Macy's "Bold New Chapter": Can the CEO's Vision Rewrite the Department Store Story?

The narrative for department stores has been written in black ink for years. The recent bankruptcy of Saks and Neiman Marcus's parent company seemed to confirm the obituary. But Tony Spring, the CEO who took the helm in February 2024, is rewriting the script. His thesis is simple but bold: the department store isn't dead, it just needs to be good. The new story hinges on warm service, a seamless omnichannel experience, and a disciplined focus on where the brand still matters.

Spring's plan is a paradigm shift from decline to deliberate optimization. It requires a brutal but focused story: shuttering about 150 underperforming stores by the end of 2026 to prioritize roughly 350 locations. This isn't just about cutting costs; it's about reallocating capital and energy to the stores where the "good" experience can thrive. The early results show the story is gaining momentum. In the third quarter, comparable sales climbed 3.2%, the strongest in over three years. For Bloomingdale's, the growth was even more impressive, up 9%. This isn't a fluke. It's the market buying the dream that customers still love the Macy's heritage but were alienated by poor assortments and thin staffing. The plan is to fix that.

The execution is now in full view. The company is closing 14 more underperforming stores this year, bringing it 80% of the way to its 150-store closure goal. This relentless pruning is freeing up resources to invest in the "Reimagine" stores, where sharper visual displays and beefed-up staffing are driving positive sales growth. The financials are starting to reflect the narrative shift. The company raised its full-year sales and earnings outlook after the strong quarter, signaling that the momentum is real and sustainable. The grand vision is clear: by becoming a "good" department store, Macy's isn't just surviving-it's redefining the category.

The Financial Engine: Guidance Raised, But at What Cost?

The raised guidance is Wall Street's vote of confidence in the new narrative. After posting its strongest comparable sales growth in over three years, Macy's has lifted its full-year outlook. The company now expects adjusted earnings per share of between $2 and $2.20, a significant jump from its previous range. More importantly, it is guiding for net sales of $21.48 billion to $21.63 billion, which, while still a decline from last year's total, represents a more resilient path. This is the financial engine kicking into a higher gear, powered by the "good" store story. The standout performer is the luxury segment. Bloomingdale's comparable sales soared 9%, marking its best quarter in over a decade. This isn't just a tailwind; it's a key pillar of the new story. It proves the strategy of investing in premium locations and experiences is resonating with a segment willing to pay for quality and service. That momentum is what allows the company to raise sales guidance even after shuttering stores that once generated about $700 million in annual sales.

Operationally, the company is showing impressive discipline. Despite the growth, SG&A expenses declined $40 million year-over-year. This productivity gain is critical. It means the turnaround isn't just about revenue; it's about doing more with less. The company is reinvesting savings into the "Reimagine" stores while simultaneously pruning its cost base. The result is a healthier core business, with core adjusted EBITDA of $273 million and a gross margin of 39.4%, holding steady despite broader pressures.

Yet the cost of this transformation is visible. The company is navigating a tough environment, with higher tariffs and selective consumer spending expected to persist. The guidance itself is cautious, projecting only flat to slightly positive comparable sales for the year. The raised numbers are a signal of momentum, but the path forward remains fragile. The financial engine is running, but it must now prove it can sustain the pace without stalling.

Catalysts, Risks, and the Long-Term Vision

The next major test for Macy's story is the holiday quarter. The company itself has flagged selective spending by consumers and higher tariffs as persistent pressures. This is the narrative's crucible. The plan's resilience will be proven if the company can deliver on its guidance for flat to roughly 0.5% comparable sales growth while navigating these headwinds. A strong holiday performance would validate the "good store" model, showing customers will spend on quality and service even in a cautious economy. A miss, however, would expose the strategy as fragile, reliant on temporary momentum.

The most significant risk is a broader narrative violation. The recent bankruptcy of Saks and its parent company casts a long shadow over the entire department store model. It's a stark reminder that not all multibrand retailers can adapt. For Macy's, the risk is that this sector-wide crisis undermines the very belief system the company is trying to rebuild. If the market concludes the department store concept is structurally broken, even a well-executed turnaround plan could be dismissed as a late-stage effort.

The ultimate test, however, is moving beyond guidance bumps to a sustainable, profitable sales base. The company's plan hinges on an optimized network of about 350 stores becoming the engine. The math is clear: the company is guiding for sales that are still down from last year, even after closing stores that generated $700 million in annual sales. The long-term vision must therefore be about achieving a profitable sales floor, not just a temporary stabilization. The recent guidance raise is a step, but it must be followed by quarters of consistent execution to prove the model can work.

Looking ahead, the path is defined by disciplined optimization. The company is closing stores, reinvesting in the "Reimagine" locations, and using the savings to improve productivity. The goal is a leaner, higher-return footprint. The long-term narrative depends on this process translating into a durable increase in earnings power, not just a one-time boost from store closures. If Macy's can build a profitable, optimized store base, it will have rewritten the story for its entire category. The holiday quarter is the first major chapter in that new book.