Macy’s is closing another 86 stores—Here’s what it means for the future of retail

Why Is Macy’s Closing 86 More Stores in 2025?

Macy’s, Inc. has moved forward decisively with its retail restructuring plan, announcing the closure of 86 more stores as part of its Bold New Chapter strategy. This step intensifies a plan that aims to shutter 150 underperforming Macy’s-branded locations by the end of 2027. The initiative, initially unveiled in early 2024, is being executed in phases, and with this latest update, Macy’s has now confirmed 152 store closures over the past 18 months. The plan focuses on removing lower-performing assets and concentrating capital on modernizing the most profitable locations, especially the Reimagine 125 stores and digital platforms. Management’s goal is to steer Macy’s toward a smaller, higher-margin business model, emphasizing relevance in an increasingly digital and experience-driven retail environment.

How Did Macy’s Perform in Q1 FY25?

In the first quarter of fiscal 2025, Macy’s reported net sales of $4.6 billion, a decline of 5.1% compared to the prior year. While this decline reflects headwinds such as store closures and macroeconomic softness, the result actually came in above the company’s internal guidance. GAAP diluted earnings per share were $0.13, with adjusted EPS at $0.16, exceeding expectations but still reflecting a sharp 40.7% year-over-year decline. Core Adjusted EBITDA also fell significantly, dropping to $308 million, or 6.4% of total revenue, compared to 7.3% in Q1 FY24. Total comparable sales declined 2.0% on an owned basis and 1.2% on an owned-plus-licensed-plus-marketplace basis, with the Macy’s nameplate contributing most of the weakness. The more premium segments—Bloomingdale’s and Bluemercury—continued to outperform, with comparable sales rising 3.8% and 1.5% respectively.

What Is the “Bold New Chapter” Strategy and Why Does It Matter?

The Bold New Chapter strategy is Macy’s multi-year transformation blueprint aimed at realigning the business with shifting consumer expectations. Central to this plan is the closure of 150 underproductive Macy’s stores by 2027, while investing in 350 “go-forward” locations that represent the company’s future footprint. Within this subset, the 125 Reimagine stores feature updated layouts, improved merchandising, and digital integrations that have already delivered smaller declines in comparable sales than the broader fleet. In Q1 FY25, these Reimagine stores saw only a 0.8% drop in owned-plus-licensed sales, significantly outperforming the non-renovated base. Macy’s Marketplace, the company’s third-party seller platform, posted 40% year-over-year growth in gross merchandise value, and the Backstage off-price format delivered several hundred basis points of improvement over the full-line Macy’s locations in which they are embedded. These results suggest that Macy’s is making strategic progress even as overall performance remains under pressure.

Why Did Macy’s Cut Its FY25 Earnings Forecast?

Despite reaffirming full-year revenue guidance of $21.0 to $21.4 billion, Macy’s lowered its FY25 adjusted EPS range to $1.60–$2.00, down from the earlier range of $2.05–$2.25. This downgrade reflects a complex mix of macroeconomic pressures, including softening consumer discretionary spending, heightened promotional competition, and a renewed tariff burden on imported goods. The company expects its gross margin to be impacted by 20 to 40 basis points over the course of FY25 due to the U.S. government’s China tariff policy. Roughly 20% of Macy’s products were sourced from China in FY24, and although private brand exposure has been reduced from over 50% pre-pandemic to 27%, tariff sensitivity remains high. Executives have responded by renegotiating with vendors, shifting some sourcing to Southeast Asia, and selectively raising prices. These efforts will help mitigate, but not fully offset, the anticipated earnings drag from geopolitical trade policy and procurement volatility.

What Are Analysts and Investors Saying?

Market analysts offered a mixed response to the company’s Q1 FY25 results. While some viewed the better-than-expected top-line performance as an early validation of the turnaround strategy, the steep decline in profit margins and full-year earnings guidance prompted caution. Sentiment in institutional circles remains divided. Although the company returned $152 million to shareholders through dividends and share buybacks—demonstrating capital discipline—there is lingering skepticism about whether Macy’s can sustain margin recovery in a persistently competitive retail environment. Notably, the stock’s recent institutional flow data shows elevated volatility, with a blend of bottom-fishing activity and risk-adjusted exits. Buy-side analysts seem aligned in their view that success will hinge on execution over the next two quarters, especially in demonstrating improved same-store sales and margin stability from the go-forward store cohort.

How Is Macy’s Portfolio Performing Segment-Wise?

The performance variance among Macy’s brand banners highlights its evolving portfolio strategy. The Macy’s brand continues to struggle, posting a 6.5% decline in net sales and a 2.9% drop in owned comparable sales for the quarter. However, the go-forward Macy’s store network fared better, with only a 1.9% decline in owned-plus-licensed-plus-marketplace sales. Reimagine 125 stores were relatively more resilient, indicating early traction for the in-store transformation. Bloomingdale’s continues to emerge as a key growth engine. Its 3.8% rise in comparable sales was bolstered by strong demand for luxury brands such as Prada, Burberry, and Reformation, while digital sales and exclusive product drops drew younger, affluent shoppers. Bluemercury delivered its 17th consecutive quarter of comparable growth, driven by skin care and loyalty program enhancements. The business also benefited from 24 new or remodeled locations introduced over the past year, cementing its role in Macy’s multi-format growth thesis.

What Are the Implications for the Broader Retail Sector?

Macy’s experience is indicative of the challenges facing the U.S. department store sector at large. Brick-and-mortar formats, particularly in mid-tier retail, are under immense pressure as consumers gravitate toward value-oriented or premium-differentiated channels. Legacy brands like Macy’s are grappling with declining foot traffic, persistent promotional intensity, and rising supply chain costs. In contrast, off-price retailers such as Ross Stores and TJX Companies continue to grow, as do luxury players benefitting from brand pricing power. Macy’s decision to reduce store count, optimize inventories, and reallocate capital toward digital and luxury-focused offerings is emblematic of the broader industry shift away from undifferentiated mass-market retailing. If successful, Macy’s strategy could serve as a roadmap for other legacy department store chains facing similar margin compression and identity crises.

What Lies Ahead for Macy’s?

For the second quarter of FY25, Macy’s expects net sales to range between $4.65 billion and $4.75 billion and adjusted diluted EPS between $0.15 and $0.20. Executives have signaled that markdowns on early Spring inventory will weigh on margins, but are necessary to ensure freshness heading into Fall and Holiday 2025. Management is also continuing to explore monetization opportunities from real estate assets and is expected to close additional locations in the back half of the year. The company’s liquidity remains strong, with $932 million in cash on hand and no significant debt maturities until 2027. The recent extension of its asset-based credit facility to 2030 provides further financial flexibility, even as the borrowing capacity was reduced from $3.0 billion to $2.1 billion. Analysts expect Macy’s to remain focused on optimizing working capital, accelerating Marketplace and Backstage initiatives, and leaning into Bloomingdale’s and Bluemercury to counter softness in its core Macy’s banner.

Macy’s transformation is a calculated bet on a leaner, premium-driven, and digital-first future. While early signs from its go-forward stores and high-end formats are encouraging, the road ahead is paved with volatility—from tariff uncertainties to consumer confidence swings. For investors and industry observers, Macy’s remains one of the most closely watched retail turnaround stories of the decade.