Analysis by Allison Morrow, CNN

New York (CNN) — Here we are, at the tail end of a strong-despite-tariffs corporate earnings season, staring down a bumpy road through the second half of the year, when out of nowhere comes a flash of… what’s the word… hope? Well, not hope, but at least a reassurance that real-world business fundamentals still matter in a market obsessed with speculative AI pitch decks? A turnaround of a company with the gall to tell the private equity goons circling their stores to get bent?

It just may be.

See here: Macy’s, the retailer many investors had left for dead a year ago, busted out a banger of a quarterly earnings report, sending its stock up more than 20% Wednesday.

The company’s earnings were broadly better than expected, with revenue coming in at $4.8 billion (versus analysts’ consensus of $4.7 billion). But it was a closely watched sales metric that got heads spinning on Wall Street: Macy’s sales at locations open at least a year rose 0.8%, the first positive quarter in three years.

While less than 1% growth might not seem like much, the news was widely seen as a sign that Macy’s efforts to army-crawl its way out of the retail graveyard populated by former rivals like Sears and Lord & Taylor (RIP) are starting to pay off. There are some rough retail quarters ahead — tariffs are taking a bite, and customers are expected to spend less on holiday shopping this year because everything is so expensive and the job market is starting to look quite bad — but Macy’s has some wind at its sails for the first time in years.

It was far from clear even a year ago that anything could be done to save Macy’s.

The company, which also owns the swankier Bloomingdales brand and cosmetics retailer Bluemercury, barely made it out of the pandemic after lockdowns strangled in-store shopping and drove customers ever closer to Amazon and other big-box retailers.

Twice in the past two years, buyout firms have circled Macy’s, attracted not so much to its long-term potential as a business but downright salivating over the real estate its stores occupy. At the end of 2024, Macy’s owned nearly 300 buildings valued collectively between $8 billion and $10 billion — roughly double the company’s book value on the stock market. The private equity guys argued that Macy’s could squeeze more value out of its real estate holdings by selling it to developers and merely renting space for its “essentially worthless” retail operations, as one investor presentation described it at the time.

Both times, Macy’s rejected the buyout offers, concluding the deals wouldn’t be in shareholders’ best interests. A bold choice, perhaps, given the company’s financial situation. But also a bit of a no-brainer when you look at similarly situated retailers that got the PE takeover treatment: Sears, Kmart, Lord & Taylor, RadioShack, Toys ‘R’ Us, Payless Shoes, and the Sports Authority, just to name a few. Not exactly a roster anyone wants to join if they can avoid it.

Instead, Macy’s opted for the harder but theoretically healthier route over the long term. Tony Spring, a Bloomingdales veteran, took over as CEO last year and began making changes. Macy’s closed dozens of underperforming stores and focused on improving the customer experience at the remaining locations. Its more-promising stores cleaned up the clutter customers complained about, added more staff to fitting rooms and introduced new brands.

“Overall, Macy’s is on the right track,” retail analyst Neil Saunders wrote in a note Wednesday. “That said, the second half of the year may prove to be a little more challenging as the company comes up against some not quite so weak prior year numbers and consumers tighten their spending. Nevertheless, the most important thing is that the fundamentals of the business are being strengthened.”

— Nathaniel Meyersohn contributed to this report.

The-CNN-Wire
™ & © 2025 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.