Department store chain Macy’s (NYSE: M) reported revenue ahead of Wall Streets expectations in Q3 CY2025, but sales were flat year on year at $4.91 billion. The company’s full-year revenue guidance of $21.55 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP profit of $0.09 per share was significantly above analysts’ consensus estimates.
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Macy's (M) Q3 CY2025 Highlights:
- Revenue: $4.91 billion vs analyst estimates of $4.73 billion (flat year on year, 3.9% beat)
- Adjusted EPS: $0.09 vs analyst estimates of -$0.13 (significant beat)
- Adjusted EBITDA: $285 million vs analyst estimates of $210.5 million (5.8% margin, 35.4% beat)
- The company lifted its revenue guidance for the full year to $21.55 billion at the midpoint from $21.3 billion, a 1.2% increase
- Management raised its full-year Adjusted EPS guidance to $2.10 at the midpoint, a 12% increase
- Operating Margin: 0.9%, in line with the same quarter last year
- Free Cash Flow was -$190 million compared to -$384 million in the same quarter last year
- Same-Store Sales rose 3.2% year on year (-2.4% in the same quarter last year)
- Market Capitalization: $6.10 billion
Company Overview
With a storied history that began with its 1858 founding, Macy’s (NYSE: M) is a department store chain that sells clothing, cosmetics, accessories, and home goods.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $22.71 billion in revenue over the past 12 months, Macy's is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when you’ve penetrated most of the market. For Macy's to boost its sales, it likely needs to adjust its prices or lean into foreign markets.
As you can see below, Macy's struggled to generate demand over the last three years (we compare to 2019 to normalize for COVID-19 impacts). Its sales dropped by 4.2% annually as it closed stores and observed lower sales at existing, established locations.
This quarter, Macy’s $4.91 billion of revenue was flat year on year but beat Wall Street’s estimates by 3.9%.
Looking ahead, sell-side analysts expect revenue to decline by 4.1% over the next 12 months, similar to its three-year rate. This projection is underwhelming and suggests its newer products will not lead to better top-line performance yet.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Macy's has generally closed its stores over the last two years, averaging 5.5% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Note that Macy's reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Macy’s demand has been shrinking over the last two years as its same-store sales have averaged 1.5% annual declines. This performance isn’t ideal, and Macy's is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Macy’s same-store sales rose 3.2% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Macy’s Q3 Results
It was good to see Macy's beat analysts’ revenue and EPS expectations this quarter. We were also excited its full-year guidance was raised. Zooming out, we think this was a solid print with some key areas of upside. The stock remained flat at $22.69 immediately after reporting.
So should you invest in Macy's right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
