Everyone loves to bury department stores. The “retail apocalypse” narrative has been running since 2015, and Macy’s has been the favorite punching bag. So when the stock surged 5% on Thursday after crushing fourth-quarter earnings estimates, it wasn’t just a beat — it was a statement. Adjusted EPS came in at $2.75 against estimates of $2.55, and the company did it with flat revenue. That’s not a dying company. That’s a turnaround executing.
Under CEO Tony Spring, Macy’s has been running a playbook that would make any private equity firm nod: close the weak stores, double down on the luxury nameplates (Bloomingdale’s and Bluemercury), lean into small-format locations, and relentlessly cut costs. Inventory levels dropped 3% year-over-year. Digital sales stabilized at 32% penetration with improving margins as “buy online, pick up in store” adoption takes hold. The company even paid down nearly $500 million in debt.
But the real story is what this says about where consumer spending is going. Bloomingdale’s and Bluemercury — the luxury and beauty arms — are showing the strongest growth, which tracks perfectly with the broader macro picture: upper-income consumers are still spending freely, even as the lower half pulls back. Macy’s is essentially two businesses in a trench coat — and the luxury one is carrying the team.
The stock is up roughly 45% over the past year, yet it still trades well below its 2015 highs, which means there’s potentially more room to run if the turnaround keeps hitting milestones. For traders watching this on a day when the S&P fell 0.6% and the Dow dropped 800 points, Macy’s was a rare green name on a very red screen. That’s the kind of relative strength that gets noticed. The retail apocalypse may be real for weak operators, but for the ones willing to reinvent themselves, the obituary was premature.