U.S. omnichannel retailer Macy’s (M) released its fourth-quarter 2025 results on Wednesday, guiding for lower sales in fiscal 2026 due to the impact of tariffs as well as macroeconomic and geopolitical factors. However, M stock climbed about 6% in early trading as the retailer’s earnings beat excited investors.
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Macy’s Surpasses Wall Street
During the three-month period ending on January 31, Macy’s saw its adjusted earnings per share (EPS) fall by about 7% year-over-year to $1.67, with net sales also declining by about 2% to $7.6 billion. However, both metrics surpassed the Wall Street consensus of an adjusted EPS of $1.56 and net sales of $7.51 billion.
Macy’s comparable sales — sales made at stores that have been open for at least a year during the period — climbed by 1.8% from the same period last year. Meanwhile, the retailer’s full-year adjusted EPS and net sales also declined by 12% and 2.2% year-over-year to $2.32 and $21.8 billion, respectively, but comparable sales returned to positive territory, up 1.5%.
Macy’s Sees Massive Profit Jump in Q4
In 2025, tariffs caused a 40 basis point decrease in Macy’s gross margin rate, although the retailer managed to trim its selling, general, and administrative expenses by $90 million to $8.2 billion. Moreover, the retailer also significantly expanded its profits: net income climbed by 48% in Q4 to $507 million and rose 10% for the full year to $642 million.
“As we wrap up year two of the Bold New Chapter, I’m pleased with the growth and progress we’re making against our strategic priorities,” noted Tony Spring, Macy’s chair and CEO. .
Macy’s Flags 2026 Pressure from Tariffs, Investments
Looking ahead, however, Macy’s is taking the side of caution and sees its net sales coming in lower at the end of fiscal 2026: between $21.4 billion and $21.65 billion compared to $21.8 billion in fiscal 2025. The retailer also expected comparable sales to decline by 0.5% or rise marginally by the same measure.
“Guidance assumes the first half of the year will have a larger tariff impact than the second half, with the first quarter having the most meaningful impact,” Macy’s clarified.
It added that the forecast also reflects investments to be pumped into its new Reimagine 200 locations and luxury nameplates such as Bloomingdale’s and Bluemercury.
Is Macy’s a Good Stock to Buy?
On Wall Street, analysts remain cautious on Macy’s shares and have maintained their Hold consensus rating on the stock. This is based on two Buys, four Holds, and one Sell issued over the past three months.
However, the average M price target of $21.40 suggests about 20% upside from current trading levels. It is also important to note that the consensus rating could change following the latest earnings report.
