Key Takeaways:
Bloomingdale’s is showing that higher-end department stores can still thrive—if they strike the right balance between luxury and premium brands.
The Macy’s-owned retailer is leaning on a modernized portfolio of brands, strong customer service, and experiential retail to attract shoppers as discount chains capture a growing share of middle-class consumers. This strategy, aimed at a younger but still affluent customer base, has helped Bloomingdale’s stand apart from struggling rivals Saks Fifth Avenue and Neiman Marcus, which filed for bankruptcy protection under Saks Global in January.
“We've cultivated a unique multigenerational customer base that's incredibly loyal, including the luxury customer of the future, and are taking share across categories, regions, and brands,” said Macy’s Chief Executive Tony Spring on Bloomingdale’s performance during the company’s latest earnings call. Spring took the top job in 2024 after more than three decades with the company, including nearly a decade leading Bloomingdale’s.
Efforts to position Bloomingdale’s as “a leading modern luxury destination” have delivered five consecutive quarters of comparable sales growth, including a 9% increase in the quarter ending November 1. Still, the relative strength of Bloomingdale’s hasn’t been enough to offset the broader pressures weighing on Macy’s, underscoring how long it will likely take to turn around the flagship name.
Macy’s reported annual revenue of $23.87 billion in 2024, down from a peak of $28.11 billion twelve years ago. Its market valuation has also taken a sharp hit, falling to around $5 billion today from roughly $24 billion in 2014.
The success of Bloomingdale’s reflects its “strong brand relationships” and its role as “the most reliable and innovative partner in the market,” according to Macy’s third-quarter earnings presentation. One example is its online beauty division, which carries exclusive fragrances from luxury houses such as LVMH’s Maison Francis Kurkdjian while expanding beyond traditional beauty assortments into adjacent lifestyle offerings. These include categories such as “gifts with purchase,” “sexual wellness products,” and “beauty tools and brushes.” By contrast, Saks Fifth Avenue’s online beauty navigation consists of the categories “designer,” “price,” “type,” “new,” “sale,” and “promotion.”
Another competitive advantage is Bloomingdale’s business model. The retailer has aggressively pursued lease and concession spaces with vendors over the years, similar to the European department store model used by peers such as the UK’s Selfridges, where brands lease their own space rather than sell products wholesale to the store, luxury market consultant Glenn McMahon told BeautyMatter.
“I think this approach has helped them a lot. It’s allowed stronger presentations and better brands in the assortment,” McMahon said, adding that if there’s a department store that can win over Gen Z and Alpha consumers, who usually prefer specialty or online shopping, it’s Bloomingdale’s or Nordstrom.
Bloomingdale’s also benefits from a smaller footprint, comprising just 32 stores compared with more than 400 Macy’s locations, a number the company seeks to reduce to about 350. Nordstrom operates roughly 90 department stores, while Saks Global ran about 75 doors until recently and now plans to cut that footprint by about half as part of its Chapter 11 restructuring.
Analysts and industry experts broadly agree that Bloomingdale’s product positioning across categories, including beauty, has played an important role in its recent performance. Beauty remains one of the retailer’s most profitable categories, driving store traffic, delivering significantly higher margins than segments such as leather goods, and helping Bloomingdale’s take market share from luxury rivals.
Shifts in the US socioeconomic landscape are also reshaping where consumers shop across the luxury spectrum, creating new momentum for the retailer. While the luxury consumer remains relatively resilient, Saks’ inventory challenges, stemming partly from missed payments to vendors, and weaker customer service are increasingly pushing shoppers toward Bloomingdale’s.
Another shift is coming from middle-class consumers trading down from the very top end of luxury to more accessible premium brands in an effort to save money, also steering them away from Neiman Marcus and Saks, Neil Saunders, Managing Director and Retail Analyst at GlobalData, told BeautyMatter.
“With Bloomingdale’s, you stay within the same retail ecosystem, but buying a different mix of brands than before,” Saunders said.
Traffic Trends Reflect a Divided Consumer Landscape
Bloomingdale’s is returning to its roots by highlighting what makes the retailer distinctive through curated in-store experiences and events, a strategy that “is resonating a lot with consumers right now,” said Elizabeth Lafontaine, Director of Research at analytics firm Placer.ai.
The impact is evident in Placer.ai’s data, with privately owned Nordstrom and Bloomingdale’s showing broadly similar, relatively strong traffic trends throughout 2025.
Nordstrom and Bloomingdale’s were the only department stores to report higher average visits per venue in the second half of 2025 compared with the same period a year earlier. Bloomingdale’s recorded a 0.8% increase after a 1.2% decline in the first half of the year, while Nordstrom posted 4.7% growth in the second half following a 3.3% rise in the first half. By contrast, Saks Fifth Avenue saw visits fall 4.5% in the second half after an 8% drop in the first half, while Neiman Marcus reported a 6.7% decline in the second half following a 2.5% decrease in the first half.
A similar divide is visible further down the department store spectrum, particularly in the mid-market segment. Chains such as Kohl’s, Macy’s, and JCPenney have struggled, while off-price retailers TJ Maxx, Marshalls, Burlington, and Ross have continued to attract shoppers.
Macy’s recorded the steepest decline in traffic, falling 0.7% drop in first half and 4.7% in the second. Kohl’s saw traffic decline 3% in the first half and 2.2% in the latter part of the year, while JCPenney posted a 0.7% decrease in the first half and a 2.4% drop in the second.
Macy’s Looks to Bloomingdale’s Playbook
As shown by data from Placer.ai, the strong performance of off-price chains has added pressure on traditional mid-market department stores. That dynamic has prompted Macy’s CEO Tony Spring to borrow elements of Bloomingdale’s playbook to improve performance at the company’s namesake chain and push both brands further upmarket, said David Swartz, a senior equity analyst of consumer research at Morningstar.
“He is trying to separate the labels from all these middle-market stores that have been declining for many years, while also trying to attract more higher-income shoppers,” Swartz said.
The challenges facing department stores extend far beyond any single retailer.
Total annual retail sales at US department stores have fallen sharply over the past two decades, declining by roughly $100 billion since the start of the century to $131 billion in 2024, according to the U.S. Census Bureau. Using a narrower definition of the sector, Euromonitor estimates that US department store sales dropped to about $57 billion in 2024 from $112 billion in 2008, representing a compound annual decline of roughly 4%.
That decline is reshaping the physical retail landscape, accelerating the closure of shopping malls across the country. The US has about 1,200 malls, but projections from Capital One Shopping Research indicate there may be as few as 900 still in operation and that 87% of large shopping malls may close over the next decade.
Still, the retail industry shakeout is also creating opportunities for stronger players.
Bloomingdale’s is benefiting from what Spring recently described as a “disrupted marketplace.” The chain isn’t, however, “sleeping on its laurels,” he added. Instead, it is using the shift in the retail landscape to deepen partnerships with existing brands while pursuing new labels to carry.
In beauty, the strategy has included introducing higher-end cosmetics brands traditionally sold at Bloomingdale’s into select Macy’s locations, while also strengthening Bloomingdale’s own beauty and skincare offering by adding niche and emerging brands.
“Historically, Bloomingdale’s leaned heavily on large US brands like Estée Lauder, but it is now doing a much better job spotlighting newer vendors,” McMahon said.
Macy’s is pursuing a similar strategy after recently revamping the beauty floors in several flagship stores by broadening its cosmetics assortment with over 24 new premium brands, including Sisley, Puig-owned Byredo, Maison Francis Kurkdjian, and Acqua di Parma, the latter two part of LVMH’s portfolio. “There’s a strong emphasis on beauty and skincare across the entire Macy’s group.”
The Importance of Beauty
Despite the sector’s long-term struggles, department stores remain an important showcase for prestige beauty brands of all sizes and ownerships. Bloomingdale’s cultural relevance and ability to draw affluent shoppers make it a particularly valuable platform for luxury and premium labels seeking visibility.
“Department stores are a place for certain high-end brand discovery,” Saunders added. “A lot of people go to Bloomingdale's, and they shop across categories, especially women, who want to buy their handbag, apparel, and beauty there. So beauty is very much part of the overall fashion ecosystem at department stores like Bloomingdale's.”
That role is particularly important for smaller beauty brands that may not be carried by specialty retailers such as Sephora or Ulta Beauty. The latter has been expanding its prestige assortment, while Amazon is also growing its Premium Beauty store. The channel also remains significant for established players like Estée Lauder, which still generates roughly 30% of its US sales from department stores.
Even so, expectations for Bloomingdale’s long-term growth remain modest despite Macy’s investments in the chain’s locations, as beauty and fashion brands increasingly prioritize opening their own direct-to-consumer stores, reducing the need for shoppers to visit high-end department stores like Bloomingdale’s.
“The number of stores has been relatively stable, so they’re not opening stores, and it’s never going to become a giant company,” Swartz said. “There just isn’t demand for it.”
