Major retailer Macy’s has reported concerning news about its holiday season performance, with sales falling short of expectations and leading to a significant drop in its stock price.
The department store giant, which operates Macy’s, Bloomingdale’s, and Bluemercury locations, disclosed that its comparable sales remained essentially flat during the quarter-to-date period. The company specifically noted underperformance in its locations outside of its “First 50” stores, with these non-go-forward locations experiencing negative comparable sales.
The retailer now anticipates its fourth-quarter net sales to reach the lower end of its previously announced range of $7.8 billion to $8.0 billion, or possibly slightly below it. Following this announcement, Macy’s shares declined approximately 8%, trading at around $14.56 per share.
This disappointing holiday performance follows earlier warning signs from the company’s third-quarter results in 2024, which showed a 2.4% decrease in total net sales year-over-year, contributing to an overall revenue decline of nearly 3%. During a December earnings call, Macy’s CFO Adrian Mitchell highlighted several challenges, including weak sales in men’s non-active apparel, handbags, and home goods
categories. Mitchell also cited unseasonably warm weather as a factor affecting sales and noted a shift in consumer behavior toward more value-oriented purchasing.
The news comes as a contrast to the National Retail Federation’s earlier predictions of record consumer spending during the holiday season for gifts, food, decorations, and seasonal items. However, it aligns with findings from ThredUp’s report, which indicated consumers planned to reduce full-price apparel purchases by 7% in 2024 compared to 2023. The report also revealed that 55% of consumers would consider increasing their secondhand clothing purchases if economic conditions didn’t improve.
In response to these challenges, Macy’s recently announced plans to close 66 underperforming stores in 2025. This decision is part of the company’s “Bold New Chapter” strategy, introduced in February 2024, which aims to strengthen the Macy’s brand, boost luxury growth, and modernize operations.
Tony Spring, Macy’s Chair and CEO, addressed the closures, stating that while closing stores is never easy, it’s necessary to redirect resources toward more productive locations where customer response has been positive to improved product offerings and enhanced service levels.
These developments reflect broader changes in consumer behavior and the ongoing challenges faced by traditional retail department stores. The company’s customers have shown increased interest in clearance items and responded positively to discounts, indicating a more price-conscious approach to shopping. This shift has created what Mitchell described as a “competitive discretionary environment” during the holiday season.
The recent performance issues and store closure announcements represent significant challenges for Macy’s as it attempts to navigate changing consumer preferences and economic conditions. The company’s focus on its most productive locations and strategic initiatives through its Bold New Chapter strategy suggests a recognition of the need to adapt to evolving retail landscapes and customer expectations.
The combination of flat comparable sales, store closures, and lower-than-expected holiday performance points to ongoing
transformation in the retail sector, with traditional department stores like Macy’s working to find their footing in an increasingly competitive and value-driven market.