Macy’s Stock Dips on Disappointing 2025 Earnings Outlook Despite Strong Q4 Profits

Mixed Financial Results Spark Market Reaction

Macy’s (NYSE:M) recently unveiled its fiscal fourthquarter 2024 earnings, delivering a performance that exceeded profit expectations but fell short on future guidance, causing its stock to slip approximately 1% in premarket trading on Thursday. This detailed Macy’s earnings report analysis dives into the numbers, strategic shifts, and market sentiment surrounding the department store giant, offering insights into why investors are reacting cautiously despite a robust quarterly showing. For Q4 2024, Macy’s posted an adjusted earnings per share of $1.80, surpassing Wall Street’s prediction of $1.54, while revenue reached $7.77 billion, nearly matching the anticipated $7.78 billion. Net income soared to $342 million, a stark contrast to the $128 million loss reported a year earlier, translating to a net income per share of $1.21 compared to a 47cent deficit previously. These figures highlight a resilient holiday season performance, yet the spotlight quickly shifted to the company’s fiscal 2025 projections, which painted a less optimistic picture.

The retailer’s comparable sales on an owned basis dropped 1.1% yearoveryear, a notable improvement from the 5.4% decline in the prior year, though it missed analyst hopes for a modest 0.09% dip. Meanwhile, ownedpluslicensedplusmarketplace comparable sales edged up by 0.2%, marking the strongest result in 11 quarters. Segment performance revealed a mixed bag: Macy’s First 50 locations grew comparable sales by 0.8% for the fourth straight quarter, Bloomingdale’s climbed 4.8%, and Bluemercury jumped 6.2%, but the core Macy’s namesake stores saw a 1.9% decline. Gross margin stood at 35.7%, down from 37.5% a year ago yet slightly above the expected 35.6%, reflecting stable profitability amid challenging sales trends. Macy’s also bolstered its financial position, ending the year with $1.3 billion in cash, up $272 million from the previous year, partly fueled by $144 million in asset sale gains from shuttering 64 underperforming stores, an $83 million increase over last year’s gains.

However, the Macy’s 2025 earnings forecast stole the narrative, projecting an adjusted EPS range of $2.05 to $2.25, well below the consensus estimate of $2.32, and full-year revenue between $21 billion and $21.4 billion, falling short of the expected $21.3 billion. Comparable ownedpluslicensedplusmarketplace sales are expected to decline by 2.0% to 0.5% compared to 2024, with goforward business sales projected to range from a 2.0% drop to flat yearoveryear. Adjusted EBITDA as a percentage of revenue is forecasted at 8.4% to 8.6%, signaling potential margin pressures ahead. This underwhelming Macy’s future earnings guidance has overshadowed the Q4 success, driving the stock’s premarket dip as investors weigh the implications for long-term growth in a competitive retail landscape.

Macy’s leadership, led by Chairman and CEO Tony Spring, emphasized the ongoing “Bold New Chapter” strategy, now in its second year, as a cornerstone of their efforts to enhance customer experience and unlock shareholder value. “As we wrap up the first year of this transformative approach, our investments in elevating the shopping experience have delivered our highest comparable sales of the year, a milestone not seen in nearly three years,” Spring noted. He added that the company plans to amplify initiatives resonating with customers to foster sustainable, profitable growth. Part of this strategy includes pruning the store portfolio, with 64 noncore locations closed in 2024 and a broader plan to shutter around 150 underperforming outlets over three years, a move announced in early 2024. While these closures have boosted cash reserves through asset sales, they may also contribute to the cautious sales outlook, as the company balances reinvestment with a shrinking physical footprint.

Delving deeper into the Macy’s financial performance breakdown, the Q4 results underscore resilience in key areas like digital sales and luxury segments, with Bloomingdale’s and Bluemercury outperforming the core brand. The 0.2% uptick in ownedpluslicensedplusmarketplace sales reflects gains in online channels and partnerships, a bright spot amid broader retail headwinds. Yet, the 2025 forecast suggests macroeconomic uncertainties and shifting consumer spending patterns could temper these gains, prompting a conservative stance from management. The stock’s reaction aligns with a market tendency to prioritize forwardlooking guidance over past achievements, especially in an industry grappling with ecommerce competition and evolving shopper preferences.

For investors and analysts tracking Macy’s stock market trends, the mixed signals present a complex picture. The Q4 earnings beat demonstrates operational strength, supported by a leaner cost structure and strategic asset management, but the muted 2025 outlook raises questions about the pace of recovery and the effectiveness of the Bold New Chapter plan in driving consistent growth. With cash reserves up and a focus on highperforming segments like the First 50 stores, Macy’s appears poised to weather nearterm challenges, yet the projected sales decline and lowerthanexpected EPS suggest hurdles remain. This Macy’s earnings impact analysis reveals a company at a crossroads, balancing shortterm wins with a longerterm vision that has yet to fully reassure the market.

Ultimately, Macy’s stock dip on March 6, 2025, reflects investor unease with the 2025 earnings and sales projections rather than dissatisfaction with the Q4 2024 results. The retailer’s ability to execute its strategic overhaul, capitalize on digital and luxury growth, and navigate a dynamic retail environment will likely determine its trajectory in the months ahead. For those seeking a comprehensive Macy’s quarterly earnings overview, this report underscores both the achievements and the uncertainties shaping the company’s path forward.