Macy’s (M) shares declined over 8% on Monday after the department store chain issued a disappointing outlook for the fiscal fourth quarter, which ended January 4, 2025. The company warned that sales are likely to fall short of expectations due to weakness at its non-prime locations. Macy’s is expected to release its fourth-quarter results in early March.
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The company expects fourth-quarter sales to be at or slightly below the lower end of its prior guidance, ranging from $7.8 billion to $8 billion. In addition, same-store sales growth is expected to remain flat compared to the previous year. However, the company noted that sales at Macy’s “First 50” locations, where the company is testing new initiatives, showed positive growth. As a result, Macy’s plans to expand these initiatives to 75 additional stores in 2025.
Meanwhile, adjusted earnings per share are expected to be within the previously announced range of $1.40 to $1.65. The consensus estimate is pegged at $1.57 per share.
Macy’s Makes Efforts to Tackle Headwinds
The weak sales outlook reflects Macy’s struggles in a tough retail environment, with declining sales and increased competition impacting its performance. The company is also working to recover from an accounting scandal in which an employee concealed expenses for several years.
To address these challenges, Macy’s has announced plans to close underperforming stores, with 150 locations expected to shut down over the next three years. Last week, Macy’s released a list of 66 stores set to close, including major locations in Philadelphia and Brooklyn. In addition, Macy’s is focusing on its “Bold New Chapter” strategy to improve sales and strengthen its market position.
What Is the Price Target for Macy’s Stock?
Turning to Wall Street, M stock has a Hold consensus rating based on three Buys, seven Holds, and one Sell assigned in the last three months. At $16.40, the average Macy’s price target implies a 12.64% upside potential. Shares of the company have gained 11.6% over the past six months.
