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This Week's Bonus Article
What's Make of Macy's: Berkshire Hathaway's Latest BuyAuthor: Leo Miller. Originally Published: 6/8/2026. 
Key Points
- Berkshire Hathaway made an unexpected move in Q1 2026 under new CEO Greg Abel, buying into Macy's stock.
- Macy's shares have taken a huge tumble since their peak 11 years ago, losing around half of their value.
- However, Macy's latest results show a company in recovery, with the firm posting a giant beat on adjusted earnings per share.
- Special Report: SpaceX is offering you shares. Don't take them.
In Q1 2026, investment management giant Berkshire Hathaway (NYSE: BRK.B) made a portfolio move that few expected. According to its 13F SEC filing, Berkshire initiated a new position in Macy’s (NYSE: M), one of the United States' most iconic department stores. Although Macy’s has closed many locations since its peak in 2015, the company remains one of the top names in its industry. In fact, in 2024, Macy’s ranked as the world’s largest department store based on sales, with revenue of approximately $23.7 billion.
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That would not be obvious from the stock’s long-term performance. Shares are down roughly 50% from their all-time high reached in 2015. Meanwhile, Macy’s market capitalization has fallen from nearly $25 billion to around $6 billion, erasing about 75% of its value over the past 11 years. Given the massive shift toward e-commerce, Macy’s is not a stock most investors would naturally consider. However, Berkshire clearly sees something in this retail name, investing $55 million. Let’s break down where Macy’s has been and where it stands today to better understand why Berkshire sees value in the stock. Macy’s Fall From Grace: Stores, Revenue, and Margins SinkAs noted, Macy’s has seen a significant decline in its store count over the past decade or so. In 2016, Macy’s operated more than 850 total stores. That included over 700 Macy’s-branded stores, more than 50 Bloomingdale’s stores, and over 70 Bluemercury stores. Today, the total store count has fallen to fewer than 675. The decline has been driven by the reduction in Macy’s-branded locations, with fewer than 450 physical stores now remaining. Meanwhile, Bloomingdale’s and Bluemercury locations have actually increased, with store counts of more than 60 and 150, respectively. Revenue over the last 12 months came in at $22.7 billion, down meaningfully from 2024 and roughly 19% below its calendar 2014 peak of $28.1 billion. Macy’s operating margin fell to a thin 2.3% in its latest quarter, well below the more than 6% it posted in the comparable quarter of 2014. Considering these metrics, it becomes much clearer why Macy’s market capitalization has fallen so sharply. However, over a shorter time frame, Macy’s has shown signs of improvement, as reflected in its recently released earnings report. Macy’s Posts Huge Adjusted EPS Beat, Raises GuidanceMacy’s reported its Q1 2026 earnings in early June, delivering solid results on several fronts. (Note that the company’s fiscal reporting period is slightly behind the calendar period.) The company posted revenue of $4.89 billion, an increase of 1.8% year over year (YOY) and well above estimates of $4.61 billion. Adjusted earnings per share (EPS) rose 18% YOY to 13 cents, far better than expected. Analysts had projected adjusted EPS of just 2 cents, which would have implied a decline of 82% YOY. The company said the outperformance was driven by sales growth that far exceeded expectations. Comparable sales, which remove the impact of store count changes, rose 3% YOY, marking the strongest growth since 2022. That compared with Macy’s comparable sales growth guidance of 0.5% to 1.5% and a decline of 2% from a year ago. Macy’s also delivered its big adjusted EPS beat despite a 4-cent tariff headwind. The company also raised its full-year guidance. Macy’s now expects midpoint comparable sales growth of 0.85%, up from 0% previously. Its midpoint adjusted EPS guidance now stands at $2.10, compared with $2 before. The updated adjusted EPS outlook implies a YOY decline of 9.5%. One of Macy’s key initiatives is to revamp its Macy’s-branded stores. That effort comes as luxury brands Bloomingdale’s and Bluemercury are growing much faster, with comparable sales rising 10.2% YOY and 6.4% YOY, respectively. By comparison, Macy’s-branded comparable sales increased just 1.6% YOY. To address that gap, the company is improving Macy’s stores through its “Reimagine” initiative. Reimagine includes changes to the merchandise mix and visual marketing throughout the stores. The 200 Macy’s locations that have already undergone Reimagine improvements have shown stronger comparable sales growth of 2.4%, suggesting the strategy is beginning to pay off. Macy’s: A Recovering Company With a Lot Left to ProveOverall, there are clear reasons why Macy’s could appeal to Berkshire. While the company has struggled mightily over the past decade, its recent improvements are real. Still, it is worth noting that Berkshire is not making a large bet on the stock. At $55 million, the position represents only a tiny fraction of the firm’s more than $250 billion equity portfolio. If Macy’s continues to make progress in its turnaround, Berkshire could choose to increase its position over time. Notably, Wall Street analysts remain cautious. The MarketBeat consensus price target of $20.30 implies around 10% downside from current levels. However, the average of two targets updated after the company’s report is $25, which suggests moderate upside. |
