of consumer behavior and the latest tariff levels from the Trump administration, we don’t know what the fall will bring.”
Earlier this year, Macy’s announced plans to close 66 unprofitable stores this year and a total of 150 stores over the next three years. As of August 2, Macy’s had 449 stores, compared to 506 in the second quarter of last year.
“We still have more unprofitable stores and redundant supply chain facilities that need to be closed,” Spring said.
“We will discuss more about this in the fourth quarter earnings call, but these measures are about adjusting our portfolio to the right state. I strongly believe in the importance of physical stores... but we also have to do some more pruning to ensure we have an appropriate and more relevant store portfolio.”
Dana Telsey from Telsey Advisory Group is not sure whether Macy’s latest profit-boosting measures are entirely sufficient, thus reiterating her “Market Perform” rating on the stock.
“While adjusting the store footprint to a reasonable level should improve long-term profitability, in the face of macroeconomic pressures, headwinds from traffic and tariffs, and a highly competitive retail environment that may see intensified promotions, the visibility of comparable sales and profit growth in the short term remains very limited,” Telsey wrote in a report to clients.
Including Wednesday’s surge, Macy’s stock is still down more than 6% this year, significantly underperforming the S&P 500 index.
In Macy’s newly renovated “revitalized stores,” Spring said the company is seeing “strong feedback” from customers. Like many retail peers, the company has observed that consumer spending remains resilient under the pressure of tariffs, but consumers are still making purchasing decisions more cautiously.
“Consumer spending remains resilient right now,” Spring said. “We can’t control whether consumers have the desire to buy, or whether they are focusing on good news or bad news,” Spring said. “I have always believed we are a kind of retail therapy model. We provide a sense of escape from all the noise and chatter.”
Macy’s, Inc. is a typical department store retailer, whereas retail giants like Walmart are hypermarkets/general merchandise stores with a very wide SKU range, and food groceries plus daily consumer goods as the core traffic and sales engine. Macy’s hardly deals in fresh food, focusing mainly on non-food categories, with a rich selection of daily department goods/apparel/beauty/home soft goods and a mix of brands/private labels, emphasizing display, service, and fashion orientation, targeting the mid-range department store price band, and relying on promotions/memberships/private labels for price differentiation and brand image.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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