Macy's Faces Uncertainty, Store Closures And Lower Guidance Loom: Analyst

Macy’s Inc M is planning additional store closures, with 64 closures representing only 43% of the total 150 closures planned.

• J.P.Morgan analyst Matthew R. Boss downgraded the shares to Neutral from Overweight. He also lowered the price forecast from $19 to $14.
• Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares and lowered the price target from $17 to $15.

For more analyst rating changes, check out our analyst ratings page.

J.P. Morgan: Macy’s reported fourth-quarter adjusted earnings per share of $1.80, surpassing analysts’ expectations of $1.54. The results were driven by strong Other Revenues of $239 million (higher than the Street’s $213 million). The gross margin of 35.7% exceeded the Street’s view of 35.5%. There was also a 1% decrease in SG&A expenses year-over-year.

For fiscal year 2025, management guided EPS of $2.05-$2.25, below street estimates of $2.26, with same-store sales expected to decline, said the analyst.

Macy’s has revised its 2025 outlook, now expecting same-store sales to decline by 2% to 0.5%, or -1.3% at the midpoint.

This is about 300 basis points below the initial guidance from a year ago, citing increased caution regarding external factors like weather, tariffs, layoffs, and the macroeconomic environment.

While the company plans to scale its initiatives to 125 reimagined stores, 225 stores will not see similar improvements.

Fiscal 2025 investments will only affect 36% of the 350-store fleet.

The company's strategy, which includes higher SG&A investments and non-go-forward store closures, is impacted by declining same-store sales (-1.3% in FY25).

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Telsey Advisory Group: Macy’s reported an EPS beat in fourth quarter, driven by controlled SG&A expenses, though sales were in line with the company’s pre-announcement. Positive comp sales came from Macy’s First 50 locations, Bloomingdale’s, and Bluemercury, especially in luxury and beauty.

However, Macy’s 2025 outlook fell short of consensus, with expected negative to flat comps despite store renovations and merchandising changes, noted the analyst.

The company's strategy includes closing 150 stores and focusing on high-potential locations.

Near-term trends are challenging following a strong fourth quarter, with first quarter seeing a slowdown. Rising inflation, changing tariff commentary, and disruptions from fires in California and cold weather are pressuring business.

Despite this, management is investing in collaborations and marketing to enhance consumer engagement. Solid inventory levels and improved product freshness should help minimize promotions.

Analysts expect momentum to build in the second quarter and the second half of the year as initiatives take effect.

Price Action: Macy’s shares are traded higher by 3.03% at $13.62 at last check Friday.

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