Macy’s Lifts Outlook as Turnaround Takes Hold

Macy’s raised its full-year outlook and reported its highest comparable sales growth in 13 quarters as its turnaround plan begins to deliver results.

Macy’s disclosed a plan last year to close underperforming locations, invest in the shopping experience at remaining stores, simplify its end-to-end operations and gain share of the luxury market. “The meaningful enterprise-wide changes we’ve made are resonating with customers,” said Chief Executive Tony Spring.

But the company said it expected “a more choiceful” consumer in the fourth quarter, which includes the holiday season.

Shares fell 0.79% to $22.53. The stock is up 31% this year.

Macy’s said it has had success introducing newer and more fashionable products from brands such as Rodd & Gun, Reiss and Prada Beauty. “We’re carving out floor space to leverage new trends,” Spring said in the earnings call. “The variety of brands and categories we offer speak to our fashion authority and the relevancy in a way we haven’t for years.”

Meanwhile, the company has invested in employee education to produce a more hospitable shopping experience in stores. Macy’s said it achieved its highest third-quarter net promoter score, a customer feedback metric, on record.

Macy’s has also closed underperforming stores and opened new locations of its Bloomingdale’s and Bluemercury chains, which sell more luxury items.

While the company expects consumers to be choosy in the holiday season, Macy’s has largely seen its customers continue to spend. “Our customer base, which is predominantly middle to upper income, remained resilient and engaged in the third quarter,” Spring said.

To address extra costs from tariffs, Macy’s has been raising prices, working with suppliers to share some of the costs of tariffs and moving production to countries with lower duties. The impact from tariffs in the third quarter was less than the company had expected, shaving off 50 basis points from the gross margin rate. The tariffs “don’t go away. So they are a part of how we have to operate in 2026,” Spring said.

The New York-based company on Wednesday raised its sales guidance for the full year to a range of $21.48 billion to $21.63 billion, up from $21.15 billion to $21.45 billion. It also expects adjusted per-share earnings of $2 to $2.20, up from its prior view of $1.70 to $2.05.

Macy’s previously raised its outlook in September, after same-stores sales flipped to growth for the first time since 2022.

Total same-store sales remained positive at Macy’s, rising 3.2% in the third quarter on a comparable owned-plus-licensed-plus-marketplace basis. Comparable sales were up 2% at Macy’s, 9% at Bloomingdale’s and 1.1% at Bluemercury.

In the latest quarter ended in November, Macy’s posted a profit of $11 million, or four cents a share, compared with $28 million, or 10 cents a share, a year earlier.

Stripping out certain one-time items, adjusted per-share earnings were nine cents, ahead of the 11-cent loss anticipated by analysts, according to FactSet.

Net sales, which includes the impact of closed stores, declined 0.6% to $4.71 billion in the third quarter. Analysts expected $4.55 billion, according to FactSet. The sales decline was less steep than it has been, as revenue has been falling by a low single-digit percentage rate for several consecutive quarters.

Write to Katherine Hamilton at katherine.hamilton@wsj.com and Nicholas G. Miller at nicholas.miller@wsj.com