Berkshire Hathaway’s New CEO Bets on Macy’s as Valuation Sets In

Key Points

• Macy’s reported comparable‑sales growth across all its brands in the first quarter.

• The retailer has trimmed its store footprint and is gaining operational efficiency.

• Macy’s trades at a price‑to‑earnings (P/E) ratio of just 10.

Berkshire Hathaway’s new leader, Greg Abel, is taking the reins after Warren Buffett’s six‑decade tenure. Assuming the role amid the legend’s towering legacy, Abel has moved quickly to sharpen the conglomerate’s focus. He pledged to tighten the portfolio around high‑ conviction holdings and trimmed roughly 16 small positions in his first quarter as CEO.

Despite the pruning, Abel added three new positions, the most notable being a stake in department‑store chain Macy’s (NYSE: M). Macy’s, a publicly traded retailer for more than 30 years, is now appearing in Berkshire’s portfolio for the first time. The chain, which has faced headwinds from shifting shopping habits, carries a modest P/E of 10, prompting questions about its upside.

Image source: Macy’s.

What Went Wrong—and What’s Going Right

Macy’s remains a major player, but it has undergone a strategic overhaul as consumer preferences move away from traditional department stores. The company has closed hundreds of locations, repositioned others, and invested heavily in e‑commerce to drive growth.

The portfolio includes three core brands—Macy’s, Bloomingdale’s and Bluemercury—with the latter two increasingly bearing the growth burden. In the first quarter ended May 2, 2026, total comparable sales rose 3 % year‑over‑year, the best performance in four quarters. Breaking this down: Macy’s comps were up 1.6 %, Bloomingdale’s up 10.2 % (its highest first‑quarter growth ever), and Bluemercury up 6.4 %.

Adjusted earnings per share came in at $0.13, beating guidance and exceeding the $0.11 reported a year earlier.

Is Macy’s Stock a Bargain?

Investors in the Berkshire mold look for durable businesses with strong management, a competitive moat, and sensible valuation, expecting to hold forever rather than trade for short‑term gains. Macy’s may meet those criteria. Its brand remains well‑known and retains a solid customer base, providing a natural moat.

The tighter store base should allow the retailer to operate more efficiently and improve profitability. Moreover, Macy’s dividend currently yields about 3 %—a high payout that appeals to income‑focused investors.

Overall, the combination of a low P/E, a solid dividend and an improving operational profile suggests Macy’s is priced attractively and could be a prudent addition for long‑term holders.

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