Macy’s Lifts Outlook as Turnaround Takes Hold

Macy’s raised its full-year forecast and posted its highest comparable sales growth in 13 quarters as its turnaround plan began to deliver results.

Macy’s unveiled a plan last year to close underperforming locations, invest in the shopping experience at remaining stores, streamline its overall operations and gain share of the luxury market. “The significant changes we have made across the organization have resonated with customers,” said CEO Tony Spring.

But the company said it expects a “more choosy” consumer in the fourth quarter, which includes the holiday season.

Shares fell 0.79% to $22.53. The stock is up 31% this year.

Macy’s said it has had success offering newer, more stylish products from brands like Rodd & Gun, Reiss and Prada Beauty. “We are dedicating floor space to capitalize on new trends,” Spring said on the earnings call. “The variety of brands and categories we offer speaks to our fashion authority and relevance in a way we haven’t seen in years.”

At the same time, the company has invested in employee education to produce a more welcoming shopping experience in stores. Macy’s said it achieved its highest net promoter score on record in the third quarter, a measure of customer feedback.

Macy’s also closed underperforming stores and opened new locations of the Bloomingdale’s and Bluemercury chains, which sell more luxury goods.

While the company expects consumers to be selective this holiday season, Macy’s has largely seen its customers continue to spend. “Our customer base, which is predominantly middle- to upper-income, remained resilient and engaged in the third quarter,” Spring said.

To address the additional costs caused by the tariffs, Macy’s has been raising prices, working with suppliers to share some of the costs of the tariffs and moving production to countries with lower tariffs. The impact of the tariffs in the third quarter was less than the company expected, with 50 basis points deducted from the gross margin rate. Tariffs “are not going away. So they are part of the way we have to operate in 2026,” Spring said.

The New York-based company on Wednesday raised its full-year sales guidance to a range of $21.48 billion to $21.63 billion, from $21.15 billion to $21.45 billion. It also expects adjusted earnings per share to be $2 to $2.20, up from its previous view of $1.70 to $2.05.

Macy’s previously raised its forecast in September, after same-store sales turned to growth for the first time since 2022.

Total same-store sales remained positive at Macy’s, rising 3.2% in the third quarter on a comparable owned and franchised plus market basis. Comparable sales were up 2% at Macy’s, 9% at Bloomingdale’s and 1.1% at Bluemercury.

In the fourth quarter ending in November, Macy’s had earnings of $11 million, or four cents per share, compared with $28 million, or 10 cents per share, a year earlier.

Excluding some one-time items, adjusted earnings per share were nine cents, ahead of the 11 cents loss that analysts had expected, according to FactSet.

Net sales, which include the impact of closed stores, fell 0.6% to $4.71 billion in the third quarter. Analysts expected $4.55 billion, according to FactSet. The sales decline was less severe than before, with revenues declining by a low-single-digit percentage rate for several consecutive quarters.

Write to Catherine Hamilton at katherine.hamilton@wsj.com And Nicholas J. Miller V nicholas.miller@wsj.com