Macy's Delivers Strong Q1, Raises Outlook, but Wall Street Remains Cautious

Key Points

• Macy's delivered a broad-based earnings beat and raised its full-year outlook, providing further evidence that the company's Bold New Chapter turnaround strategy is gaining traction.
• Strength at Bloomingdale's and Bluemercury helped drive the retailer's best first-quarter comparable sales performance in four years, while the Macy's nameplate also posted positive comparable sales growth.
• Despite the strong results and an 89% rally over the past year, Wall Street remains cautious, with a Reduce consensus rating, rising short interest, and an average price target below the current share price.

Macy's Inc. NYSE: M kicked off the first quarter of 2026 with better-than-expected performance across the board, offering further evidence that the retailer's Bold New Chapter turnaround strategy is gaining traction.

The strong results also prompted the department store chain to raise its full-year outlook. Despite the good news, Wall Street's reaction was muted, with shares closing slightly higher following the report.

Q1 Beat Fueled by Strength Across Brands

Macy's Q1 adjusted earnings came in at 13 cents per share, down from 16 cents a year ago but well ahead of Wall Street expectations of 2 cents per share. Revenue of $4.89 billion increased 1.8% year over year, topping analyst estimates of $4.61 billion.

Growth was broad-based across Macy's portfolio. Performance at Bloomingdale's was particularly strong, with comparable sales (comps) rising 10.2% year over year, marking the best first quarter in the brand's history. Comps at the Macy's nameplate rose 1.6%, though the retailer's reimagined stores, which account for roughly 60% of the store base, saw comps grow 2.4%. At Bluemercury, which sells luxury beauty brands, comps increased 6.4%.

"In the first quarter, we delivered enterprise-wide growth, better than expected performance across all key metrics, and our best comparable sales in four years with all nameplates and channels positive," Chief Executive Tony Spring said on the earnings call.

He added, "These broad-based operational and financial improvements reflect the strength and viability of the Bold New Chapter strategy."

Macy's Raises Full-Year Outlook

Macy's issued second-quarter guidance and raised its full-year outlook, citing better-than-expected first-quarter earnings and revenue results, as well as a modest increase in its sales expectations for the remainder of the year.

For the second quarter, the company expects net sales of approximately $4.75 billion to $4.8 billion, with comparable sales ranging from roughly flat to up 1%. Adjusted diluted earnings are expected to be between 29 cents and 34 cents per share.

For the full year, Macy's now anticipates net sales of $21.5 billion to $21.75 billion, up from its previous forecast of $21.4 billion to $21.65 billion. Comparable sales are expected to increase 0.5% to 1.2%, compared with prior guidance of down 0.5% to up 0.5%. Adjusted diluted earnings are now projected to be between $2 and $2.20 per share, up from the previous range of $1.90 to $2.10.

Macy's said the updated outlook reflects revised tariff and fuel assumptions, which it expects will have a roughly net-neutral impact on results this year. The guidance also provides flexibility to account for potential changes in the competitive landscape, as well as ongoing macroeconomic and geopolitical uncertainty.

Wall Street Reaction Remains Muted

Despite the strong quarter and optimistic outlook, Wall Street's reaction was relatively muted following the report, with shares closing up just 0.4% to $21.76.

Investors may be taking a breather after the stock's strong run over the past year. Fueled by a series of better-than-expected earnings reports that have bolstered confidence in the company's turnaround strategy, shares had already gained roughly 90% over the prior 12 months.

After reaching a 52-week intraday high above $24 in December, the stock pulled back during the first few months of 2026. Momentum appeared to return in March after Macy's delivered stronger-than-expected fourth-quarter results, giving shares a boost. However, the company's outlook prompted some analysts to lower their price targets. Still, over the three months leading up to the Q1 release, the stock rose 19%.

Analysts Remain Cautious Despite Turnaround Progress

Despite signs that Macy's turnaround strategy is working, Wall Street remains cautious on the stock. The consensus rating is Reduce, with two Sell ratings, 11 Hold ratings, and one Buy rating. The average price target is approximately $19.90, roughly 15% below the current share price. The highest price target on Wall Street is $27, while the remaining targets range from $9 to $23.

The cautious stance may reflect concerns about whether Macy's can sustain its momentum, as well as broader uncertainty surrounding consumer spending and the macroeconomic environment.

Short Interest Climbs as Some Investors Remain Skeptical

Short interest in the stock has also risen over the last several months. As of May 15, roughly 33.5 million shares, or 12.8% of the float, were sold short. That is up from approximately 21.1 million shares, or 8.2% of the float, on Jan. 15.

From a valuation standpoint, Macy's looks inexpensive relative to the broader retail industry. The stock currently trades at roughly 10X earnings, below the retail industry average of 11.3X. On a price-to-sales basis, shares trade at 0.27X compared with the industry average of 0.84X.

Although Wall Street remains cautious, Macy's latest quarter clearly highlighted continued progress in its turnaround efforts. Investors will be watching closely to see whether the company can continue to build on that progress in the quarters ahead.