Macy's Holiday Sales Disappoint: What's Next for the Retail Giant?

Macy's, Inc. (NYSE: M) has warned investors that its holiday-quarter sales will fall short of expectations, citing consumer budget pressure and a lull in spending between Thanksgiving and Christmas. The retailer expects net sales to be at the low to midpoint of its previously expected range of $8.16 billion to $8.4 billion, with adjusted diluted earnings per share (EPS) still in the range of $1.47 to $1.67. Shares of the company fell about 4% in aftermarket trading on Friday.

Macy's CEO Jeff Gennette attributed the weak sales to current macro-economic indicators and proprietary credit card data, which suggest that consumers will continue to face pressure in 2023, particularly in the first half of the year. The company has planned inventory mix and depth of initial buys accordingly. Macy's is not alone in facing headwinds; other retailers, such as Nordstrom (JWN) and Kohl's (KSS), have also reported sluggish sales and reduced guidance.



To address these challenges, Macy's has been implementing its Bold New Chapter strategy, which involves closing underperforming stores and monetizing non-go-forward assets. The company has also been investing in customer-facing initiatives, such as staffing, merchandising, visual presentation, and eventing, at its First 50 locations. These investments have led to a 1.9% increase in comparable sales at these stores. Additionally, Macy's has been expanding successful concepts like Macy's Backstage and Bluemercury, as well as focusing on digital transformation and adjusting its product mix and merchandising strategies.

Despite the disappointing holiday sales, Macy's has reported positive results in other areas. The company's asset sale gains of $66 million in the third quarter of 2024 were $61 million higher than the same period last year, reflecting the pull-forward of the monetization of certain non-go-forward assets. Macy's First 50 locations, Bloomingdale's, and Bluemercury have all reported strong comparable sales growth, indicating that the company's strategies are resonating with customers.

As Macy's looks to the future, it will be crucial for the company to continue executing its Bold New Chapter strategy and adapting to the evolving retail landscape. By focusing on customer-facing initiatives, expanding successful concepts, and leveraging digital transformation, Macy's can position itself for future growth and success. Investors should monitor the company's progress and remain vigilant for any signs of improvement or further challenges in the coming months.

In conclusion, Macy's holiday sales have fallen short of expectations, but the company is taking steps to address these challenges and improve its performance. By implementing its Bold New Chapter strategy and focusing on customer-facing initiatives, Macy's can navigate the current retail environment and emerge stronger in the long run.