What: Macy's returns to profitability in Q4 2024 with USD 342 million net income, despite sales challenges, as transformation strategy shows early results.

Why it is important: The positive performance, particularly in pilot locations, may show that targeted store investments and portfolio optimisation can drive profitability even amid retail sector headwinds.

Macy's Inc. demonstrated significant progress in its transformation efforts during the fourth quarter of fiscal 2024, posting a net income of USD 342 million compared to a loss of USD 128 million in the previous year. Operating income rose to USD 500 million from a loss of USD 149 million, despite a 4.3% decrease in net sales to USD 7.8 billion. The company's "Bold New Chapter" strategy, launched a year ago, showed comparable sales increasing by 0.2% across owned, licensed, and marketplace platforms. Notably, the "First 50" locations delivered consistent growth, while luxury nameplates Bloomingdale's and Bluemercury achieved accelerated annual sales growth. The company's strategic approach includes significant store portfolio optimization, with plans to close underperforming locations while investing in customer experience and service at remaining stores. This balanced strategy of targeted investment and operational efficiency appears to be gaining traction, particularly in high-traffic areas such as women's shoes and fitting rooms.

IADS Notes: In January 2025, the company announced the closure of 66 stores while committing to invest in 350 go-forward locations. This strategic realignment comes amid pressure from activist investors who, in December 2024, urged for more aggressive measures including the potential spinoff of luxury divisions. However, the Q4 2024 results validate the company's measured approach, with the "First 50" locations demonstrating sustained growth and improved customer satisfaction.

Macy’s turns profitable in Q4 despite net sales decline