Department store chain Macy’s (NYSE: M) announced better-than-expected revenue in Q4 CY2025, but sales fell by 1.1% year on year to $7.92 billion. The company’s full-year revenue guidance of $21.53 billion at the midpoint came in 2.6% above analysts’ estimates. Its non-GAAP profit of $1.67 per share was 6.8% above analysts’ consensus estimates.
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Macy's (M) Q4 CY2025 Highlights:
- Revenue: $7.92 billion vs analyst estimates of $7.78 billion (1.1% year-on-year decline, 1.7% beat)
- Adjusted EPS: $1.67 vs analyst estimates of $1.56 (6.8% beat)
- Adjusted EBITDA: $840 million vs analyst estimates of $812 million (10.6% margin, 3.4% beat)
- Adjusted EPS guidance for the upcoming financial year 2026 is $2 at the midpoint, missing analyst estimates by 6.5%
- Operating Margin: 9.4%, up from 6.2% in the same quarter last year
- Free Cash Flow Margin: 12.2%, down from 13.4% in the same quarter last year
- Same-Store Sales rose 1.8% year on year (0.2% in the same quarter last year)
- Market Capitalization: $4.50 billion
Company Overview
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $22.62 billion in revenue over the past 12 months, Macy's is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. To accelerate sales, Macy's likely needs to optimize its pricing or lean into international expansion.
As you can see below, Macy’s demand was weak over the last three years. Its sales fell by 3.9% annually as it closed stores.
This quarter, Macy’s revenue fell by 1.1% year on year to $7.92 billion but beat Wall Street’s estimates by 1.7%.
Looking ahead, sell-side analysts expect revenue to decline by 3.1% over the next 12 months, similar to its three-year rate. This projection doesn't excite us and suggests its newer products will not lead to better top-line performance yet.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Macy's has generally closed its stores over the last two years, averaging 3.1% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Note that Macy's reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Macy’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and Macy's is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Macy’s same-store sales rose 1.8% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Macy’s Q4 Results
We were impressed by how significantly Macy's blew past analysts’ gross margin expectations this quarter. We were also glad its full-year revenue guidance exceeded Wall Street’s estimates. On the other hand, its full-year EPS guidance missed. Overall, this print was mixed. The stock traded up 7.1% to $18.12 immediately following the results.
Is Macy's an attractive investment opportunity at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
