Macys posts strong Q4 results but a reserved outlook reflects uncertainty around tariffs, Iran war

NEW YORK (AP) — Macy’s reported stronger-than-expected profits for its pivotal fourth quarter and comparable sales rose again. The store said overhauling its products and improving customer service has led shoppers to spend more.

The company, which also operates luxury Bloomingdale’s and beauty chain Bluemercury, offered a mixed outlook for the year; He predicts sales to be above Wall Street expectations but a conservative outlook on profits.

Macy’s CEO Tony Spring said the cautious outlook reflects “tension” between Macy’s relatively healthy business and foreign economic volatility, namely uncertainty from President Donald Trump’s tariffs and the war in Iran, which is causing energy prices to rise.

“As we sit here today, there are more unknowns than there are known,” Spring said in an interview with The Associated Press on Wednesday.

Shares rose around 3.9% in morning trading.

Spring, who is in his third year at Macy’s and trying to revitalize the storied retailer, said Wednesday that Bloomingdale’s had its best holiday sales performance on record. Some of this outstanding performance has been attributed by industry analysts to Chapter 11 Bankruptcy The company that operates Saks Fifth Avenue and Neiman Marcus.

But Macy’s is struggling with the same obstacles that have bedeviled its competitors and the retail industry as a whole.

The USA turned global trade upside down tariffs This caused prices to rise, and many Americans reprioritized where their paychecks would go.

Iran war These pressures, which began late last month, have led to sharp increases in gasoline prices and especially diesel prices, which are mainly used for transportation. The latest cost increases have hit consumers right at the pump and could soon be felt at retail counters as well.

Some of the additional costs resulting from the tariffs have led to some difficult decisions for retailers, such as what they can put on shelves and how much of the increased costs will be passed on to customers who are already more cautious about spending.

Supreme Court strikes down President Donald Trump’s biggest tariffs – but management is trying to replace them with new ones. While a federal judge has ruled that companies are entitled to refunds on tariffs overturned by the Supreme Court, retailers are unsure when or if they will even receive those refunds.

Against this backdrop, consumer spending is becoming uneven, with higher-income households continuing to spend more freely, while lower-income households are withdrawing what is often referred to as ‘determination’. “K-shaped economy.”

“I don’t know how long this war is going to last,” Spring told the AP. “I don’t know how long the Strait of Hormuz will be disrupted. I don’t know if the Supreme Court decision and the tax refunds will happen. I think we need to focus on the things we can control, and as we learn more, I think we need to react accordingly.”

Macy’s hasn’t seen an increase in shipping costs yet, but if the Iran war drags on, Spring said it could be a different story. He said the company could cover some of the costs, but would eventually have to pass some of those costs on to consumers.

Under Spring, who took over the top job at Macy’s in early 2024, Macy’s has closed unprofitable stores and spent millions to modernize others. The company has strengthened customer service. It is also trying to differentiate its luxury business from its competitors with exclusive products.

The company reported net income of $507 million, or $1.84 per share, for the three months ended Jan. 31. This compares with $342 million, or $1.21 per share, in the same period last year. Adjusted results per share were $1.67 in the most recent quarter.

Net sales decreased to $7.64 billion from $7.68 billion in the same period the previous year; This reflects Macy’s move to close more stores.

Comparable sales (sales across established online channels and brick-and-mortar stores) increased 1.8%. This was lower than the 3.2% increase in the fiscal third quarter, following a 1.9% increase in the second quarter. These sales also include licensed businesses such as cosmetics.

Analysts had expected sales of $7.51 billion in the latest quarter, with sales of $1.57 billion per share, according to analysts polled by FactSet.

Macy’s overall comparable sales rose 0.4% in the quarter. However, comparable sales for the 125 renovated locations increased 0.9%; This is an encouraging sign after major investment. The company began renovating 75 more Macy’s locations as of the beginning of this year.

Bloomingdale’s comparable sales increased 9.9% in the latest quarter, while Bluemercury’s comparable sales increased 1.3%. Brands such as Totême, Christian Louboutin, Victoria Beckham Beauty and Skims have been added to Bloomingdale’s, the company said. These labels increased spending by existing customers and attracted new customers.

For this year, Macy’s expects net sales to be in the range of $21.4 billion to $21.65 billion. It expects comparable sales to be between a 0.5% decrease and a 0.5% increase. It predicts earnings per share will be between $1.90 and $2.10.

Analysts are expecting $2.20 per share on sales of $20.97 billion, according to FactSet.