Macy’s posts surprise profit with overhaul under new CEO resonating with shoppers

Macy’s staged a remarkable turnaround in its third quarter, posting an unexpected profit and its strongest comparable sales growth in over three years, signaling that the extensive overhaul led by new CEO Tony Spring is beginning to resonate with shoppers.

The 167-year-old New York department store chain reported a 3.2% increase in comparable sales for the quarter ended November 1, following a 1.9% rise in the second quarter. This metric, which includes licensed businesses like cosmetics, serves as a key indicator of retail health and represents a significant improvement after years of struggle.

Macy’s reported net income of $11 million, or 4 cents per share, substantially outperforming analyst expectations of a 13-cent loss. On an adjusted basis, earnings reached 9 cents per share, though this still represents a decline from the $28 million, or 10 cents per share, earned in the same period last year.

While net sales dipped slightly to $4.71 billion from $4.73 billion, reflecting the strategic closure of underperforming locations, the figure still exceeded analysts’ projections of $4.55 billion.

“While it would be an exaggeration to say that Macy’s is a retailer at the very top of its game, there is no doubt that it is now becoming a more proficient player on the retail field,” said Neil Saunders, managing director of GlobalData. “The sloppy and slapdash execution that once plagued the chain has largely disappeared.”

The strong performance is particularly noteworthy given the challenging retail environment, where consumers have become increasingly selective in their spending amid economic pressures and inflation concerns stemming partly from trade tensions.

Spring, who assumed the CEO role in early 2024, acknowledged the reality of what economists call a “K-shaped economy,” where higher-income households continue to spend freely while lower-income families pull back on discretionary purchases.

“The K economy is real,” Spring told The Associated Press. “We’re fortunate. Bloomingdales and Bluemercury are solidly in the upper part of the K and about half of the Macy’s customers are in the upper part of the K. But we do also appeal to an aspirational customer and one that is choiceful.”

This customer demographic has helped insulate Macy’s somewhat from broader retail challenges. Approximately 50% of Macy’s customers have household incomes exceeding $100,000, while Bloomingdale’s and Bluemercury—also owned by Macy’s—serve an even more affluent clientele, with a larger percentage earning over $150,000.

Spring’s revitalization strategy has focused on closing unprofitable stores while investing in modernizing remaining locations. The company has enhanced customer service in key areas such as fitting rooms and shoe departments while working to differentiate its luxury offerings through exclusive merchandise.

The 125 stores that have undergone renovations are already showing results, with comparable sales growth of 2.7%, outpacing the company average.

Despite the positive quarterly results, Macy’s maintained a cautious outlook for the crucial holiday shopping season. Spring described the company’s fourth-quarter guidance as “realistic” and “sensible,” noting that Macy’s has increased promotions to attract budget-conscious shoppers.

As for the impact of tariffs in the current trade environment, Spring indicated that while they remain a factor, their effect has been less severe than initially anticipated. The company has been working with suppliers to absorb some of the higher costs and taking a “more surgical approach” to price increases.

Buoyed by the strong performance, Macy’s raised its annual financial guidance, now expecting earnings per share between $2.00 and $2.20, up from its previous projection of $1.70 to $2.05. The company also increased its 2025 sales forecast to between $21.47 billion and $21.62 billion, compared to the earlier range of $21.15 billion to $21.45 billion.

Investor response was positive but measured, with Macy’s shares rising 2% following the announcement, as the market weighed the company’s improved performance against broader economic concerns that could affect holiday spending.