Macy’s Struggles and Its Bold New Chapter: Can the Iconic Retailer Make a Comeback?

In an era where department stores are losing their relevance, Macy’s — once a retail giant — finds itself at a crossroads.

The 166-year-old company, which has long been a staple in the U.S. shopping landscape, is attempting to steer through a maze of declining sales, shifting consumer behavior and the relentless growth of digital commerce. Amid these challenges, Macy’s management has placed its hopes on its A Bold New Chapter strategy, which centers around an initiative known as the First 50  locations — an ambitious effort to revitalize its brick-and-mortar business and make a comeback in the competitive retail market.

But with Macy’s sales continuing to slide and its stock price languishing, can this strategy truly turn the tide? Or is it simply a last-ditch effort to keep a sinking ship afloat?

The Struggles Behind Macy’s Decline

The story of Macy’s struggle to maintain its place as a retail powerhouse is a familiar one: declining mall traffic, a shift to online shopping and changing consumer preferences. The department store model, once synonymous with American shopping culture, is no longer the go-to destination for many consumers. Instead, shoppers flock to niche retailers, specialty stores and eCommerce platforms that offer convenience, personalized experiences and often lower prices.

For Macy’s, the results have been stark. In its second-quarter results, the company revealed a 3.8% drop in second-quarter sales, with total sales falling to $4.9 billion. Comparable sales were down by 4%, reflecting the broader struggles in the department store sector. Yet, results for its First 50 stores presented a glimmer of hope, with these select locations seeing a 0.8% increase in comparable sales — a small but noteworthy sign of life in an otherwise difficult environment.

Macy’s preliminary third-quarter results revealed overall net sales down 2.4% to $4.742 billion, primarily due to weaknesses in non-First 50 locations and digital sales. But its First 50 stores delivered their third consecutive quarter of growth, with comparable sales up 1.9%. Bloomingdale’s and Bluemercury also saw positive sales, with Bluemercury posting a 3.3% increase.

Macy’s postponed its third-quarter earnings call to Wednesday (Dec. 11) after the company disclosed an accounting issue related to delivery expenses, where a former employee hid up to $154 million in costs. The issue did not affect cash management or vendor payments.

Despite this setback, Chairman and CEO Tony Spring is unwavering in his optimism, highlighting the “First 50 Stores” as a key part of Macy’s future. These flagship stores, which represent a prototype for a more modern, experiential Macy’s, have been positioned as a potential blueprint for the retailer’s reinvention. Macy’s leadership points to improvements such as enhanced staffing, better merchandising and more in-store events as positive signs that the strategy is beginning to take root.

While there are pockets of optimism within the company, these small wins stand in contrast to the larger trend of declining sales. Macy’s executives remain focused on the long-term potential of this strategy, but analysts and investors are wary about whether these efforts can truly reverse the company’s fortunes.

The Activist Pressure and Strategic Overhaul

As if Macy’s wasn’t already facing enough pressure, the retailer has now come under fire from activist investors, including Barington Capital Group and Thor Equities, which published a detailed presentation calling for a major shift in Macy’s capital allocation strategy, urging the retailer to reevaluate its spending and consider selling off some of its luxury brands, including high-end offerings like Bloomingdale’s and Bluemercury.

The investors’ rationale is clear: Macy’s has spent billions over the past decade on capital expenditures, but these investments have failed to generate meaningful value. Since 2014, Macy’s has sunk $9.7 billion into capital projects, but during that same period, its market capitalization has shrunk by $15 billion. Barington has criticized Macy’s management for misallocating resources, including share repurchases that occurred when stock prices were much higher than they are today, offering little benefit to shareholders.

While Macy’s has made some strategic moves, including closing low-performing stores as part of its “Bold New Chapter” initiative, the results so far have been underwhelming. Despite efforts to revitalize the brand, the company’s stock has dropped 13% since the announcement of the new strategy, and its valuation multiples are now at historic lows. In short, investors are losing faith in Macy’s ability to turn things around on its own.

The Road Ahead: Can Macy’s Make a Comeback?

With Macy’s still grappling with declining sales and increasing competition, the question remains: Can it recover?

In an interview with PYMNTS, Neil Saunders, Managing Director, Retail, at research firm GlobalData, said “what investors want to hear from the announcement on Wednesday is the outlook and how holiday trading is shaping up so far. Unfortunately, there is unlikely to be much optimism on this front as many retailers are very cautious around the holidays and it is unlikely Macy’s is performing significantly better. As Macy’s is now facing more pressure from activist investors, it really needs to paint a clear and confident picture about its future.”

Greg Zakowicz, Senior Ecommerce Expert at Omnisend, offered a sobering assessment of the retailer’s prospects.

“The only thing it (Macy’s) has to prove is that it’s making strides at turning the company around,” he explained to PYMNTS. “I don’t know how they’re doing so far this holiday season, but I suspect it will be an average or slightly below-average season. We’re seeing more consumers consolidate their purchasing this season, benefiting companies like Amazon and Walmart.”

Zakowicz noted Macy’s is facing an uphill battle to turn things around.

“With its lack of differentiation, I don’t know how Macy’s is going to appeal to new shoppers and pull existing ones away from other stores in the short term,” he added. “They’re going to need to find a void in the market and fill the gap. Whether this is luxury goods or an elevated beauty and cosmetics department, they’ll need something to create a new reputation.”

Looking Forward

Does Macy’s have something to prove?

“Absolutely,” Zachary Robichaud, Instructor, School of Retail Management, Ted Rogers School of Management, Toronto Metropolitan University, told PYMNTS. “Beyond addressing the immediate fallout from the stolen money incident, Macy’s must show it can navigate the broader challenges plaguing department stores, including declining foot traffic and the shift to eCommerce. Strong earnings and a clear strategy will be critical to reassure stakeholders.”

Regarding the stolen money incident, Robichaud said it “points to potential gaps in internal controls, but it’s also a symptom of the broader struggles department stores face in maintaining relevance and operational efficiency in a highly competitive retail landscape. Department stores like Macy’s have been battling weak consumer sentiment and intensifying competition from online retailers. Holiday performance will hinge on their ability to execute promotional strategies and attract foot traffic in a challenging environment.”

Should Macy’s be doing anything different?

“Macy’s should focus on modernizing its business model, strengthening its digital presence, and reimagining the in-store experience to differentiate itself,” Robichaud added. “Greater investment in technology, customer personalization, and operational resilience is essential for long-term success.”