M (From Old Portfolios – $12.36 as of Aug 1, 2025 close) —

• • Macy’s stock trades at $12.36, down significantly year-to-date and well below its 52-week high of ~$18. The stock is attractive from a value and dividend perspective but remains under pressure amid retail headwinds and cost escalation.
  • In Q1 2025, Macy’s reported net sales of $4.6 billion, with comparable sales down ~2%. Adjusted EPS came in at $0.16, slightly ahead of expectations, while Bloomingdale’s and Bluemercury delivered positive growth. Despite the earnings beat, the company revised its full-year adjusted EPS guidance downward to $1.60–$2.00, down from a prior range of $2.05–$2.25, citing increased costs related to tariff implementation.
  • Tariff-related pressure is reflected in a company-wide strategy shift: Macy’s is implementing “surgical” price increases only where consumer tolerance allows, renegotiating supplier terms, diversifying product sourcing, and canceling or delaying orders when margins don’t make sense. Roughly 20% of its merchandise was sourced from China last year, and leadership aims to reduce exposure while balancing promotions and inventory clearance strategies. Macy’s has also announced plans to close approximately 150 underperforming stores by early 2027 as part of a broader turnaround plan.
  • Despite these challenges, Macy’s maintains a strong brand portfolio and solid liquidity, returning capital through modest dividends and ongoing share buybacks. The valuation is compelling at under 6× forward earnings, and Morningstar pegs intrinsic value around $23 per share, implying meaningful upside if execution and macro trends improve.

Recommendation: Still Watching
Macy’s remains a deeply discounted retail name with turnaround potential—especially if it can flex pricing, manage inventory prudently, and adjust supply chains effectively. Maintain it on the watch list.