Macy's Q3 Beats Estimates, Raises 2025 Outlook Amid Cautious Holiday View

December 3, 2025 at 19:34 UTC

5 min read

Key Points

Macy's reported its strongest comparable sales growth in over three years with a 3.2% increase in Q3 2025, surpassing analyst expectations.
The company raised its full-year 2025 sales guidance to $21.48-$21.63 billion and adjusted EPS guidance to $2.00-$2.20, reflecting confidence in its turnaround strategy.
Despite positive Q3 results, Macy's issued a cautious outlook for the crucial fourth quarter, expecting a 3%-5% decline in net sales year-over-year due to a more selective consumer and tough comparisons.
Macy's continues to close underperforming stores while investing in its Reimagine 125 locations, Bloomingdale’s luxury segment, and Bluemercury beauty chain, driving growth in higher-income customer segments.

Strong Q3 Performance Highlights Turnaround Progress

Macy's Inc. delivered better-than-expected financial results for the third quarter of 2025, marking its strongest comparable sales growth in more than three years. The company reported net sales of approximately $4.71 billion, slightly below the prior year but exceeding Wall Street estimates of $4.6 billion. Adjusted earnings per share came in at $0.09, a significant beat over the anticipated loss of $0.13 per share. Comparable sales, a key retail performance metric, rose 3.2% on an owned-plus-licensed-plus-marketplace basis, surpassing the company’s guidance and analyst expectations. This growth was broad-based across Macy’s nameplates, with Bloomingdale’s luxury brand posting an 8.8% increase in comparable sales, its highest in 13 quarters, and Bluemercury’s beauty stores achieving a 1.1% gain. The Reimagine 125 initiative, which involves investing in staffing, merchandising, and store experience at select Macy’s locations, continued to outperform the broader Macy’s portfolio with comparable sales growth of 2.7%. CEO Tony Spring attributed the strong quarter to the acceleration of the Bold New Chapter strategy, which focuses on store optimization, luxury market expansion, and digital growth. The company also reported adjusted EBITDA of $285 million, up from $273 million a year earlier, and maintained disciplined cost management, reducing selling, general and administrative expenses by 1.9% year-over-year.

Raised Full-Year Guidance Reflects Confidence Amid Challenges

Following the robust third-quarter results, Macy’s raised its full-year 2025 financial outlook for the second consecutive quarter. The company now expects net sales between $21.48 billion and $21.63 billion, up from the previous range of $21.15 billion to $21.45 billion, and adjusted earnings per share in the range of $2.00 to $2.20, compared to the prior guidance of $1.70 to $2.05. This upward revision reflects the company’s confidence in its turnaround efforts and ability to navigate a complex retail environment. Despite the improved outlook, Macy’s anticipates that full-year sales will still be below the prior year’s $22.29 billion, primarily due to the closure of approximately 64 underperforming stores last year, with plans to shutter about 150 stores over a three-year period. The company’s strategy includes reallocating resources to higher-performing stores and expanding its luxury and beauty segments, which have shown strong momentum. Macy’s also highlighted successful mitigation of tariff impacts, which shaved 50 basis points from gross margin but were less severe than initially expected. The company’s balance sheet remains strong, with $447 million in cash and $2 billion in available borrowing capacity, supporting its ongoing investments and shareholder returns, including $99 million returned through dividends and share repurchases in the quarter.

Cautious Fourth-Quarter Outlook Amid Consumer Selectivity

Despite the positive third-quarter performance and raised full-year guidance, Macy’s issued a cautious outlook for the critical fourth quarter, which includes the holiday shopping season. The company expects net sales to decline by 3% to 5% year-over-year, projecting a range of $7.35 billion to $7.5 billion, slightly below analyst consensus. Adjusted earnings per share guidance for the quarter is set between $1.35 and $1.55, also below expectations. CEO Tony Spring emphasized a prudent approach to guidance, citing tough year-over-year comparisons and uncertainty about spending patterns among aspirational customers, particularly those in lower-middle-income households who tend to be value-focused and selective. The company anticipates a “more choiceful” consumer who will prioritize purchases based on perceived value, especially during the holiday season. Nonetheless, Macy’s believes it is well-positioned with compelling merchandise, an omni-channel shopping experience, and a broad price range that caters to both discount hunters and luxury buyers. The luxury segment, led by Bloomingdale’s, continues to benefit from a K-shaped economy where higher-income consumers remain resilient, supporting growth in that category.

Strategic Store Closures and Investments Drive Growth

Macy’s ongoing turnaround strategy involves closing underperforming stores while investing in its best-performing locations and expanding its luxury and specialty beauty offerings. The company has permanently closed about 64 Macy’s stores and plans to close approximately 150 over three years, focusing on optimizing its store footprint. Concurrently, Macy’s is investing in the Reimagine 125 stores, which have shown stronger sales growth due to enhanced staffing, improved merchandising, and better in-store experiences. The luxury Bloomingdale’s brand and Bluemercury beauty chain are key growth drivers, with Bloomingdale’s posting nearly 9% comparable sales growth and Bluemercury achieving its 19th consecutive quarter of positive comps. Macy’s also continues to expand Bloomingdale’s and Bluemercury store footprints, including opening new locations for Bloomies, smaller specialized versions of Bloomingdale’s. The company’s diversified brand portfolio, ranging from off-price to luxury, and its strong digital presence provide flexibility to adapt to changing consumer preferences. Additionally, Macy’s has taken steps to mitigate tariff-related cost pressures through price adjustments, supplier negotiations, and shifting production to lower-duty countries. These efforts have helped maintain gross margins despite external challenges.

Key Takeaways

Macy’s turnaround strategy is gaining traction, evidenced by its strongest comparable sales growth in over three years and raised full-year guidance.
The company remains cautious about the holiday quarter due to selective consumer spending and tough year-over-year comparisons, leading to conservative guidance.
Store closures of underperforming locations are balanced by investments in high-performing stores and growth in luxury and beauty segments, supporting long-term profitability.

References

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