Shares of Macy's department stores are up 4% after a good forecast. Are they worth buying?

US department store chain Macy's beat Wall Street expectations for the fourth quarter and gave a first-quarter outlook above analysts' consensus. After that, its shares jumped more than 4%. At the same time, the company is cautious about the entire fiscal year 2026 because of duties and war in the Middle East.

Macy's reported fourth-quarter 2025 revenue of $7.64 billion and adjusted earnings of $1.67 per share. Analysts, according to LSEG, expected $7.62 billion and $1.53 per share, respectively, CNBC writes. Revenue fell 1.6% year-on-year, while net income, on the other hand, nearly halved to $507 million.

Fourth-quarter comparable sales, which exclude the effect of chain expansion, added 1.8%, with Bloomingdale's showing the strongest growth, up 9.9%, while the core Macy's brand added 0.4%.

Macy's shares rose 4.7% to $17.72 at the close of trading on March 18.

The company projected revenue in the first quarter of the new fiscal year of $4.63 billion and comparable sales growth of up to 1.5% - above the forecasts of analysts surveyed by Bloomberg. At the same time, Macy's maintained a cautious outlook for the full fiscal year 2026: expected earnings per share of $1.9 to $2.1 and comparable-sales momentum from a 0.5% drop to growth of that much were below analysts' expectations, the agency said.

Macy's results could be affected by duties, fuel prices and geopolitical events, including conflict in the Middle East, CEO Tony Spring warned in an interview with CNBC. The greatest pressure is expected in the first half of the year, he said.

Wealthier shoppers continue to spend aggressively, while lower-income customers remain under pressure, Spring argues. News of conflicts and economic uncertainty related to duties may encourage some consumers to shop as "escapism and entertainment," Bloomberg quoted the head of the company as saying.

The company is about halfway through its three-year Bold New Chapter transformation strategy to strengthen its core brand, develop premium formats and improve business efficiency, CNBC writes. As part of the program, Macy's plans to close about 150 inefficient stores by 2027 while investing in the remaining locations: improving assortment, visuals and staff. At the moment, about 200 Macy's stores have undergone a "relaunch".

Network cuts should improve profitability in the long term, but short-term sales and profit growth remains limited due to macroeconomic factors, tariffs and high competition, said analyst Dana Telsey of Telsey Advisory Group. Her opinion was quoted by Bloomberg.

Macy's premium brand, Bloomingdale's, has gotten a boost amid the bankruptcy of rival Saks Global: Spring said it presents an opportunity to capture market share and expand the premium segment's presence.

Macy's shares have lost 19.7% since the beginning of the year. The average target price is $21.1, implying a 19% upside potential relative to the closing level on March 18.

Analysts mostly recommend holding Macy's shares: they have nine Hold ratings out of 14 total, MarketWatch shows. Only three analysts recommend buying Macy's stock (Buy and Overweight ratings), while two believe the stock is better off sold (Underweight and Sell).

This article was AI-translated and verified by a human editor