Macy's Boosts Profit Outlook Amid Early Turnaround Success Under New CEO Tony Spring

By John Lopez

May 21, 2024 08:32 PM EDT

Macy's Announces Corporate Layoffs And The Closing Of 5 Stores — NEW YORK, NEW YORK - JANUARY 19: The Macy's company logo is seen at the Macy's store on Herald Square on January 19, 2024 in New York City. Macy's department-store chain announced that they will be laying off roughly 2,350 employees which is about 3.5% of their workforce. The company says that it will also be closing five stores in order to adjust to the online-shopping era.
(Photo : Photo by Michael M. Santiago/Getty Images)

Despite challenges from cautious consumer spending, US department store chain Macy's has increased its profit forecast for the year, Reuters reported.

This reflects the early successes of its turnaround plan under new CEO Tony Spring.

Macy's Profit Forecast Raised Amid Turnaround Plan Success

The plan includes cost-cutting measures, such as 'aggressively' closing around 150 stores in the next couple of years, which will save $100 million this year alone.

The company's stock rose 5% in early trading after exceeding first-quarter profit expectations. Macy's expects full-year adjusted earnings to be between $2.55 and $2.90 per share, an increase from its previous forecast.

Macy's is expanding its Bloomingdale's and Bluemercury chains to improve performance and outperform traditional Macy's department stores.

Low Spending Pose Concerns Despite Positive Performance

"We're certainly seeing at the high end, Bloomingdale's consumer is interested in purchasing, but she's being very thoughtful in the category she's purchasing in," Spring said in the recent earnings report.

Despite these challenges, Macy's first-quarter results were above expectations, with an adjusted profit of 27 cents per share.

However, net sales decreased by 2.7% to $4.85 billion. The department store has not reported any sales growth since the first quarter of 2022.

Analysts note that, while Macy's is performing as expected, they are concerned about the strength of consumer spending, particularly among Macy's core customer base.

At the company's first-quarter 2024 financial results, Tony Spring told investors that shoppers are still experiencing financial pressure, leading them to evaluate their discretionary spending thoroughly.

Macy's is also in buyout talks with activist investor Arkhouse Management, which could increase the company's value to $6.6 billion, a premium over its current market value.