Macy's beats earnings but warns tariffs will dent 2026 profits
Luxury Bloomingdale's brand shines with 9.9% sales growth as retailer cites geopolitical headwinds
Macy's delivered stronger-than-expected fourth-quarter results but issued a cautious outlook for 2026, warning that proposed tariffs could pressure margins and reduce consumer spending in the coming year.
The department store chain reported adjusted diluted earnings of $1.67 per share for the quarter ended January, exceeding company guidance. Net sales reached $7.6 billion, while comparable sales rose 1.8% across the business.
For fiscal year 2025, Macy's achieved adjusted diluted earnings of $2.32 per share, surpassing its most recent guidance range of $2.00 to $2.20. The company returned to annual comparable sales growth with a 1.5% increase, marking a turnaround from recent declines.
However, the retailer's 2026 guidance fell short of analyst expectations. Macy's projected adjusted earnings of $1.90 to $2.10 per share for the new fiscal year, compared with the consensus estimate of $2.17. Net sales are expected to range between $21.4 billion and $21.65 billion, versus fiscal 2025's $21.8 billion.
The company cited ongoing geopolitical uncertainties and potential tariff impacts as key factors behind its conservative outlook. Proposed tariffs are projected to increase average U.S. household costs by $600 in 2026, which could pressure discretionary spending on apparel and home goods that comprise Macy's core business.
Bloomingdale's emerged as a bright spot in the quarter, with comparable sales surging 9.9%. The luxury department store has consistently outperformed the flagship Macy's brand, benefiting from higher-income consumers who have proven more resilient to inflation and economic uncertainty.
Tony Spring, chairman and chief executive officer, highlighted the progress of the company's "Bold New Chapter" strategy, noting that all three nameplates gained traction during the quarter. The initiative has focused on optimizing the store portfolio, expanding digital capabilities, and enhancing the customer experience across Macy's, Bloomingdale's, and bluemercury.
Despite the cautious 2026 outlook, Macy's demonstrated confidence in its financial position by increasing its dividend by 5%. The retailer continues to prioritize returning capital to shareholders while investing in strategic growth initiatives.
Macy's has been developing a more flexible supply chain to help mitigate potential disruptions from global trade and tariff activity, a strategy that could prove critical as trade tensions escalate. The company previously estimated that tariffs would reduce gross margin by approximately 40 to 60 basis points, with the majority of that impact expected in the fourth quarter of the current fiscal year.
The retailer's stock, which has 11 of 13 analysts rating it a hold, faces significant execution challenges as it attempts to revitalize its department store model amid shifting consumer preferences and increased competition from online retailers. Shares currently trade at a forward price-to-earnings ratio of 9.45, reflecting investor skepticism about near-term growth prospects.
With the department store sector undergoing a prolonged transformation, Macy's ability to maintain Bloomingdale's momentum while navigating macroeconomic headwinds will be critical to its turnaround success. The company's performance in 2026 will provide a key test of whether its strategic investments can offset the broader challenges facing traditional brick-and-mortar retailers.