Macy's Q3 sales hit a three-year high due to strong holiday demand, raising full-year profit guidance again

Macy's third-quarter performance exceeded expectations across the board, with net sales of $4.71 billion reaching the highest level in 13 quarters, prompting the company to raise its full-year profit and sales guidance again, indicating that American consumers still maintain their willingness to spend amid economic concerns.

On December 3rd, the latest financial report from Macy's, the largest department store chain in the United States, showed total revenue of $4.91 billion in the third quarter, surpassing market expectations of $4.75 billion. Adjusted earnings per share were $0.09, significantly better than the market's expectation of a loss of $0.14 per share. The strong performance was mainly attributed to robust holiday shopping demand and the effectiveness of the company's transformation strategy.

Macy's raised its full-year adjusted earnings per share guidance to $2.00-$2.20, higher than the previous expectation of $1.70-$2.05 and the market estimate of $1.99. The full-year net sales expectation was also increased to $21.48-$21.63 billion. Despite the strong performance, Macy's stock fell over 6% in pre-market trading. Macy's stock price has risen 34% this year, with a particularly significant increase in the past week.

Macy's CEO Tony Spring stated, "Our third-quarter sales are the strongest in 13 quarters. As we enter the holiday season, we are in a favorable position." This is the second time Macy's has raised its full-year targets this year, reflecting that its transformation efforts are beginning to yield returns.

Performance Exceeds Expectations, Profitability Significantly Improves

Macy's third-quarter financial performance surpassed Wall Street expectations across the board. Net sales of $4.71 billion exceeded analysts' expectations of $4.56 billion. More notably, profitability saw a significant improvement, with adjusted earnings per share of $0.09, while the market had previously expected a loss of $0.14 per share.

The strong sales performance led to better profit margins, and tariff relief measures and cost reductions also contributed to the improvement in profitability.

Reports indicate that Macy's high-end brand Bloomingdale's saw a significant year-on-year increase in net sales in the third quarter, and the high-end beauty chain Bluemercury also experienced growth in net sales.

This performance has garnered more support from Wall Street for Spring's transformation strategy. Since taking over as CEO in 2024, Spring has focused on investing in Macy's stores with the greatest sales potential, enhancing performance through increased staffing, strengthened marketing, and updated store displays.

Macy's is reportedly advancing its transformation by closing underperforming stores, testing smaller store formats, and expanding its online product offerings, with these measures beginning to show returns in a challenging retail environment.

Analysts stated, "Our research shows that Macy's women's apparel products and merchandise displays in stores—especially in renovated stores—and online channels have improved." The company plans to close about 150 underperforming stores by 2026.

Strong Holiday Demand, Resilience in Consumer Spending

Macy's guidance for the remainder of the year indicates that management expects consumers to maintain some of the spending momentum seen during Black Friday and Cyber Monday shopping activities. The company has raised its full-year net sales forecast to a range of $21.5 billion to $21.63 billion.

Reportedly, like other retailers, Macy's is heavily relying on promotional activities this holiday season, holding promotions throughout November leading up to Black Friday and Cyber Monday. The company noted that the optimistic guidance assumes consumers will be more selective during the key holiday shopping period in the second half of the year.

Previously, several retailers, including Kohl's Corp., Best Buy Co., and Dick's Sporting Goods Inc., raised their full-year guidance at the end of November, providing further evidence that American consumers are still willing to shop at retailers that can offer the desired goods at reasonable prices