The Positive New Chapter: How Retail Giants Macy's, Kohl's, and Costco Are Executing Recovery Strategies

The U.S. retail landscape is undergoing a meaningful transformation. Three major players—Macy’s, Kohl’s, and Costco—are demonstrating how strategic execution and disciplined capital allocation can drive genuine positive momentum even in an uncertain consumer environment. These companies are not just surviving; they’re rewriting their playbooks to build sustainable competitive advantages in an evolving market. The positive new chapter unfolding across this sector offers valuable lessons in operational excellence and strategic clarity.

Macy’s Bold Execution: How the New Chapter Strategy Is Reshaping the Business

Macy’s has emerged as the most compelling turnaround story in traditional retail. The company’s “Bold New Chapter” strategy is producing tangible results that extend far beyond quarterly headline numbers. The third-quarter fiscal 2025 performance painted a clear picture: a 3.2% comparable sales increase marked the strongest performance in 13 quarters, signaling that fundamental business health is improving despite macroeconomic headwinds.

What makes this execution particularly noteworthy is the breadth of improvement. Macy’s didn’t achieve results through a single lever—instead, the company deployed a multifaceted approach. The Go-Forward stores, which have received focused merchandising investments and enhanced store presentation, delivered positive comparable sales growth. The Reimagine 125 store portfolio, which underwent targeted physical and operational upgrades in high-potential markets, continued to outperform the broader fleet. This data-driven approach to capital allocation demonstrates how selective investment can drive outsized returns.

The luxury segment deserves particular attention. Bloomingdale’s posted its strongest comparable sales performance in over three years, buoyed by exclusive brand partnerships and robust demand in premium categories. Bluemercury, Macy’s entry into contemporary luxury beauty, also delivered positive comparable sales for another consecutive quarter. These results suggest that affluent consumers remain engaged and willing to spend on curated, elevated retail experiences—a powerful counternarrative to uniform consumer weakness narratives.

Behind the scenes, operational modernization has been equally critical. Investments in supply-chain automation, inventory discipline, and cost management have simultaneously improved operational margins while freeing up capital for reinvestment. This disciplined capital allocation—extracting efficiency while reinvesting strategically—is the hallmark of effective management in mature retail environments.

Kohl’s and Costco: The Store Optimization Imperative Driving New Growth

While Macy’s is executing a comprehensive turnaround, Kohl’s and Costco are pursuing a complementary but distinct strategy centered on physical retail optimization. This reflects a broader positive trend: leading retailers are recognizing that the physical store remains a critical competitive asset when executed thoughtfully.

Kohl’s is fundamentally reimagining its in-store experience in third-quarter fiscal 2025. The company refined store layouts to improve traffic flow, expanded impulse checkout areas to increase basket size, and strengthened category adjacencies to promote discovery. Enhanced visual merchandising and clearer signage are creating a more intuitive customer journey. These initiatives may sound incremental, but they represent a calculated bet on store traffic recovery and long-term customer lifetime value.

Costco’s approach operates at a different scale but reflects similar strategic thinking. The company opened eight new warehouses in the first quarter of fiscal 2026, bringing its global footprint to 921 locations. More significantly, Costco is strategically relocating high-volume locations to larger formats with expanded parking and enhanced gas station capacity—a capital-intensive bet on continuing traffic growth. First-quarter fiscal 2026 new warehouses generated approximately $192 million in annualized sales per location, a powerful metric that validates the expansion thesis.

Technology is amplifying these physical retail advantages. Costco’s deployment of membership pre-scanning and digital wallet functionality has delivered checkout speed improvements of up to 20% in early-adopting locations. When a retailer can materially improve the transactional experience while maintaining member satisfaction, it creates a compounding advantage. Targeted warehouse remodels and expanded ancillary services further boost sales efficiency and per-square-foot productivity.

Market Validation: Stock Performance and Valuation Signals

The positive momentum across this cohort is being validated by the market in real time. Macy’s shares surged 53.8% over the past six months, significantly outpacing the industry average of 40.8% growth. This isn’t speculative enthusiasm—it reflects genuine confidence in management’s execution and the business trajectory.

From a valuation perspective, Macy’s presents an intriguing opportunity. The company trades at a forward 12-month price-to-sales ratio of 0.25X, a meaningful discount to the industry average of 0.48X. This valuation asymmetry suggests the market is still pricing in skepticism despite the strong fundamental improvements.

Earnings expectations also tell a revealing story. The Zacks Consensus Estimate projects a 16.7% year-over-year decline in fiscal 2025 earnings—likely reflecting the heavy cost of the transformation—followed by a modest 1.7% uptick in fiscal 2026. However, management estimates for both fiscal years have been revised upward by 16 cents and 11 cents respectively over the past 30 days. These revisions suggest analysts are becoming more confident in the company’s trajectory as execution continues to demonstrate tangible results. Macy’s currently carries a Zacks Rank of #1 (Strong Buy), reflecting conviction among professional investors about the positive new chapter ahead.

What This Positive Retail Shift Means for the Market and Beyond

The simultaneous execution of thoughtful strategies across Macy’s, Kohl’s, and Costco points to a broader positive inflection in the retail sector. These aren’t desperate turnaround attempts or financial engineering plays; they’re disciplined, customer-centric strategies designed to build sustainable competitive advantages. Macy’s is winning through excellence in merchandising and luxury positioning. Kohl’s is competing on convenience and the refined in-store experience. Costco is leveraging operational scale and member loyalty.

For investors and market watchers, the key insight is that traditional retail is not in structural decline—rather, poorly executed retailers are being separated from well-managed ones. The positive new chapter unfolding in this sector demonstrates that capital allocation discipline, customer insight, and operational excellence remain powerful drivers of shareholder value creation. As consumer caution persists, these three companies are proving that execution, not economic conditions, ultimately determines retail winners and losers.