After five straight quarters of missing revenue estimates, Macy's (M, Financial) finally delivered a beat—reporting Q1 sales of $4.79 billion, ahead of Wall Street's $4.42 billion call. But let's be clear: that bar was set low. Year-over-year, revenue still slipped from $5 billion. Net income dropped as well, falling to $38 million from $62 million. CEO Tony Spring pointed to “surgical” price increases and efforts to shift sourcing away from China, especially in private-label goods. With about 20% of its products still tied to Chinese suppliers, Macy's has started renegotiating and even canceling orders where margins don't make sense.
What's more concerning? The profit guidance cut. Macy's now expects adjusted earnings between $1.60 and $2.00 per share for 2025—down from its earlier $2.05 to $2.25 range. While full-year sales guidance remains intact at $21–$21.4 billion, the retailer is bracing for margin pressure tied to tariffs and macro headwinds. Spring said the company is absorbing some costs to stay competitive, betting that price-value will win in the back half of the year. That strategy might pay off—or it might just squeeze already-thin profits in a shaky consumer spending environment.
Looking at the revenue estimate history, the story gets more uncomfortable. Macy's has consistently underdelivered against estimates for over a year, with surprise misses ranging from -0.3% to -3.55%. This quarter's beat looks more like the result of lowered expectations than a fundamental turnaround. The stock barely moved after four of the last five earnings reports, showing how little confidence investors have in the upside.
If you're watching Macy's, keep an eye not on headline beats—but on margins, inventory discipline, and how well it navigates the tariff maze in the second half of 2025.
