Macys 2026 Q1 Earnings Misses Targets as Net Income Falls 38.7%

Macy's reported a decrease in fiscal 2026 Q1 revenue, falling 5.1% to $4.60 billion from the previous year. The company's earnings per share (EPS) also declined to $0.14, significantly missing analyst expectations. Despite these challenges, Macy's maintained its sales guidance for the year, although it revised its profit forecast downward due to ongoing economic and market pressures, including tariff impacts.

Revenue
Macy's reported a decline in revenue for Q1 2026, reaching $4.60 billion compared to $4.85 billion a year earlier. Women's Accessories, Shoes, Cosmetics, and Fragrances generated $1.94 billion, while Women's Apparel brought in $1.10 billion. Men's and Kids' segments contributed $951 million, with Home/Other at $608 million. Other Revenue accounted for $194 million, net credit card revenues were $154 million, and Macy's Media Network added $40 million, culminating in total revenue of $4.79 billion.

Earnings/Net Income
Macy's saw a 36.4% drop in EPS to $0.14 in Q1 2026 from $0.22 the previous year. The company's net income also fell 38.7%, decreasing from $62 million to $38 million. This performance reflects a challenging quarter for the retailer.

Price Action
The stock price of Macy's increased by 4.29% during the latest trading day, edged down 0.17% over the most recent week, and rose 0.68% month-to-date.

Post Earnings Price Action Review
The investment strategy of purchasing stocks when revenue exceeds expectations and holding them for 30 days has shown effectiveness, often outperforming the broader market. Using revenue beats as a trigger can help identify well-performing stocks, and a 30-day holding period allows for a clearer assessment of trends. Backtesting this strategy has demonstrated consistent profitability, indicating potential for excess returns compared to a buy-and-hold approach. However, it's crucial to consider varied market conditions and risk factors before implementation. Investors should evaluate their risk tolerance and investment goals. In summary, while buying on revenue beats has been historically effective, thorough backtesting and careful consideration of individual circumstances are essential before pursuing this strategy.

CEO Commentary
Tony Spring, Chairman and CEO of Macy's, highlighted the company's robust performance in Q1 2025, driven by omnichannel execution and progress on the Bold New Chapter strategy. He noted an improvement in comparable sales and positive results from luxury segments. Despite macroeconomic challenges, Spring expressed confidence in navigating uncertainties with strategic pricing and inventory management.

Guidance
For fiscal 2025, Macy's projects net sales between $21.0 billion and $21.4 billion, with adjusted EPS of $1.60 to $2.00. The company anticipates a comparable sales decline of 0.5% to 2%, and an adjusted EBITDA margin of 7.4% to 7.9%. Q2 guidance includes net sales of $4.65 billion to $4.75 billion, with adjusted EPS of $0.15 to $0.20, reflecting a cautious stance on consumer behavior and promotional pressures.

Additional News
Macy's is undergoing significant changes with plans to close 150 underperforming stores by early 2027, as part of a three-year strategy to streamline operations and enhance profitability. CEO Tony Spring emphasized a focus on improving the customer experience, including faster online deliveries and better in-store service. Macy's is also adjusting its sourcing strategy to mitigate tariff impacts, reducing reliance on Chinese imports for its private brands. These efforts are part of a broader initiative to strengthen Macy's market position amid economic uncertainties.