NYSE:M
Macy's, Inc.
A premier US department store retailer leveraging omnichannel strategies to drive sales growth and improve margins in a challenging retail environment.
Key Metrics
Investment Thesis
Bull Case
Investors may favor Macy's due to its demonstrated ability to improve net income from a low base of $105M to $582M, showcasing strong operational turnaround potential. The company's substantial cash position of $1.31B provides flexibility for strategic acquisitions, dividend payments, or share buybacks to support shareholder returns. Its diversified revenue streams and powerful real estate portfolio offer a defensive characteristic that could attract value-oriented investors in a volatile market.
Bear Case
Concerns regarding the slight revenue contraction over the last three years suggest potential saturation of core markets or weakening consumer discretionary spending. High operating expenses of $8.36B and significant interest expense of $158M indicate heavy leverage that could become burdensome if credit conditions tighten further. The large accumulated deficit in retained earnings alongside negative other shareholders equity highlights historical capital allocation challenges that may weigh on future growth prospects.
About Macy's, Inc.
Macy's, Inc. (NYSE:M) is a leading specialty retailer operating department stores across North America, offering a wide range of apparel, accessories, home décor, beauty products, and footwear to millions of customers. The company serves diverse markets through its iconic flagship locations in major U.S. cities as well as an expanding e-commerce platform designed to meet evolving consumer shopping habits. With revenue of $23.01B and net income of $582M for the latest fiscal year, Macy's continues to navigate a competitive retail landscape while focusing on profitability and operational efficiency.
Analysis
Management Discussion
Macy's reported a recovery in profitability with net profit reaching $582M, significantly higher than the previous year's $105M, indicating successful cost management and margin expansion efforts. Despite a slight decline in total revenue from $24.44B in 2023 to $23.01B, the company maintained healthy cash flow from operations of $1.28B, demonstrating strong liquidity generation. The reduction in accumulated other comprehensive income loss suggests stabilization in foreign exchange and hedging activities compared to prior periods.
Industry Overview
The retail industry is currently characterized by a shift towards omnichannel commerce, where physical stores serve as experience hubs while e-commerce drives volume and frequency of purchases. Companies must balance high fixed costs associated with real estate and inventory against rising consumer expectations for personalization and speed. Market consolidation is ongoing as weaker players exit, creating opportunities for established brands like Macy's to capture market share through strategic pricing and assortment optimization.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $24.44B | $23.87B | $23.01B |
| Cost of Revenue | $15.31B | $14.14B | $13.74B |
| Gross Profit | $9.14B | $9.72B | $9.27B |
| Operating Expenses | $7.41B | $9.34B | $8.36B |
| Operating Income | $1.73B | $382.0M | $909.0M |
| G&A | $8.32B | $8.38B | $8.33B |
| Stock-Based Comp | $54.0M | $47.0M | $58.0M |
| D&A | $857.0M | $897.0M | $881.0M |
| Amortization | $2.0M | $2.0M | $5.0M |
| Other OpEx | $-911.0M | $966.0M | $27.0M |
| Non-Operating Income | $-212.0M | $-258.0M | $-146.0M |
| Interest Expense | $175.0M | $170.0M | $158.0M |
| Interest Income | $13.0M | — | — |
| Pre-Tax Income | $1.52B | $124.0M | $763.0M |
| Income Tax | $341.0M | $19.0M | $181.0M |
| Continuing Ops | $1.18B | $105.0M | $582.0M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $1.18B | $105.0M | $582.0M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $1.18B | $105.0M | $582.0M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $5.85B | $6.09B | $6.48B |
| Cash & Equivalents | $862.0M | $1.03B | $1.31B |
| Inventory | $4.27B | $4.36B | $4.47B |
| Other Current Assets | $724.0M | $694.0M | $705.0M |
| Long-Term Assets | $11.01B | $10.16B | $9.92B |
| PP&E (Net) | $5.91B | $5.31B | $5.07B |
| Intangibles | $432.0M | $430.0M | $425.0M |
| Goodwill | $828.0M | $828.0M | $828.0M |
| Operating Leases | $2.67B | $2.30B | $2.23B |
| Other LT Assets | $1.17B | $1.29B | $1.37B |
| Total Assets | $16.87B | $16.25B | $16.40B |
| Current Liabilities | $4.86B | $4.43B | $4.52B |
| Accounts Payable | $2.05B | $1.91B | $1.89B |
| Current Leases | $333.0M | $356.0M | $365.0M |
| Deferred Revenue | $399.0M | $384.0M | $353.0M |
| Taxes Payable | $58.0M | $83.0M | $0 |
| Other Current Liab | $-732.0M | $-740.0M | $-712.0M |
| Long-Term Liabilities | $7.92B | $7.68B | $7.33B |
| LT Operating Leases | $2.95B | $2.97B | $2.91B |
| Other LT Liab | $4.97B | $4.71B | $4.41B |
| Total Liabilities | $12.78B | $12.11B | $11.85B |
| Shareholders' Equity | $4.08B | $4.14B | $4.55B |
| Retained Earnings | $6.27B | $6.19B | $6.50B |
| AOCI | $-618.0M | $-496.0M | $-449.0M |
| Total L&E | $16.87B | $16.25B | $16.40B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $1.18B | $105.0M | $582.0M |
| Non-Cash Adjustments | $606.0M | $1.13B | $382.0M |
| Working Capital Changes | $-168.0M | $67.0M | $314.0M |
| Cash from Operations | $1.61B | $1.30B | $1.28B |
| Capital Expenditures | $888.0M | $631.0M | $518.0M |
| Cash from Investing | $-1.17B | $-913.0M | $-592.0M |
| Share Buybacks | $601.0M | $38.0M | $1.0M |
| Dividends Paid | $173.0M | $181.0M | $192.0M |
| Cash from Financing | $-1.30B | $-220.0M | $-413.0M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-850.0M | $172.0M | $273.0M |
| Beginning Cash | $1.72B | $865.0M | $1.04B |
| Ending Cash | $865.0M | $1.04B | $1.31B |
Frequently Asked Questions
How does Macy's, Inc. make money?
The company generates revenue primarily through its Department Stores segment, which includes apparel, accessories, footwear, home goods, and beauty categories sold via physical stores and digital channels. Additional value is derived from the Brand Licensing segment, where Macy's licenses its trademarked names to third-party manufacturers for sale in department stores and online. The Financial Services segment provides credit card products and installment financing options that facilitate customer purchases and drive transaction volume.
What are the main risks for M?
Sustained inflationary pressures on supply chains and labor costs could compress gross margins given the company's high cost of revenue relative to sales. Intense competition from e-commerce giants like Amazon and fast-fashion retailers threatens market share in apparel and accessories categories. Rising interest rates increase borrowing costs, impacting net income as seen with significant interest expense in recent periods. Inventory management risks persist if consumer demand slows further, potentially leading to write-downs on the large inventory balance.
What is M's competitive advantage?
Macy's benefits from a strong brand heritage and high-traffic flagship locations in prime urban real estate, providing significant foot traffic and advertising value that pure-play e-commerce competitors lack. Its robust omnichannel integration allows for seamless inventory management and fulfillment capabilities, enhancing the customer experience across physical and digital touchpoints. A diversified product mix spanning fashion, home, and beauty categories provides resilience against trends specific to a single category.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.