Retail is a confusing segment right now, with the price of goods impacted via increases in tariffs causing a tougher situation for not only consumers, but also sellers and producers. Let's take a look at two major retailers, Macy's (M 3.10%) and Dick's Sporting Goods (DKS 0.98%). In all, I think one of these two retail titans is showing more signs of life, whereas the other is being forced to shrink to improve its bottom line.

Macy's

Macy's saw an uptick in the few years following the COVID-19 outbreak but has since been in slow stagnation, with revenue declining over the last two years. Looking into 2025, the retailer's first quarter beat estimates, but the overall outlook underwhelmed. The company reported adjusted earnings of $0.16 per share versus estimates of $0.14 per share, while total revenue came in at $4.60 billion compared to expectations of $4.50 billion.

From another perspective, things didn't look that great. While revenue came in above expectations, it trailed last year's total sales of roughly $4.85 billion. Operating income fell 24.8% year over year to $94 million, and net income declined 38.7% to $38 million. Diluted earnings per share declined from $0.22 in the first quarter of 2024 to $0.13 per diluted share this year.

Person shopping for running shoes.

Image source: Getty Images.

These year-over-year declines are something that is haunting Macy's and putting downward pressure on the stock. For this year, the company reiterated net sales guidance in the range of $21 billion to $21.4 billion. In comparison, it reported sales of $22.29 billion in 2024. All in all, Macy's cut its profit outlook for the year and expects to raise prices on products to offset the impact of tariffs on its goods.

Dick's Sporting Goods

In contrast, Dick's Sporting Goods has done surprisingly OK. First-quarter results included a 5.2% year-over-year increase in sales revenue, to roughly $3.18 billion, while non-GAAP income was flat at $275 million.

The company has been building sales annually and provided good guidance for 2025, reiterating its previous expectations of $13.80 to $14.40 in earnings per share. The high end of that range would beat out 2024, which finished with diluted earnings per share of $14.05. Net sales are expected to be in the range of $13.6 billion to $13.9 billion, which would outperform last year's revenue of $13.45 billion.

Dick's is also looking to expand through its announced acquisition of Foot Locker for $2.5 billion. This drastically increases the company's position within shoes and sets up Dick's for future growth, as Foot Locker had been in the midst of a turnaround itself. 

An expanding business versus a declining one

This story is a comparison of a company that is shuttering stores in an attempt to become a leaner machine, relative to a company that seemingly is looking to grow. Though improvement is slow, Dick's has been reporting better year-over-year sales figures than Macy's, with plans to open new stores and even make an acquisition, whereas Macy's plans to close over 100 locations and raise prices.

While the potential for tariffs to cause headaches for both of these companies is something to be mindful of, I think you have to go with Dick's Sporting Goods here. Its diversified offerings give it a broader consumer base, while Macy's is more heavily concentrated in clothing, perfumes, etc.

Unlike a lot of tech, there's still some value in retail, with Dick's trading at a little over 12 times earnings and offering a 2.73% dividend yield. While the short term might be a bit choppy due to tariffs, long-term this company seems to be making the right moves.