Macy's (M.US) Q4 Results Show Mixed Bag, Weaker Guidance Weighs on Shares Before Market Open
1min read On Thursday before the U.S. stock market opened, macy's (M.US) reported its fourth-quarter 2024 results. Macy's fourth-quarter sales missed expectations, while its profit beat expectations, but the company gave a weak outlook for 2025. Shares of Macy's fell nearly 4% as of writing.
The company reported total revenue of $8.007 billion in Q4, down 4% from $8.375 billion in the same period last year. Net sales were $7.77 billion, down 4% from $8.12 billion in the same period last year, slightly below the consensus estimate of $7.78 billion. Adjusted EPS was $1.80, topping the consensus estimate of $1.54.
Macy's CEO Tony Spring noted that the company completed its first year of its "bold new chapter" transformation strategy, which drove the company's best comparable sales in a year — its best performance in the past 11 quarters.
Spring focused on closing underperforming Macy's stores while hiring more employees and improving product displays at 125 stores he and his team believe have more potential. The move was welcomed by Wall Street. He is trying to shrink Macy's business to adapt to the decades-long decline in demand for the goods sold in department stores and make the company more profitable. The data showed Macy's closed 64 stores last year and plans to close 86 more in the next two years.
While the strategy is financially sensible, analysts noted that implementing these changes now is not easy, given that Macy's mass-market shoppers are facing economic challenges such as inflation.
Looking ahead, Macy's expects net sales in 2025 to be between $21 billion and $21.4 billion, with the midpoint of the forecast below the consensus estimate of $21.3 billion. The company also expects adjusted EPS to be between $2.05 and $2.25, below the consensus estimate of $2.29.
Macy's more pessimistic outlook for 2025 sales and profits suggests that the company's management is cautious about consumer spending in the U.S. The company also expects a 2% year-over-year decline in sales from e-commerce and stores that have been open for at least one year, which means the company is lagging behind the plan Tony Spring set when he took over last year, promising comparable sales growth in the low single-digit percentages starting in 2025.