Walking past the Macy’s Herald Square flagship the day after Thanksgiving, something felt different this year. The lines were long, sure, but the energy was unmistakably upbeat. Shoppers weren’t just hunting for deals—they actually looked excited to be there. Turns out my gut feeling wasn’t wrong.
Macy’s just dropped numbers that made even the most skeptical retail analysts do a double-take. For the first time in what feels like forever, the 166-year-old department store giant is showing real, sustainable momentum. And yes, before you ask—this is coming from someone who’s been writing about retail long enough to remember when “Macy’s turnaround” felt more like a punchline than a possibility.
The Quarter That Changed Everything
Let’s start with the headline numbers because they’re genuinely impressive. Macy’s third-quarter revenue came in at $4.71 billion, beating Wall Street’s $4.62 billion expectation by a comfortable margin. More importantly, this marked the third consecutive quarter of beating sales estimates—the kind of consistency that gets investors sitting up straighter in their chairs.
But the real story isn’t just that they beat expectations. It’s how much they beat them and what it says about the underlying business.
Comparable sales across the company jumped 3.2%—and 3.4% when you strip out the stores they’re closing anyway. That’s not just growth. That’s the strongest comparable sales performance Macy’s has posted in more than three years. Three years. Let that sink in for a second.
From Earnings Misses to Guidance Raises
Remember back in May when Macy’s actually cut its full-year guidance? Higher tariffs, aggressive promotions, and softening discretionary spending had everyone bracing for impact. Fast forward six months and we’re looking at the second consecutive quarter of raising both sales and earnings guidance.
The new outlook calls for adjusted earnings per share between $2.00 and $2.20—up substantially from the previous $1.70 to $2.05 range. Net sales guidance moved up to $21.48 billion to $21.63 billion. They’re now expecting comparable sales to be flat to up 0.5% for the full year, a dramatic improvement from the previous expectation of down 0.5% to 1.5%.
This isn’t just accounting magic or one-time gains. This is organic improvement showing up in the numbers.
“We’re taking a prudent view of the fourth quarter because we face tough year-over-year comparisons and uncertainty about how aspirational customers may spend during the season.”
– Tony Spring, Macy’s CEO
The First 50 Strategy Is Working
Here’s where things get really interesting. About eighteen months ago, Macy’s identified 50 underperforming stores and decided to treat them differently. More staffing. Better visual merchandising. Curated product assortments. Basically, they stopped treating these locations like generic department stores and started running them like flagship experiences.
The results were so encouraging that they’ve now expanded this approach to 125 locations—more than a third of the 350 Macy’s stores they plan to keep long-term.
I’ve been in some of these revitalized stores recently, and the difference is night and day. The beauty departments actually have staff who know what they’re talking about. The clothing presentations don’t look like someone just dumped inventory on racks. There’s energy. There’s intention.
- Sharper visual displays that actually make you want to browse
- Staff who can answer questions without looking panicked
- Product assortments that feel current rather than leftover
- Experiences that justify coming to a physical store in 2025
The Three-Headed Retail Beast
One of the most underappreciated aspects of Macy’s story is that it’s actually three different businesses operating under different dynamics.
Bloomingdale’s continues to be the star performer, with comparable sales jumping a remarkable 9% in the quarter. That’s not just good—that’s luxury department store growth during a period when many high-end retailers are struggling with inventory issues and softening demand from aspirational shoppers.
Bluemercury, their beauty chain, grew comparable sales by 1.1%. Not spectacular, but steady and profitable in a beauty market that’s finally cooling off after years of explosive growth.
The namesake Macy’s banner—the one everyone thinks of when they hear the company name—is where the real turnaround story lives. This is the business that was supposed to be dying, slowly suffocated by off-price competitors and Amazon. Instead, it’s showing legitimate signs of life.
Why the Holiday Caution Makes Sense
The CEO’s cautious tone about the holiday quarter isn’t corporate speak—it’s actually pretty rational when you dig into the details.
First, they’re facing extremely difficult year-over-year comparisons. Last year’s holiday season was surprisingly strong for many retailers, which means this year needs to be even better just to show growth.
Second, the “aspirational customer”—that shopper who loves the Macy’s experience but doesn’t have luxury money—is exactly the demographic feeling the most pressure right now. These aren’t the ultra-wealthy who keep spending regardless of economic conditions, nor are they the pure value seekers who only shop T.J. Maxx. They’re the middle, and the middle is nervous.
Add in the persistent tariff pressure that’s making merchandise more expensive to source, and you understand why management isn’t popping champagne yet.
The Store Closure Math
Of the expected $700 million annual sales decline from last year, virtually all of it comes from the 64 stores they closed. This is actually good news when you think about it—they’re pruning the dead wood and the remaining stores are performing significantly better.
This gets to the heart of their “Bold New Chapter” strategy announced earlier this year: close 150 underperforming Macy’s stores by 2027 while opening more Bloomingdale’s and Bluemercury locations. It’s the classic retail playbook of focusing on your best assets, but Macy’s is actually executing it rather than just talking about it.
What This Means for Investors
The stock market has already voted with its dollars—Macy’s shares are up about 34% year-to-date, roughly double the S&P 500’s return. At current levels, the company trades at less than 8 times forward earnings with a market cap around $6.1 billion.
That’s not expensive for a retailer that’s finally showing operational momentum, particularly one with significant real estate assets and a brand name that still means something to American consumers.
The bigger question is whether this improvement is sustainable. Department stores have teased comebacks before only to slip back into old habits. But this time feels different. The investments in the remaining stores are visible. The product feels more relevant. The customer experience is meaningfully better.
Perhaps most importantly, management isn’t declaring victory. They’re raising guidance while simultaneously warning about holiday risks. That’s the kind of balanced messaging that suggests they actually understand the challenges ahead.
Retail turnarounds are never linear, and Macy’s still has plenty of work ahead. But for the first time in years, the trajectory looks pointed in the right direction. Sometimes that’s all investors need to see.
The next few weeks will tell us a lot. If Macy’s can navigate this holiday season with even modest comparable sales growth, it will validate that the worst is truly behind them. If they can do better than that? Well, then we might be looking at one of the more remarkable retail comeback stories in recent memory.
Either way, something meaningful is happening at America’s most famous department store. And for once, it’s not just about survival—it’s about the possibility of thriving again.
