Department stores, including Macy’s, have been declared dead countless times. But Macy’s continues to demonstrate why its brands, scale, real estate, luxury exposure, and improving operating performance make it one of the most interesting names in traditional retail.
October 26, 2026 | RetailOptionTrader.com
For years, investors have heard the same argument about Macy’s.
Department stores are dying.
Amazon is taking over retail.
Shopping malls are disappearing.
Consumers are moving online.
Traditional retailers can’t compete.
Macy’s is supposedly yesterday’s company.
And yet Macy’s is still here.
More importantly, the business is showing signs that its turnaround strategy is actually working.
Macy’s comparable sales have improved.
Bloomingdale’s is growing rapidly.
Bluemercury continues expanding in luxury beauty.
Management is investing in its strongest stores while closing weaker locations.
Margins are improving.
And the company continues generating billions of dollars in annual sales.
That doesn’t mean Macy’s has suddenly become a high-growth technology stock.
It hasn’t.
But I think investors sometimes make a mistake by assuming that an old company automatically represents an obsolete business.
Macy’s remains one of America’s most recognizable retailers.
And in 2026, I think there are several reasons that Macy’s still deserves to be considered a leader among traditional retail stocks.
1. Macy’s Is Still an Enormous Retail Business
The first thing investors sometimes forget is the sheer scale of Macy’s.
This isn’t a struggling regional retailer with a few dozen stores.
Macy’s, Inc. operates hundreds of locations across its portfolio.
The company includes:
Macy’s
Bloomingdale’s
and
Bluemercury.
That gives Macy’s exposure to several different parts of consumer spending.
The traditional Macy’s customer.
The higher-income Bloomingdale’s customer.
And the premium beauty customer through Bluemercury.
That portfolio matters.
Instead of relying exclusively on the traditional department-store model, Macy’s has multiple brands capable of serving different consumers.
2. Macy’s Sales Are Growing Again
This is one of the biggest reasons I’m paying attention.
In the second quarter of 2026, Macy’s, Inc. reported approximately:
$4.9 billion in net sales.
That represented an increase of approximately:
1.1% from the previous year.
More importantly, comparable sales increased:
2.7%.
And Macy’s comparable sales increased for the:
fifth consecutive quarter.
That doesn’t sound like a retailer disappearing.
It sounds like a company beginning to stabilize and improve.
For a mature retailer, consistent comparable-sales growth is extremely important.
Macy’s doesn’t necessarily need 20% annual revenue growth.
It needs to make its existing store base more productive.
And that’s exactly what management is attempting to accomplish.
3. The Reimagine Strategy Appears to Be Working
Macy’s has been concentrating investment on its stronger locations.
Instead of trying to save every store, management has taken a much more selective approach.
The company initially identified a group of stores where additional investment could produce stronger results.
That strategy eventually expanded into what Macy’s calls its:
Reimagine 200 stores.
These locations receive additional attention around:
Merchandise
Store presentation
Customer service
Staffing
and
Shopping experience.
And the results have been encouraging.
During Q2 2026, Macy’s overall comparable sales increased:
1.1%.
But the Reimagine 200 locations increased:
1.9%.
That difference matters.
It suggests that investing in better-performing stores can improve productivity.
4. Macy’s Is Willing to Close Weak Stores
This might actually be one of the smartest things management is doing.
For decades, department stores focused heavily on expanding their footprints.
More stores meant more revenue.
But the internet changed retail.
Today, having too many weak stores can become a liability.
Every store requires:
Rent
Employees
Inventory
Utilities
Maintenance
and
Capital investment.
A poorly performing location can consume resources that could have been invested somewhere else.
Macy’s has therefore been shrinking portions of its traditional store footprint while investing more heavily in the locations it believes have stronger long-term potential.
I don’t view that as retreat.
I view it as optimization.
5. Bloomingdale’s May Be Macy’s Secret Weapon
If investors only look at the Macy’s nameplate, they’re missing one of the strongest parts of the company.
Bloomingdale’s has been performing extremely well.
During Q1 2026, Bloomingdale’s comparable sales increased:
10.2%.
Then during Q2:
11.3%.
Bloomingdale’s also achieved its highest second-quarter sales volume in its history.
That’s impressive.
And it demonstrates why Macy’s luxury exposure matters.
Higher-income consumers behave differently from lower-income consumers.
They may be less sensitive to inflation.
They may continue purchasing premium apparel, accessories, cosmetics, and luxury products even when economic conditions become uncertain.
Bloomingdale’s gives Macy’s access to that consumer.
6. Bluemercury Gives Macy’s Exposure to Beauty
Another part of the business I think investors should pay more attention to is Bluemercury.
Beauty has become an increasingly important retail category.
Skincare.
Fragrance.
Cosmetics.
Dermatological products.
Premium beauty.
These products can generate repeat purchases and strong customer loyalty.
During Q2 2026, Bluemercury comparable sales increased:
6.2%.
That followed:
6.4% comparable-sales growth in Q1.
So Macy’s isn’t simply betting everything on the traditional department store.
It has exposure to one of retail’s more attractive specialty categories.
7. Macy’s Has Three Different Consumer Engines
This is how I increasingly think about the company.
Macy’s isn’t really one retailer.
It’s a portfolio.
Macy’s
Mass-market department-store exposure.
Bloomingdale’s
Premium and luxury exposure.
Bluemercury
Premium beauty exposure.
Those businesses can complement one another.
If mainstream apparel is weak, luxury or beauty may perform better.
If consumers become more confident, Macy’s can benefit.
If higher-income spending remains strong, Bloomingdale’s can benefit.
If beauty remains resilient, Bluemercury can benefit.
That diversification makes Macy’s more interesting than the ticker symbol alone suggests.
8. Macy’s Still Has an Iconic Brand
Brand value is difficult to quantify.
But it matters.
Macy’s is deeply embedded in American retail culture.
Think about:
Macy’s Thanksgiving Day Parade
Macy’s Herald Square
Macy’s Fourth of July Fireworks
Holiday shopping
and
Christmas retail traditions.
Those cultural associations have been built over generations.
A startup can create a website.
It can buy advertisements.
It can build an app.
But creating a nationally recognized consumer brand can take decades.
Macy’s already has that.
The challenge is monetizing it effectively in modern retail.
9. Herald Square Is More Than Just Another Store
Macy’s Herald Square flagship in Manhattan represents something unusual.
It’s simultaneously:
A department store
A tourist destination
A brand advertisement
and
A major real-estate asset.
Few retailers have anything comparable.
This brings us to another reason Macy’s remains interesting.
10. Macy’s Has Significant Real Estate
Retail investors often focus entirely on:
Revenue
Margins
and
But Macy’s also controls valuable real estate.
Some locations occupy prominent properties in major metropolitan markets.
That creates potential optionality.
Real estate can potentially be:
Sold
Redeveloped
Leased
Monetized
or incorporated into broader mixed-use developments.
I’m not suggesting Macy’s should liquidate its property portfolio.
The point is that the company possesses tangible assets beyond inventory and brand value.
That differentiates it from many asset-light retailers.
11. Physical Retail Isn’t Dead
E-commerce changed retail permanently.
But it didn’t eliminate physical stores.
Consumers still want to:
Try on clothing.
Test cosmetics.
Smell fragrances.
See furniture.
Return merchandise conveniently.
Shop with friends.
Browse.
Purchase gifts.
And sometimes simply leave the house.
The future of retail isn’t necessarily:
Online OR physical.
It’s increasingly:
Online + physical.
Macy’s has spent years developing that combination.
12. Macy’s Is an Omnichannel Retailer
This is another reason I don’t think it’s fair to describe Macy’s simply as a mall retailer.
Customers can interact with Macy’s through:
Physical stores
The website
Mobile shopping
Store pickup
Shipping
and other fulfillment options.
The store network itself can support digital commerce.
A physical store isn’t necessarily competing with the website.
It can function as:
A showroom
A pickup point
A return center
A fulfillment node
and
A customer-acquisition channel.
The strongest retailers increasingly combine digital convenience with physical presence.
Macy’s already has both.
13. The Company Has Enormous Customer Data
Scale creates another advantage:
Data.
Macy’s interacts with millions of consumers.
Those interactions can help the company understand:
What customers buy
When they buy
Which brands perform
Which promotions work
Which stores are productive
and
Which customers are likely to purchase again.
That information can improve inventory allocation, personalization, advertising, and merchandising.
Modern retail increasingly depends on data.
Macy’s has decades of customer relationships that can feed those systems.
14. Macy’s Media Network Creates Another Revenue Stream
This is an area I think could become increasingly important.
Retailers have discovered that their websites and customer data can become advertising platforms.
Brands already want access to Macy’s shoppers.
Instead of simply selling a brand’s products, Macy’s can also sell advertising opportunities to that brand.
That’s the idea behind:
Macy’s Media Network.
During Q2 2026, Macy’s Media Network generated approximately:
$37 million in net revenue.
That represented an increase of approximately:
8.8%.
It’s still relatively small compared with Macy’s overall retail sales.
But it represents an interesting higher-margin opportunity.
Macy’s isn’t simply monetizing merchandise.
It’s increasingly monetizing:
Customer attention.
15. Credit Cards Remain Valuable
Macy’s also generates significant revenue through its credit-card business.
During Q2 2026, credit-card net revenue was approximately:
$156 million.
That was up approximately:
2% from the prior year.
Retail credit programs can increase customer loyalty while producing an additional revenue stream.
This means Macy’s economic model extends beyond simply:
Buy shirt for X → sell shirt for Y.
The customer relationship can generate value through retail purchases, credit, advertising, loyalty, and repeat visits.
16. Margins Improved in Q2
Another encouraging sign came from gross margin.
Macy’s reported a Q2 2026 gross margin rate of:
41.5%.
That was approximately:
180 basis points higher
than the prior-year quarter.
Part of that improvement came from tariff refunds, so investors shouldn’t simply assume the entire increase represents permanent operating improvement.
But even excluding those effects, Macy’s reported underlying gross-margin improvement.
For a mature retailer, margin discipline matters enormously.
Small improvements across billions of dollars of sales can translate into meaningful earnings.
17. Earnings Improved Too
Macy’s reported Q2 2026 GAAP net income of approximately:
$169 million
compared with:
$87 million
a year earlier.
GAAP diluted earnings per share increased from:
$0.31
to:
$0.62.
Adjusted EPS was:
$0.63.
Again, some of the improvement reflected tariff-related benefits.
But the broader picture remains encouraging:
Sales increased.
Comparable sales increased.
Margins improved.
And earnings increased.
That’s exactly what investors want to see during a retail turnaround.
18. Management Raised Guidance
One of the strongest signals management can provide is raising expectations.
After Q2 2026, Macy’s raised its full-year top- and bottom-line guidance.
That matters because management had already raised its outlook after Q1.
Companies don’t always execute perfectly.
Guidance can still be missed.
But repeatedly increasing expectations while comparable sales improve suggests that the turnaround has gained momentum.
19. Macy’s Has Pricing Power Through Brands
Department stores occupy an interesting position in retail.
Macy’s sells products from many recognizable brands.
That creates something Amazon and discount retailers don’t always replicate in the same way:
Curated brand assortment.
Consumers may enter Macy’s looking for:
Fragrance.
Designer handbags.
Suits.
Dresses.
Shoes.
Jewelry.
Cosmetics.
Home goods.
And branded apparel.
That assortment creates opportunities for cross-selling.
Someone buying a suit may also buy:
Shoes
A shirt
A tie
and
Fragrance.
That’s one of the advantages of the department-store format when executed well.
20. Macy’s Can Benefit From Retail Consolidation
Traditional retail has experienced enormous disruption.
Many competitors disappeared.
Others reduced their footprints.
That sounds negative.
But survivors can benefit.
When competitors close stores, their customers don’t necessarily stop shopping.
They go somewhere else.
Strong remaining retailers can capture some of that spending.
Macy’s scale, national recognition, online operation, and portfolio of brands put it in a position to potentially benefit from consolidation.
21. Macy’s Doesn’t Need Explosive Growth
This is one of the most important parts of my investment thesis.
Macy’s doesn’t need to become Amazon.
It doesn’t need 20% annual revenue growth.
Imagine Macy’s simply accomplishes the following over several years:
Low-single-digit comparable-sales growth
Improving store productivity
Stable or improving margins
Growth at Bloomingdale’s
Growth at Bluemercury
Better inventory management
Continued digital development
and
Disciplined capital allocation.
That alone could materially improve the quality of the business.
Turnaround investments don’t necessarily require extraordinary growth.
Sometimes they require a mediocre business becoming a good business again.
22. Macy’s Is Becoming More Focused
Closing stores can make headline revenue look weaker.
That’s why investors need to distinguish between:
Companywide revenue
and
Productivity of the remaining business.
If Macy’s closes an unproductive store, total revenue may decline.
But if the remaining stores become more profitable, the business may actually become healthier.
This is why I pay particular attention to:
Comparable sales
and
Go-forward store performance.
Those numbers tell us more about what the future Macy’s may look like.
23. The Reimagine Stores Could Provide the Blueprint
If the Reimagine 200 locations continue outperforming the broader Macy’s fleet, management can learn from them.
What merchandise works?
What staffing levels work?
Which brands attract customers?
Which store layouts improve sales?
Which events increase traffic?
Which services increase conversion?
Macy’s can take those lessons and apply them throughout the remaining store base.
That makes the Reimagine strategy potentially more important than the performance of those 200 locations alone.
They can function as a testing ground for the future Macy’s.
24. Why Macy’s Remains Interesting for Options Traders
Macy’s also has characteristics that can make it interesting for RetailOptionTrader.com readers.
M is a well-known consumer stock.
It’s sensitive to:
Consumer spending
Retail sales
Inflation
Interest rates
Holiday shopping
Earnings reports
and
Economic expectations.
That can create volatility.
And volatility can create option premiums.
An investor bullish on Macy’s at a lower price might evaluate a cash-secured put.
A shareholder with at least 100 shares might evaluate covered calls.
More advanced traders might study defined-risk credit spreads around their view of earnings or retail conditions.
The important point is that the underlying investment thesis should come first.
The options trade comes second.
25. Macy’s Still Has Risks
I don’t want to make Macy’s sound risk-free.
It isn’t.
Several things could derail the turnaround.
Consumer Weakness
If consumers reduce discretionary spending, department stores can suffer.
Inflation
Higher costs can pressure consumers and retailer margins.
Tariffs
Macy’s sells merchandise sourced through global supply chains, making trade policy relevant.
Competition
Amazon, Walmart, Target, specialty retailers, luxury retailers, discount chains, and direct-to-consumer brands all compete for spending.
Store Closures
Management still has to execute its footprint strategy successfully.
Fashion Risk
Retailers can make inventory mistakes.
Buying the wrong merchandise can lead to markdowns.
Turnaround Execution
The recent comparable-sales improvements need to continue.
Two or three strong quarters don’t guarantee a successful multiyear transformation.
These risks are real.
26. What I Would Watch Going Forward
For me, Macy’s investment story comes down to six numbers.
Macy’s comparable sales
Reimagine 200 comparable sales
Bloomingdale’s comparable sales
Bluemercury comparable sales
Gross margin
and
Free cash flow.
If those metrics continue improving, the turnaround becomes increasingly credible.
If they reverse sharply, I’d reconsider the thesis.
27. Why I Still Consider Macy’s a Retail Leader
Macy’s isn’t a retail leader because every store is thriving.
It isn’t.
It’s not a leader because department stores are suddenly high-growth businesses.
They aren’t.
And it’s not a leader because competition disappeared.
Competition is intense.
I consider Macy’s a leader because few traditional retailers possess the same combination of:
National brand recognition
Hundreds of physical locations
Large-scale digital commerce
Luxury exposure through Bloomingdale’s
Beauty exposure through Bluemercury
Valuable real estate
Credit-card revenue
Retail-media revenue
Large customer relationships
and
More than a century of brand history.
That’s a difficult collection of assets to replicate.
The Bottom Line
Investors have been predicting the death of Macy’s—and the department store—for years.
But Macy’s continues adapting.
The company is closing weaker stores.
It’s investing more heavily in productive locations.
It’s modernizing the shopping experience.
It’s strengthening merchandise.
It’s growing Bloomingdale’s.
It’s expanding Bluemercury.
It’s monetizing customer relationships through advertising and credit.
And most importantly, customers appear to be responding.
Macy’s comparable sales have now increased for five consecutive quarters.
Bloomingdale’s produced double-digit comparable-sales growth in both Q1 and Q2 2026.
Bluemercury continued growing.
And management raised its annual outlook after stronger-than-expected performance.
That doesn’t mean Macy’s turnaround is complete.
It means the evidence is becoming more interesting.
The future of retail probably won’t belong exclusively to e-commerce companies or exclusively to physical stores.
It will belong to retailers capable of combining:
Brand + stores + digital + data + experience + disciplined execution.
Macy’s already possesses most of those ingredients.
Now management has to prove it can put them together.
That’s why I believe Macy’s remains one of the most important traditional retail stocks to watch—and why I’m not ready to count this 168-year-old retailer out.
Disclaimer: This article is for educational and informational purposes only and does not constitute investment, financial, tax, or options-trading advice. Macy’s is exposed to risks including changes in consumer spending, competition, tariffs, inflation, inventory markdowns, store-closure execution, and broader economic conditions. Recent comparable-sales and earnings improvements do not guarantee future performance. Investors should conduct their own research before buying Macy’s shares or trading options on the stock.