Breaking Down Macy's, Inc. (M) Financial Health: Key Insights for Investors

You're looking at Macy's, Inc. and wondering if the bold turnaround strategy is actually showing up in the numbers, and honestly, the financial picture for fiscal year 2025 is a real mixed bag. The company is projecting full-year revenue around the $22.70 billion mark, but the real story is in the bottom line and the balance sheet, which is where the action is. Management has tightened the earnings per share (EPS) guidance to a range of $1.70 to $2.05, reflecting the ongoing macroeconomic pressure and the cost of the 'Bold New Chapter' store closures. Still, the company is sitting on approximately $829 million in cash and equivalents as of mid-2025, plus they expect to generate an additional $600 million to $750 million from asset monetization over the next three years, which is a significant capital cushion. That's the cash flow that funds the future, but you have to weigh that against the analyst consensus for flat or even negative comparable store sales this year. It's a complicated holding pattern, defintely not a straight-line growth story.

Revenue Analysis

You're looking at Macy's, Inc. (M) revenue, and the headline number can be misleading. While the total net sales for the second quarter of 2025 (Q2 2025) came in at $4.8 billion, this was a 2.5% decrease year-over-year. But here's the critical context: this decline was largely driven by the strategic closure of 64 underperforming stores, not a collapse in the core business. The core, or 'go-forward' business, is actually showing growth.

For the full fiscal year 2025 (FY2025), which ended February 1, 2025, Macy's, Inc.'s annual revenue was $23.01 billion, reflecting a 3.6% decline from the prior year. This trend of declining top-line revenue is a direct result of the company's 'Bold New Chapter' strategy, which prioritizes a smaller, more profitable store footprint and accelerated investment in its luxury and digital segments. It's a calculated contraction for future health.

Breakdown of Primary Revenue Sources

Macy's, Inc.'s revenue is a mix of traditional retail sales and a growing 'Other Revenue' stream, which is defintely worth watching. The primary revenue sources are categorized by nameplate, each showing a different trajectory in Q2 2025:

• Macy's Nameplate: The largest segment, but net sales were down 3.8% due to store closures.
• Bloomingdale's: The luxury segment is a clear growth driver, with net sales increasing 4.6% year-over-year.
• Bluemercury: The beauty and spa segment also showed growth, with net sales up 3.3%.
• Other Revenue: This segment, which includes credit card income and the Macy's Media Network, grew 17.6% to $187 million.

The comparable sales (owned-plus-licensed-plus-marketplace, or O+L+M) for the entire company were up 1.9% in Q2 2025, which shows that customer demand is increasing in the stores and online channels that remain open and are receiving investment.

Segment Contribution and Growth Dynamics

The company's growth engine is clearly shifting toward its luxury and digital channels. Look at the comparable sales growth on an O+L+M basis for Q2 2025:

Bloomingdale's is the clear standout, delivering a strong 5.7% comparable sales jump. Also, the 'Other Revenue' stream is becoming more material; credit card net revenues alone increased 22.4% to $153 million in Q2 2025. That's a high-margin, sticky revenue source that is often overlooked in retail analysis. For more on the strategic focus, you can review the Mission Statement, Vision, & Core Values of Macy's, Inc. (M).

Significant Changes in Revenue Streams

The most significant change is the intentional reduction of the low-performing Macy's store fleet, which is why the total net sales figure is down. The company is actively pruning the bottom end of its portfolio to fund investment in the top. The 'Reimagine 125' locations, which are the stores receiving investment, saw comparable sales up 1.4% (O+L+M) in Q2 2025, proving the strategy works where capital is deployed. This is a story of quality over quantity, and the numbers show the focused investments are paying off in the chosen locations and brands.

Profitability Metrics

You want to know if Macy's, Inc. (M) is making enough money to justify the risk, and the short answer is that their profitability is improving but still lags the broader industry. The company is a work in progress, balancing cost cuts with necessary investments in their 'Bold New Chapter' strategy.

For the fiscal year ending January 2025, Macy's, Inc. reported a gross profit of approximately $9.27 billion on revenue of $23.01 billion. This translates to a Gross Profit Margin of around 40.3%. Here's the quick math: that 40.3% is decent for a department store, actually exceeding direct competitors like Nordstrom and Dillard's in that specific metric.

However, the real pressure point is further down the income statement. The Operating Profit Margin for the trailing twelve months (TTM) stands at a much lower 3.63%, and the Net Profit Margin is about 2.18%. This tells you that while the cost of goods sold (COGS) is managed well, the operating expenses-things like selling, general, and administrative (SG&A) costs-are eating up a huge chunk of potential profit.

• Gross Profit Margin (LTM): 40.3%
• Operating Profit Margin (TTM): 3.63%
• Net Profit Margin (TTM): 2.18%

Profitability Trends and Industry Comparison

Looking at the trend, Macy's, Inc.'s Gross Profit Margin of 40.3% for the fiscal year ending January 2025 actually saw a slight decline from the 40.4% reported in the prior fiscal year, a minor dip but a reminder of the retail sector's constant pricing pressure. We saw this play out in the second quarter of 2025, where the gross margin rate fell 80 basis points to 39.7%, largely due to proactive markdowns to clear inventory and the impact of tariffs. That's the cost of keeping shelves clean and inventory healthy, but it hurts the bottom line.

When you compare these numbers to the industry averages, the picture becomes clearer on why the stock has been volatile. The company's TTM Gross Margin of 40.31% is just shy of the industry average of 41.97%, but the gap widens significantly for operating and net profitability. The industry average for Net Profit Margin is nearly 8.88%, which makes Macy's 2.18% look defintely weak. They have a lot of ground to cover to reach peer performance.

Operational Efficiency and Cost Management

Operational efficiency is where the management team is focused. They are actively working to contain costs and streamline operations, expecting to realize $100 million in supply chain cost savings in the current fiscal year (FY2025). These savings are being reinvested into growth areas, like the 'Reimagine 125' store locations, Bloomingdale's, and Bluemercury.

For example, in the second quarter of 2025, Selling, General, and Administrative (SG&A) expense decreased by $29 million, which is a win for cost containment. However, because net sales also decreased, SG&A actually increased as a percentage of total revenue to 38.9%. This shows the challenge: you can cut costs, but if the top-line revenue shrinks faster, your cost structure still looks bloated. The core business is growing nicely on a like-for-like basis, though; comparable sales for the go-forward business were up 1.1% on an owned basis in Q2 2025. This suggests the strategic investments are starting to pay off.

To dig deeper into the company's investor base and market perception, you should check out Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

Debt vs. Equity Structure

You're looking at Macy's, Inc. (M) and trying to figure out if their balance sheet is built on a solid foundation or a house of cards. The direct takeaway is that Macy's, Inc. is conservatively financed, especially for a retailer, with a Debt-to-Equity (D/E) ratio significantly lower than the industry average, but they are actively managing their debt maturity schedule to mitigate future interest rate risk.

As of the first quarter of fiscal year 2025, Macy's, Inc.'s debt load is manageable. Their total debt-the combination of short-term and long-term liabilities-is relatively low when compared to the capital their shareholders have invested. Specifically, short-term debt is a tiny fraction at only $6 million, while long-term debt stands at $2.774 billion. This structure means very few debt obligations are due in the immediate near-term, which is a big plus for liquidity.

Here's the quick math on their leverage: using the Q1 2025 figures, the total debt of approximately $2.780 billion ($2.774B + $0.006B) against shareholders' equity of $4.451 billion gives us a Debt-to-Equity ratio of roughly 0.62.

• Macy's, Inc. D/E Ratio (Q1 2025): 0.62
• Apparel Retail Industry Average D/E Ratio (Nov 2025): 1.2

To be fair, a D/E of 0.62 is defintely on the low side for a company in the capital-intensive retail sector, where the Apparel Retail industry average is closer to 1.2. This tells you Macy's, Inc. relies more on equity and retained earnings than borrowing to fund its assets, which reduces financial instability risk. They have a strong balance sheet and limited near-term debt maturities.

Still, a seasoned analyst looks at actions, not just ratios. In July 2025, the company executed a significant debt management maneuver. They priced an offering of $500 million in 7.375% senior notes due 2033. The goal wasn't to raise net new capital for growth, but to refinance. They used the proceeds to fund a concurrent tender offer, aiming to redeem about $587 million of existing, older senior notes and debentures. This move pushes a chunk of their maturity schedule out to 2033, reducing refinancing pressure in the next few years. They are actively swapping near-term debt risk for a higher, fixed interest rate, which is a common, prudent move in an uncertain rate environment.

The company balances its financing through this kind of active debt management, plus a consistent return of capital to shareholders via dividends and share repurchases. For example, in the first quarter of 2025, they returned approximately $152 million to shareholders, split between $51 million in cash dividends and $101 million in share repurchases. This shows a commitment to both debt stability and equity investor returns. For a deeper dive into who is on the other side of these transactions, you can check out Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Macy's, Inc. (M) can cover its near-term bills, and the 2025 numbers show a tight but managed liquidity position, typical for a large retailer. The key takeaway is that while the Quick Ratio is low, the company's substantial inventory and available credit provide a necessary buffer.

For the fiscal year ending in early 2025, Macy's, Inc.'s Current Ratio stood at 1.43. This means the company has $1.43 in current assets (cash, receivables, inventory) for every dollar of current liabilities. That's a healthy number, honestly, showing it can meet its obligations over the next year. Still, the Quick Ratio (Acid-Test Ratio), which strips out less-liquid inventory, was lower at 0.39. This is a structural reality for department stores; they are inventory-heavy, so you should expect this number to be below 1. It just means they defintely rely on selling their stock to pay short-term debt.

The working capital trend is also important. For the fiscal year ending January 2025, Macy's, Inc. had positive working capital (Current Assets minus Current Liabilities) of about $1.96 billion ($6.48 billion in current assets minus $4.52 billion in current liabilities). This positive balance is a strength, but the company is actively focused on working capital efficiencies, including a 0.8% year-over-year decrease in merchandise inventories reported in Q2 2025. That's a good sign of inventory management improving.

Here's the quick math on the cash flow for the fiscal year 2025, showing where the money moved in and out (all figures in millions):

• Operating Cash Flow (CFO): $1,278 million
• Investing Cash Flow (CFI): $-592 million
• Financing Cash Flow (CFF): $-413 million

The $1.28 billion in positive Operating Cash Flow is a clear strength, indicating core business operations are generating more than enough cash. This cash was then used for strategic capital expenditures (CapEx) like store remodels and technology, reflected in the $-592 million outflow from Investing Activities. The negative $-413 million from Financing Activities shows the company is paying down debt and returning capital to shareholders, including $-192 million in common stock dividends paid.

What this snapshot hides is the reliance on their $2.5 billion available borrowing capacity under their asset-based credit facility, which acts as a key liquidity backstop. The company has no material long-term debt maturities until fiscal 2027, which gives management a solid runway to execute their turnaround strategy without near-term debt pressure. The liquidity position is stable, but the low Quick Ratio is a constant pressure point that requires disciplined inventory and credit management. For a deeper dive into the shareholder base, check out Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

Valuation Analysis

You want to know if Macy's, Inc. (M) is a bargain or a trap right now. The quick answer is that the market sees it as fairly valued, leaning slightly toward undervalued based on traditional metrics, but the analyst consensus is a firm Hold.

As a seasoned financial analyst, I look at three core valuation ratios to cut through the noise: Price-to-Earnings (P/E), Price-to-Book (P/B), and Enterprise Value-to-EBITDA (EV/EBITDA). Here's the quick math on Macy's, Inc. as of November 2025, using Trailing Twelve Months (TTM) data:

• P/E Ratio: 11.33
• P/B Ratio: 1.21
• EV/EBITDA Ratio: 7.14

A P/E ratio of 11.33 is defintely low compared to the broader retail sector, which often sits higher, suggesting the stock is cheap relative to its earnings power. Plus, a Price-to-Book ratio of just 1.21 indicates you are paying only a small premium over the company's net asset value, which is a key indicator for a retailer with significant real estate holdings. The EV/EBITDA of 7.14 is also reasonable, showing the company's total value (including debt) is not excessively high compared to its operating cash flow proxy (EBITDA).

Near-Term Stock Performance and Analyst View

The stock price trend over the last 12 months tells a story of significant recovery and volatility. Macy's, Inc.'s stock has climbed by 29.03% over the past year, moving from a 52-week low of $9.76 to a recent high of $21.25. The latest closing price is around $19.99. This surge reflects market optimism around the company's turnaround plan, which includes store rationalization and investment in its Bloomingdale's and Bluemercury brands.

But still, Wall Street is cautious. The consensus rating from 9 analysts as of November 2025 is a Hold. The breakdown shows a split camp:

• Strong Buy: 22%
• Hold: 67%
• Strong Sell: 11%

The average analyst price target is set at $15.72, which is actually below the current trading price, suggesting that many analysts believe the stock's recent run-up has already priced in the near-term recovery. This is a classic value trap signal-the fundamentals look cheap, but the street doesn't expect the price to move much higher from here.

The Dividend Reality Check

For income investors, Macy's, Inc. offers a decent yield. The company pays an annual dividend of $0.73 per share, which translates to a dividend yield of 3.65% at the current price. This is attractive in the current market. More importantly, the projected payout ratio (distribution rate) for the 2025 fiscal year sits at a comfortable 33.3%. This means the company is only using about a third of its earnings to cover the dividend, leaving plenty of room for reinvestment or weathering a downturn.

To be fair, the real estate value is the wild card here, and a deeper dive into the company's assets is warranted. You can start by reading Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

Risk Factors

You're looking for a clear picture of Macy's, Inc. (M) risks before committing capital, and honestly, the biggest near-term challenges are a mix of macro headwinds and the execution risk inherent in a major turnaround. The company is defintely fighting an uphill battle against external forces, plus managing a massive internal strategic shift.

The primary external risk is the health of the U.S. consumer, which directly impacts the company's ability to hit its fiscal year 2025 (FY2025) net sales forecast of between $21 billion and $21.4 billion. Inflation and broader economic uncertainty are making consumers cautious, which hurts discretionary retail spending. Also, trade policy is a constant threat: the impact of new tariffs, like the massive 145% China tariff on some imported goods, has already squeezed gross margin by driving up the cost of merchandise.

Here's the quick math on the operational and financial risks we saw in the Q2 2025 report:

• Turnaround Uncertainty: The 'A Bold New Chapter' strategy is still in its early stages, and any misstep could derail a recovery.
• Gross Margin Pressure: Q2 2025 gross profit dropped to $1.912 billion, representing a decline of 80 basis points year-over-year, largely due to proactive markdowns and the impact of tariffs.
• Store Performance: Weakness in Macy's non-go-forward locations continues to drag down overall performance, even as the 'First 50' redesigned stores show positive comparable sales.
• Competition: The retail landscape is brutal, with intense competition from specialty, off-price, and deep-discount e-commerce players.

You need to see Macy's, Inc. successfully execute its plan, or the projected FY2025 adjusted earnings per share (EPS) of $2.05 to $2.25 will be at risk. What this estimate hides is the potential for a deeper cut in profit if the holiday season disappoints.

Mitigation Strategies and Actions

Macy's, Inc. isn't just sitting still; their mitigation plan is focused on shrinking to grow and improving financial flexibility. The strategic store closures are a key action. They plan to close 150 Macy's stores through 2026, and the Q2 2025 revenue decrease of 2.5% was actually driven by the closure of 64 underperforming stores. This is a deliberate trade-off: lower revenue now for higher profitability later.

The company is also accelerating its luxury brands, Bloomingdale's and Bluemercury, which continue to deliver strong comparable sales growth, providing a buffer against the struggles of the core Macy's brand. On the financial side, they are actively managing debt, having issued $500 million in new senior notes while retiring approximately $644 million of existing debt in Q2 2025. This debt juggling improves the long-term capital structure.

Here is a snapshot of the strategic actions underway:

For a deeper dive into who is betting on this turnaround, you should read Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

The bottom line is that Macy's, Inc. is using its real estate and financial strength to fund a painful but necessary operational pivot. If onboarding takes 14+ days, churn risk rises. The success of the 'A Bold New Chapter' strategy is the single biggest determinant of whether the stock is a value play or a value trap.

Finance: Track the comparable sales growth of the 'First 50' locations versus the non-go-forward stores by the next earnings call on December 3, 2025.

Growth Opportunities

You're looking for a clear map of where Macy's, Inc. (M) is actually going to make money, and honestly, it's a story of subtraction leading to addition. The company is not chasing top-line growth at all costs; it's focused on profitable growth by shrinking its footprint and doubling down on its winners.

The core of the strategy, which they call the 'Bold New Chapter,' is about redirecting capital from underperforming assets to the parts of the business that are showing real traction. This means closing about 150 underproductive stores by the end of fiscal year 2026, including 66 already closed in 2025, and focusing investment on a smaller, more efficient fleet of approximately 350 'go-forward' locations. That's a serious commitment to efficiency.

Future Revenue and Earnings Estimates

The near-term numbers reflect this strategic transition, where store closures suppress overall sales but margin improvements help the bottom line. For the full fiscal year 2025, the company has revised its Net Sales guidance to a range of $21.15 billion to $21.45 billion. This is a slight raise from their prior guidance, which is a good sign of stabilization. The real metric to watch is the Adjusted Diluted Earnings Per Share (EPS), projected between $1.70 and $2.05. Here's the quick math on the core business's health:

• FY 2025 Net Sales Projection: $21.15B to $21.45B
• FY 2025 Adjusted Diluted EPS: $1.70 to $2.05
• Q2 2025 Comparable Sales (O+L+M): Up 1.9%

What this estimate hides is the underlying health of the invested-in stores. The 'Reimagine 125' locations-the ones getting the capital investment-are outperforming the rest of the fleet, showing that the strategy works where it's applied.

Key Growth Drivers and Strategic Initiatives

The future growth for Macy's, Inc. is driven by three clear pillars, not just one. It's a multi-pronged effort to be a better retailer, not just a bigger one. The long-term goal, starting in 2025, is for low-single-digit annual comparable sales growth and mid-single-digit Adjusted EBITDA dollar growth. That's a realist's growth target.

The most compelling growth engine is the acceleration of their luxury and specialty businesses, Bloomingdale's and Bluemercury. Bluemercury, their beauty concept, has an impressive track record, achieving its 18th consecutive quarter of comparable sales growth. They plan to open approximately 15 new Bloomingdale's stores and at least 30 new Bluemercury stores over the next three years. This is smart; luxury is less sensitive to consumer spending volatility. Also, the company is committing $3 billion to its digital initiatives to boost its omnichannel (combining physical and digital) capabilities. This includes exploring AI for everything from personalization to supply chain optimization, which defintely cuts costs and improves the customer experience. You can read more about the investor profile here: Exploring Macy's, Inc. (M) Investor Profile: Who's Buying and Why?

Competitive Advantages

Macy's, Inc.'s main edge isn't price; it's the sheer breadth of its offerings and its iconic brand equity. They are a multi-channel, multi-brand, and multi-category operator, spanning from off-price to luxury. This gives them flexibility to adapt to a 'more choiceful' consumer, which they assume for the second half of 2025. Their advantages boil down to a few tangible assets:

• Brand Portfolio: The combination of Macy's, the luxury-focused Bloomingdale's, and the specialty beauty chain Bluemercury provides a diverse offering that appeals to different consumer segments.
• Omnichannel Infrastructure: They have a strong e-commerce presence integrated with their physical stores, allowing for flexible shopping options.
• Automation and Supply Chain: Significant investment in warehouse automation is streamlining operations, which is a critical, often-overlooked source of cost-effectiveness and efficiency.

The company's strong balance sheet, which ended Q2 2025 with $829 million in cash and no material long-term debt maturities until 2027, gives them the financial flexibility to execute this multi-year turnaround. Finance: keep tracking the comparable sales growth of the 'go-forward' stores versus the overall net sales decline to confirm the strategy is working as planned.