Macy’s on Tuesday said sales fell nearly 2% in the holiday quarter, as the 166-year-old department store operator unveiled its strategy to get back to growth. 

Here’s what Macy’s reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

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• Earnings per share: $2.45 adjusted vs. $1.96 expected
• Revenue: $8.12 billion vs. $8.15 billion expected

The retailer said it expects sales to remain stagnant. It projected net sales of between $22.2 billion to $22.9 billion for this fiscal year, down from $23.09 billion in 2023. It anticipates comparable sales, which take out the impact of store openings and closures, will range from a decline of about 1.5% to a gain of 1.5% compared with the year-ago period on an owned-plus-licensed basis and including third-party marketplace sales.

Yet the company’s new CEO Tony Spring laid out a brighter outlook for the following fiscal year and how Macy’s plans to get there. Spring is the former CEO of Macy’s higher-end department store Bloomingdale’s. He took the helm earlier this month, weeks after Macy’s announced layoffs and as it faced pressure from activist investors.

In an interview with CNBC, he said the company is taking a clear-eyed look at its business — particularly its struggling namesake stores.

“Yes, there are headwinds, certainly on discretionary categories and the middle-income consumer, but we take responsibility for what we control,” he said. “Let’s put better products into our stores. Let’s make sure it’s merchandised appropriately at a decent value. And then we have more opportunity for conversion and more [market] share.”

As part of the retailer’s push to woo shoppers and restore investor confidence, Macy’s said it will make big changes to its store footprint. Macy’s plans to close about 150 unproductive locations and to prioritize investing in about 350 other namesake locations.

It plans to focus more on selling luxury goods by opening about 15 new Bloomingdale’s stores and at least 30 new Bluemercury stores over the next three years. It will also remodel roughly 30 existing stores of the beauty chain during that time. 

Macy’s had already announced five store closures and more than 2,300 layoffs last month. It also said last year that it would open up to 30 smaller versions of its namesake stores in strip malls over the next two years.

In a news release on Tuesday, Macy’s said it will also take a hard look at how to operate more efficiently – such as scrutinizing the network of warehouses used for its e-commerce business.

In the fiscal year that starts in early 2025, Macy’s said it expects low-single digit comparable sales growth on an annual basis, including owned, licensed and marketplace sales. It said it expects capital spending to fall below 2024 levels and free cash flow to drop to pre-pandemic levels. Its outlook does not include any potential impact from a proposed credit card late fee ruling by the federal government. 

Macy’s, which includes its namesake banner, Bloomingdale’s and Bluemercury, has faced scrutiny from activist investors Arkhouse Management and Brigade Capital Management, who made a rejected bid to buy the retailer. Arkhouse recently nominated a slate of nine directors to Macy’s board.

For the fiscal fourth quarter that ended Feb. 4, Macy’s swung to a loss of $71 billion, or 26 cents per share, from net income of $508 million, or $1.83 per share, a year earlier. The losses included $1 billion of impairment and restructuring costs related to Macy’s plans to close about 150 locations, which are part of its turnaround strategy.

Revenue fell from $8.26 billion in the year-ago period. Digital sales declined 4% compared to the prior-year quarter and brick-and-mortar sales were roughly flat.

Across the company, comparable sales on an owned-plus-licensed basis fell 4.2% from the year-ago period. That was better than the 5.8% decline that analysts expected, according to LSEG.

Macy’s continued to be the weakest store banner – a trend reflected in the company’s plans to close many of its stores. The namesake store’s comparable sales on an owned-plus-licensed basis dropped by 4.7%, as the women’s shoes and cold weather apparel and accessories categories struggled. Beauty and Macy’s off-price business, Backstage, were stronger performers in the quarter. 

Bloomingdale’s and Bluemercury, the two store chains that the parent company plans to expand, both fared better in the holiday quarter. 

At Bloomingdale’s, comparable sales declined 1.6% on an owned-plus-licensed basis, as the men’s and designer handbag businesses came in soft.

Bluemercury’s comparable sales rose 2.3%, as shoppers bought skincare items and color cosmetics. 

Net credit card revenue also took a hit, as Macy’s said it tumbled by 26% from the prior year to $195 million as the company dealt with higher net credit card losses. 

So far this year, shares of Macy’s have fallen about 4%. The company’s stock has underperformed the approximately 6% gains of the S&P 500 during the same period. Shares of Macy’s closed Monday at $19.30, bringing the company’s market value to $5.29 billion.

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