Macy’s defies the retail gloom with its best quarter in years and a raised outlook

Macy’s, Inc. (NYSE: M), the 168-year-old department store operator, rose roughly 5 to 6 percent to around 23 dollars, near its 52-week high, after delivering its strongest first quarter in four years and raising its full-year guidance, a striking counterpoint to the guidance cuts and selloffs at apparel peers Lululemon and PVH. Comparable sales climbed 3 percent, beating the company’s own guidance and marking a fourth consecutive quarter of growth, while net sales rose 1.8 percent to 4.68 billion dollars and adjusted earnings of 13 cents per share crushed the 3 cents analysts expected. Chairman and Chief Executive Tony Spring said the retailer delivered enterprise-wide growth with all three nameplates, Macy’s, Bloomingdale’s, and Bluemercury, and all channels positive, evidence that his Bold New Chapter turnaround is gaining real traction. The company raised its fiscal 2026 outlook even as it cited macroeconomic and geopolitical uncertainty. For a business long written off as a casualty of e-commerce and changing tastes, the quarter reframes Macy’s as the unlikely last store standing among legacy department stores.

How strong was Macy’s first quarter and why is it the best in four years?

The breadth of the beat was the standout feature. Macy’s reported net sales of 4.68 billion dollars, above its guidance range, with comparable sales up 3 percent against a guidance of roughly 0.5 to 1.5 percent and a negative 2 percent comparison a year earlier. Adjusted earnings of 13 cents per share dwarfed the 3 cents analysts had forecast, and net income rose 66 percent to 63 million dollars.

The consistency is what gives the results weight. Macy’s has now posted five consecutive quarters of better-than-expected top- and bottom-line results and four straight quarters of comparable sales growth, a track record that distinguishes a genuine turnaround from a one-off good quarter. The 3 percent comp was the strongest first-quarter performance in four years.

Margins held up despite tariff pressure. Gross margin reached 38.9 percent, with tariffs accounting for the entire modest contraction of about 30 basis points, a far milder hit than some peers absorbed. The company also generated healthy cash flow, ending the quarter with 1.3 billion dollars in cash and ample borrowing capacity, underscoring that the sales momentum is translating into financial strength.

What is the Bold New Chapter strategy and how are the Reimagine 200 stores performing?

The turnaround rests on focusing resources where they work. Chief Executive Tony Spring launched the Bold New Chapter strategy roughly two years ago, redirecting investment toward the highest-potential stores and the luxury nameplates while exiting weaker locations. The plan is built on the premise that concentrating capital on the best assets beats spreading it across a declining fleet.

The data validates that approach. The roughly 200 reimagined stores, which represent about half the go-forward fleet and have received upgrades to assortment, visual merchandising, and service, posted comparable sales growth of 2.4 percent, outperforming the 1.6 percent at the broader Macy’s namesake banner. That gap is the clearest evidence that the investment in selected stores generates a measurable return.

The strategy also simplifies the business. By closing underperforming stores and streamlining operations while pouring resources into winners, Macy’s is improving the productivity of its remaining footprint rather than fighting to defend an unwieldy national fleet. Management is also leaning into newer growth drivers, including its retail media network, in-store events, brand collaborations, and AI tools, to deepen customer engagement across the reimagined base.

Why are Bloomingdale’s and Bluemercury powering Macy’s luxury-led growth?

Luxury is the engine of the current momentum. Bloomingdale’s delivered comparable sales growth of 10.2 percent, its highest first-quarter sales volume in brand history and its seventh consecutive quarterly gain, while the Bluemercury beauty chain grew comparable sales 6.4 percent on strength in makeup, dermatological skincare, and fragrances. Both luxury banners are substantially outpacing the namesake department store.

A competitor’s collapse has helped. Chief Executive Tony Spring acknowledged that the bankruptcy of luxury rival Saks Fifth Avenue created a tailwind for Bloomingdale’s, as affluent shoppers sought alternatives, though he stressed that market disruption is not the primary reason for the growth. The luxury banner’s distinctive merchandising and what Spring called its fun factor are drawing customers independent of the Saks situation.

The premiumization trend reinforces the strategy. Macy’s reported an 8.3 percent increase in average unit retail, driven by a mix shift toward higher-priced items, indicating that its customers, predominantly middle- to upper-income, are willing to spend on differentiated, compelling products. This focus on the more resilient affluent consumer is central to why Macy’s is outperforming retailers exposed to more price-sensitive shoppers.

What does Macy’s raised guidance say about consumer resilience and tariffs?

The guidance raise signals genuine confidence. Macy’s lifted its full-year net sales outlook to between 21.5 and 21.75 billion dollars, raised its comparable sales guidance to a range of positive 0.5 to 1.2 percent from a prior range that included declines, and confirmed adjusted earnings per share of 2.00 to 2.20 dollars. Raising guidance after a single strong quarter, rather than waiting for confirmation, reflects management’s belief that the momentum is durable.

The move stands out against a cautious consumer narrative. Management raised the outlook explicitly despite macroeconomic and geopolitical uncertainty, and Spring noted that the favorable first-quarter trends had continued into the second quarter. The results suggest a disconnect between widely reported consumer anxiety and the actual spending behavior of Macy’s affluent customer base, which has remained resilient.

The tariff and cost picture is mixed but manageable. The updated guidance factors in lower tariffs than previously feared, a benefit, offset partly by higher fuel costs, a reminder that the broader energy price environment shaped by the Middle East conflict touches even domestic retailers. On balance, Macy’s was able to raise its outlook, a sharp contrast to peers forced to cut theirs over tariffs and geopolitical headwinds.

How is Macy’s stock valued and why does it stand out against struggling peers?

Macy’s trades as a value and turnaround story. After rising to around 23 dollars, near its 52-week high of 24.41 dollars and well above its low near 10.54 dollars, the stock carries a trailing price-to-earnings multiple under 10 and a dividend yield above 3 percent, with a market capitalization around 6 billion dollars. That valuation reflects lingering skepticism about department stores even as results improve.

The contrast with apparel peers is stark. On the same days that Lululemon and PVH cut guidance and saw their shares tumble, Macy’s raised its outlook and climbed, illustrating a divergence within consumer retail between companies executing well and those facing brand or geopolitical headwinds. The legacy department store, long considered structurally challenged, is currently the stronger performer.

The capital returns add to the appeal. Macy’s returned 100 million dollars to shareholders in the quarter through dividends and buybacks, and its healthy balance sheet supports continued returns. For value investors, a single-digit earnings multiple, a solid dividend, and an improving operating trajectory present an attractive combination, provided the turnaround proves sustainable rather than a temporary upswing.

What secular and macro risks could still derail the Macy’s turnaround?

The first risk is the secular decline of department stores. Despite the strong quarter, Macy’s and its peers have lost retail market share for years, and the long-term structural pressure from e-commerce and specialty retailers has not disappeared. The turnaround must continually prove it can overcome a challenging industry backdrop rather than merely riding a cyclical or competitor-driven upswing.

The second risk is the sustainability of the momentum. Analysts pressed management on whether positive comparable sales can continue into the back half of the year, where the implied guidance flattens, and the company attributed the deceleration to tougher prior-year comparisons rather than fading demand. Still, the reliance on luxury strength and a competitor’s bankruptcy raises questions about how much of the growth is repeatable.

The third risk is the macro and tariff environment. None of this is investment advice, and Macy’s has clearly executed well, with consistent beats, a validated store strategy, and a resilient affluent customer. But consumer discretionary spending is cyclical, tariffs and fuel costs remain variables, and broader economic uncertainty could pressure even Macy’s better-positioned customer base. The stock’s modest valuation reflects these doubts, and sustaining the turnaround will require continued execution against both industry decline and an unpredictable macro backdrop.

Key takeaways on what the quarter means for Macy’s

• Macy’s rose roughly 5 to 6 percent to near its 52-week high after its strongest first-quarter comparable sales performance in four years, up 3 percent.
• Adjusted earnings of 13 cents per share crushed the 3 cents expected, and net income rose 66 percent to 63 million dollars.
• The company raised its full-year sales, comparable sales, and confirmed earnings guidance despite citing macro and geopolitical uncertainty.
• The Bold New Chapter turnaround is validated by the roughly 200 reimagined stores, which grew comps 2.4 percent versus 1.6 percent for the namesake banner.
• Bloomingdale’s posted record first-quarter sales with comps up 10.2 percent, aided partly by the bankruptcy of luxury rival Saks Fifth Avenue.
• Bluemercury grew comps 6.4 percent, and average unit retail rose 8.3 percent on a shift toward higher-priced items.
• Macy’s results contrast sharply with guidance cuts at Lululemon and PVH, highlighting a divergence within consumer retail.
• The stock trades under 10 times trailing earnings with a dividend yield above 3 percent, an attractive value and turnaround profile.
• Risks include the secular decline of department stores, questions about back-half momentum, and reliance on luxury strength.
• Tariffs, fuel costs, and broader consumer uncertainty remain variables, but Macy’s was able to raise guidance where peers cut.