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By Brian Nelson, CFA
Macy’s (M) recently reported third quarter results that came in better than expected on both the top and bottom lines. The retailer achieved net sales of $4.7 billion, exceeding the company’s guidance range. Macy’s reported comparable sales were up 2.5% on an owned basis and up 3.2% on a comparable owned-plus-licensed-plus marketplace (O+L+M) basis, also exceeding the company’s guidance range. Adjusted diluted earnings per share was $0.09, above its prior guidance range thanks to better-than-expected net sales, gross margin, and overhead costs. Bloomingdale’s comparable store sales were up 8.8% on an owned basis and up 9.0% on an O+L+M basis, the highest in 13 quarters.
Management had the following to say about the results:
Our third quarter sales were the strongest in 13 quarters, reflecting the acceleration of our Bold New Chapter strategy and demonstrating that the meaningful enterprise-wide changes we’ve made are resonating with customers. As we enter the holiday season, we are well-positioned with compelling new merchandise and an omni-channel customer experience that delivers both inspiration and value. With a strategy rooted in hospitality, our teams are focused on driving long-term, profitable growth.
Macy’s merchandise inventories increased 0.7% year-over-year reflecting in part tariff-related cost increases. The company ended the third quarter with cash and cash equivalents of $447 million and $2.0 billion of available borrowing capacity under its asset-based credit facility. At the end of the third quarter, total debt was $2.4 billion, with no material long-term debt maturities until 2030. Macy’s returned roughly $99 million to shareholders in the quarter, consisting of $49 million in quarterly cash dividends and $50 million in share buybacks. Macy’s has approximately $1.2 billion remaining under its $2.0 billion share repurchase authorization.
Macy’s revised its 2025 guidance, raising its net sales and adjusted diluted earnings per share targets. Its updated guidance reflects a consumer that is more “choiceful” in the fourth quarter and that current tariffs remain in place. Net sales for 2025 are targeted in the range of $21.475-$21.625 billion, up from $21.15-$21.45 billion previously. Go-forward comparable O+L+M sales change is now expected to be flat to up 1% versus down 1.5% to flat previously. Core adjusted EBITDA margin is targeted in the range of 7.5%-7.7% compared to 7.0%-7.5% previously. Adjusted earnings per share for the year is expected in the range of $2.00-$2.20, up from $1.70-$2.05 previously.
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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