Macy's: A Year in Review and a Look Ahead

With the holiday season upon us, many people think of Macy's (NYSE: M), known for its televised Thanksgiving Day parade and renowned holiday window displays. From an investor's standpoint, there are key things to consider when looking at the past year and evaluating key issues for 2026.

This time of the year is also a good time for investors to review the retailer's performance. Once you do that, you can look at the key things to look for in 2026.

Here's a look back to see what happened with Macy's over the past year, and what to look for in the year ahead.

Image source: Getty Images.

A 2025 review

Macy's shareholders have good reason to celebrate this year, with the stock performing very well this year. The price gained 36.3% through Dec. 16, easily outpacing the S&P 500's (SNPINDEX: ^GSPC) 14.8%.

Macy's shareholders and those investing passively in the S&P 500 also receive dividends. They also factor into the total return. Adding those payouts, Macy's stock produced a total return of 43.3%, outperforming the S&P 500 by 27.6 percentage points.

It's challenging to decipher Macy's sales, since there have been store closings. The best measure to compare is same-store sales (comps). Management presents this in a couple of ways, but I like the owned-plus-licensed-plus marketplace measure, which includes online sales and sales by departments licensed to others.

On this basis, Macy's comp growth has improved this year, including a 3.2% gain in the fiscal third quarter. This increase fell in the period that ended on Nov. 1.

What to watch in 2026

Management has been executing its turnaround plan, which involves closing underperforming locations, revamping stores, and improving customer service. There's also an effort to sell more to upper-income consumers, including at its Bloomingdale's and Bluemercury brands.

Fortunately for Macy's, while lower- and middle-income consumers have been struggling with high overall prices, those at the higher end have been doing well. One thing to watch is whether this continues.

A slowdown in housing price gains and a pullback in the stock market would be a good indicator of sluggishness in this group, since these have helped this demographic. You can also look at comps at the Bloomingdale's and Bluemercury brands. The former has been doing particularly well, including a 9% increase in the latest quarter.

You should also watch other macroeconomic statistics. These include unemployment, consumer confidence, and the Consumer Price Index. Remember, Macy's is trying to appeal to a higher-income consumer.

However, if these statistics worsen dramatically, it could indicate that high earners are being affected and will slow down discretionary spending on expensive items. After all, they're not immune to the economic cycle.

Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.