To The Moon

$Macy's(M)$ is scheduled to report its Q1 Fiscal Year 2025 earnings before market open on Wednesday, 28 May 2025.

Earnings Per Share (EPS): Macy's expects adjusted EPS to range between $0.12 and $0.15 for Q1 FY 2025. The consensus analyst estimate is around $0.15. This would represent a significant 44% drop from the $0.27 EPS reported in Q1 FY 2024.

Revenue: Macy's has guided for net sales between $4.4 billion and $4.5 billion for Q1 FY2025. Analysts are projecting sales of approximately $4.42 billion. This indicates a projected decline of over 8% from the same period a year ago.

Macy's (M) Last Neutral Earnings Call Saw Share Price Declined By 7.92%

Macy had a neutral earnings call on 06 March 2025 which saw its share price declined by 7.92% since.

The earnings call reflected a mix of strong performance in certain segments such as luxury and strategic initiatives like store closures, alongside challenges in consumer environment and specific categories like home. The strategic progress and financial improvements are noteworthy, but the broader economic uncertainties and specific category weaknesses temper the overall outlook.

Macy's (M) Guidance

During Macy's fourth quarter 2024 earnings call, the company provided several key metrics and insights into its performance and outlook. Macy's reported a 0.2% increase in comparable sales, the highest in 11 quarters, with the go-forward Macy's locations achieving a 0.6% comp gain. The company's net sales were approximately $7.8 billion, and they ended the fiscal year with $1.3 billion in cash, up $272 million from the previous year.

Macy's also generated $679 million in free cash flow, inclusive of $283 million from asset monetization. The annual comps improved by 510 basis points, although they were still down 0.9% compared to 2023. The company closed 64 of its 150 non-go-forward Macy's stores, which contributed to annual asset sale gains of $144 million. Additionally, Macy's lowered its capital expenditures by $111 million to $882 million. For fiscal 2025, Macy's projects net sales of $21 billion to $21.4 billion, with comparable sales expected to decline between 2% and 0.5%. The company plans to continue reducing capital expenditures while prioritizing investments that enhance profitability and stakeholder value.

Factors to Watch and Potential Influences

Macy's, Inc. achieved a 0.2% comparable sales gain in the fourth quarter, which was the highest of the year and best in 11 quarters. Go-forward Macy's, Inc. reported its strongest comp of the year at plus-0.6%.

"Bold New Chapter" Strategy: Macy's is undergoing a significant transformation under its "Bold New Chapter" strategy. Investors will be looking for updates on the progress of these initiatives, including:

Store Fleet Optimization: The company is closing unproductive stores and focusing resources on more profitable locations. The impact of recent store closures and the performance of expanded "go-forward" store bases (aiming for 125 locations) will be key.

Closed 64 underperforming Macy's stores ahead of the annual plan and generated $283 million of asset monetization proceeds, contributing to $679 million of free cash flow, up 71% from last year.

Product Assortment and Brand Strategy: Efforts to improve product assortment, enhance customer experience, reshape private brands, and add relevant national brands will be under scrutiny.

The home business at Macy's faced pressure due to interest rates and competitive landscape, highlighting the need for a refresh in this category.

Digital Capabilities and Marketing: Focus on improving digital capabilities and marketing effectiveness should contribute to results.

Luxury Divisions Performance: Macy's continues to see strength in its luxury nameplates, Bloomingdale's and Bluemercury. These divisions showed positive comparable sales growth in Q4 FY2024 (Bloomingdale's nearly 5%, Bluemercury 6%). Continued strong performance in these segments could help offset weakness in the core Macy's brand.

Bloomingdale's achieved a positive 6.5% comp, marking the strongest fourth quarter volume in its history. Bluemercury reported its 16th consecutive quarter of positive comps.

Credit Card Revenue and Net Credit Losses: In Q4 FY2024, credit card revenues decreased, primarily due to higher net credit losses. Investors will be watching this metric closely, as it impacts overall profitability.

Consumer Spending Environment: The broader macroeconomic environment and consumer spending trends, particularly in the department store sector, will heavily influence Macy's results. Department stores, in general, have been struggling, and Macy's is projected to post weak Q1 2025 same-store sales of around -4.3%.

Total Macy's nameplate comps declined 0.9% in the fourth quarter, despite a 380 basis point improvement from the prior year. Concerns about consumer health due to inflation, housing costs, and food prices contribute to an uncertain environment for retail.

Full-Year Guidance: Macy's previously cut its full-year FY2025 sales and profit outlook, citing "external uncertainties" and broader retail challenges. Any adjustments to this guidance based on Q1 performance will be critical for investor sentiment.

Fourth quarter adjusted EPS was $1.80, above the guidance range, driven by better-than-expected SG&A, credit card revenues, and improved shortage and asset sale gains.

Macy's (M) Price Target

Based on 10 analysts from Tiger Brokers offering 12 month price targets for Macy's in the last 3 months. The average price target is $12.30 with a high forecast of $17.00 and a low forecast of $6.00. The average price target represents a 1.74% change from the last price of $12.30.

Comparable sales on an owned basis were down 1.1%, though owned-plus-licensed-plus-marketplace comparable sales were up 0.2% (their best performance in 11 quarters). We could be seeing some volatility on the share price for Macy.

Technical Analysis - Exponential Moving Average (EMA)

Macy's reported Q4 FY 2024 adjusted EPS of $1.80, exceeding analyst estimates of $1.53. Revenue for Q4 FY 2024 was $7.8 billion, a 4.3% decrease year-over-year, and slightly missed analyst estimates.

If we looked at how the previous earnings with slightly missed analyst estimates and caused the share price to experience a downtrend since until mid-April, where we saw a brief upside, and then the negative momentum continues.

The bears have been in control, though the bulls is trying to push above the 50-day period, which seem pretty challenging, so what I would expect from the upcoming earnings would be a good result delivered from the "Bold New Chapter" Strategy, this could create a gap up or surge for Macy’s, which is having investors waiting.

Short interest is showing mixed reaction, there are some investors who are waiting for a surprise in earnings but there are some who are planning to sell for profits first before any further decline. Not forgetting the impact from tariffs on Macy’s as well, we could see some price volatilty before and after the earnings call.

I am looking for a surprise surge from the positive results from the "Bold New Chapter" Strategy.

Summary

Macy's Q1 FY 2025 earnings are expected to reflect ongoing challenges in the department store sector, with projected declines in both revenue and EPS.

I think we need to watch and focused on the progress of the "Bold New Chapter" strategy, the performance of the luxury brands, and any updated outlook for the rest of the fiscal year, as these factors will be key indicators of the company's ability to navigate the current retail landscape.

Appreciate if you could share your thoughts in the comment section whether you think Macy would be able to deliver results on its "Bold New Chapter" strategy.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.