Macy’s returned to comparable sales growth in the last fiscal year following better-than-expected performance in the final quarter.
The department store giant lifted its comparable sales by 1.8 per cent in the fourth quarter and 1.5 per cent for FY25. This marks the first time in a long time that the company has pushed into positive comparable territory for the full fiscal year.
GlobalData MD Neil Saunders said the turnaround marked an “important milestone” for the company because it “sends the signal that the fate of department stores does not have to be one of permanent decline”.
“Over the past few years, Macy’s has worked hard to correct many of the issues that plagued the business for well over a decade,” he said. “The results on the shop floor, especially within the Macy’s nameplate, are coming through clearly in the form of better presentation and a more engaging selling environment.”
Total sales were still down 1.8 per cent during the quarter, but Saunders said the decline was relatively modest and expected because of planned store closures.
By segment, Bloomingdale’s remains the star of the show with comparable sales up 9.9 per cent and net sales up 8.5 per cent, driven by excellent holiday performance.
“It’s certainly true that Bloomingdale’s has benefited from the problems at Saks, which has helped push more customers its way.
“But it is also the case that the strong numbers have been driven by a very compelling proposition which includes a strong balance of high-end luxury and more accessible premium products that enticed the customer over the holiday period,” Saunders said.
At Macy’s, overall comparable sales rose 0.4 per cent and go-forward locations up 0.6 per cent, while the 125 most invested in stores grew 0.9 per cent. While the numbers are soft, Saunders said the fact that they are positive is a major achievement.
“Tony Spring, who used to run Bloomingdale’s before stepping into the group CEO role, has applied his merchant-first thinking to the rest of the Macy’s business. Step by step, this has resulted in Macy’s department stores showing up better for the customer.
“The clutter and disarray that used to plague shops has gone. In its place is a much more service-oriented environment where assortments are logical, presentation is better, and more inspiration and ideas are offered up,” he said.
On the bottom line, net income soared 48.2 per cent in the fourth quarter and 10 per cent for the full year. The analyst noted that it includes a settlement for credit card interchange fee litigation.
Meanwhile, adjusted EBITDA fell 7 per cent as tariffs pushed up costs.
“ Still, Macy’s remains nicely profitable and is financially sound which gives it the headroom to invest to drive the top line,” Saunders added.
For the new fiscal year, Macy’s expects comparable sales growth to be in the range of -0.5 per cent to +0.5 per cent.
“The market is somewhat more challenging and Bloomingdale’s is now lapping a tough prior year, so this weakening is understandable. However, it’s important for Macy’s to try and strengthen the numbers to show its strategy is working,” Saunders said.
