Macy's Soars on Surprise Profit, Raises Full-Year Outlook
Luxury brand Bloomingdale's posts best sales in 13 quarters, signaling strong consumer health ahead of the holiday season.
Macy's Inc. (NYSE: M) delivered a stunning third-quarter earnings report Tuesday, posting a surprise profit and raising its full-year guidance in a powerful signal that its turnaround strategy is gaining traction ahead of the crucial holiday shopping season. Shares surged in pre-market trading as investors cheered the unexpected results.
The department store giant reported an adjusted earnings per share of $0.09, decisively beating Wall Street consensus that had braced for a loss of approximately $0.13 per share. Revenue for the quarter came in at $4.71 billion, comfortably surpassing estimates of $4.56 billion. The performance stands in stark contrast to the cautious sentiment that surrounded the retailer, which had seen its stock gain significantly in recent months on hopes of a strategic revival.
Driving the remarkable results was the outperformance of its luxury nameplate, Bloomingdale’s. The upscale retailer saw comparable sales on an owned-plus-licensed basis grow by 9.0%, its strongest quarterly performance in over three years. This surge in the luxury segment suggests high-end consumers remain resilient despite broader economic pressures.
"Our strongest third quarter in 13 years was driven by the acceleration of our Bold New Chapter strategy," Tony Spring, Chairman and CEO of Macy's, said in a statement. He noted that the "meaningful enterprise-wide changes" are resonating with customers, pointing to sustained momentum at Bloomingdale’s and the company's beauty division, Bluemercury.
The strong quarter gave management the confidence to lift its forecast for the remainder of the year. Macy's now expects full-year adjusted earnings to be in the range of $2.00 to $2.20 per share, a significant increase from its previous guidance of $1.70 to $2.05. The company also raised its outlook for net sales.
This optimistic forecast from a major national retailer offers a positive signal for the health of the U.S. consumer and the broader retail sector. The results follow a period of intense pressure for department stores, which have battled shifting consumer habits, e-commerce competition, and inventory challenges. Macy's performance, particularly in its high-end division, may alleviate some concerns about a potential spending slowdown during the holidays, a sentiment echoed by a Bloomberg report highlighting solid holiday demand.
Prior to the earnings release, Wall Street analysts had maintained a largely cautious stance on the company. Telsey Advisory Group had recently raised its price target to $22 while maintaining a "Market Perform" rating, and UBS held a "Sell" rating despite a minor price target increase to $7, according to Benzinga. The wide gap between those cautious outlooks and Tuesday's results underscores the magnitude of the company's beat.
Investors will now watch closely to see if the momentum from the "Bold New Chapter" strategy can be sustained through the fourth quarter. The plan, which focuses on modernizing the brand, curating a sharper product assortment, and improving the digital shopping experience, appears to be yielding significant returns far earlier than many analysts had anticipated.