NEW YORK (AP) — Macy’s reported stronger-than-expected profits in the crucial fourth-quarter and comparable sales rose again. The department store said an overhaul of its merchandise and improved customer service led to more spending by shoppers.
The company, which also operates upscale Bloomingdale's and the beauty chain Bluemercury, offered a mixed outlook for the year — projecting sales above Wall Street expectations, but a conservative outlook on profits.
Shares jumped 9% before the opening bell.
CEO Tony Spring, entering his second year leading Macy's and attempting to recharge the storied retailer, said Wednesday that Bloomingdale’s booked its highest holiday sales performance on record. Some of that outsized performance has been attributed by industry analysts to the Chapter 11 bankruptcy of the company that runs Saks Fifth Avenue and Neiman Marcus.
Yet Macy's is contending with the same hurdles that have pummeled its rivals and the retailer sector as a whole.
The U.S. has upended global trade with tariffs that have driven prices higher, and many Americans have reprioritized where their paychecks go.
The Iran war that began late last month has added to those pressures, driving sharp increases in the price of gasoline and even more so, diesel, used predominantly in shipping. The newest cost increases have hit consumers directly at the pump, and may soon be felt at the retail counter.
Some additional costs, namely from tariffs, have made for some difficult decisions for retailers, ranging from what they can put on shelves, to how much of their increased costs will passed on to their customers, which are already being more careful with spending.
The Supreme Court struck down the largest of President Donald Trump’s tariffs – though the administration is seeking to replace them with new ones.
Against this background, consumer spending has been uneven with higher income households continuing to spend more freely, while lower income families pull back in what is often referred to a “K-shaped economy.”
Under Spring, who took over the top job at Macy’s in early 2024, Macy’s has closed unprofitable stores and spent millions modernize others. The company has beefed up customer service. It’s also been trying to differentiate its luxury business from its rivals with exclusive merchandise.
The company posted net income of $507 million, or $1.84 per share, for the three-month period ended Jan. 31. That compares with $342 million, or $1.21 per share, in the year-ago period. Adjusted per share results were $1.67 for the latest quarter.
