Macy’s cut its full-year profit guidance on Wednesday even as it beat Wall Street’s quarterly earnings expectations, as the retailer’s CEO said it will hike prices of certain items to offset tariffs.
In an interview with CNBC, CEO Tony Spring said about 15 cents to 40 cents per share of the guidance cut is due to tariffs.
Macy’s will raise some prices and stop carrying certain items to mitigate the hit from tariffs, he added.
CFO Adrian Mitchell said on the company’s earnings call that Macy’s has taken action to blunt the impact of tariffs on national brands it sells, too.
Earlier this spring, Macy’s announced a few key leadership changes – including a new chief financial officer.
Despite exceeding Wall Street’s quarterly earnings forecast, Macy’s lowered its full-year profit guidance on Wednesday. The retailer’s CEO stated that it would raise the prices of some items to compensate for tariffs.
The department store operator stated in a news release that it had lowered its earnings outlook due to “some moderation” in discretionary spending, increased tariffs, and more promotions. However, Macy’s stuck to its sales projection for the entire year.
In fiscal 2025, Macy’s has lowered its previous estimate of adjusted earnings per share from $2.05 to $2.25 to $1.60 to $2. The company reiterated its full-year sales forecast of $21 billion to $21.4 billion, which would be less than the $22.29 billion it reported for the previous full year.
CEO Tony Spring stated in an interview with CNBC that tariffs are to blame for between 15 and 40 cents per share of the guidance cut. About 20% of the company’s merchandise, he said, is imported from China.
In order to lessen the impact of tariffs, Macy’s will increase some prices and discontinue carrying some items, he continued.
He stated, “You’re struggling with it on both the demand side and the increased cost side.”. In order to navigate that, we have a number of scenarios to try and determine what will actually happen. We want our guidance to be flexible enough to accommodate that uncertainty so that we can respond to customer needs in real time and improve customer service. “,”.
The business will be “surgical” with price adjustments, according to Spring.
“There isn’t a one-size-fits-all method,” he stated. Certain items will remain at the same price as they were a year ago. We will selectively carry items that may be more costly, and we may not carry some items because the price does not justify the quality or the consumer’s perception of value. “..”.
Based on an analysis of analysts conducted by LSEG, here is a comparison of Macy’s performance in the fiscal first quarter with the expectations of Wall Street.
As adjusted, earnings per share were 16 cents. 14 cents is anticipated.
Revenue: $4.60 billion as opposed to… $4–50 billion is anticipated.
The company made $38 million, or 13 cents per share, in the three months that ended on May 3. This is in contrast to $62 million, or 22 cents per share, during the same period last year. Sales fell from $4.85 billion in the same quarter last year. Adjusted earnings per share were 16 cents when certain one-time expenses, such as restructuring charges, were excluded.
When trading began on Wednesday, the company’s shares were down a little.
Macy’s plans for a turnaround have been complicated by economic uncertainty, including President Donald Trump’s intermittent announcements about tariffs. The legacy retailer with its headquarters in New York City has been working for more than a year to reduce its size while improving its overall health. It is closing its less successful locations and putting money into its more successful divisions, such as the upscale department store Bloomingdale’s and the cosmetics chain Bluemercury. By hiring more employees for stores and expediting online deliveries, it has also attempted to enhance the consumer experience.
A variety of private brands owned by national bands are offered by Macy’s and are only available in-store and online. Spring informed CNBC that the company has decreased the percentage of its private brands originating from China to roughly 27%, down from 32% the previous year and over 50% prior to the Covid pandemic.
During the company’s earnings call, CFO Adrian Mitchell stated that Macy’s has taken steps to lessen the effect of tariffs on the national brands it sells. According to him, the business has delayed some orders, canceled others, and renegotiated orders with vendors.
He stated, “We’ve been able to obtain some vendor discounts, which has been beneficial to us, but we’re also bearing some of that cost.”.
Additionally, Mitchell noted that Macy’s occasionally maintains prices the same in spite of rising expenses in an effort to win over budget-conscious consumers and overtake rivals for market share.
During Wednesday’s earnings call, Spring stated that Macy’s sales were higher in March and April than in February, partly due to better weather. In May, he claimed, that improved performance persisted.
Macy’s intends to shut down roughly 150 underperforming namesake stores nationwide by the beginning of 2027.
The Macy’s namesake brand continued to be its weakest during the first quarter of the fiscal year. Compared to the previous year, comparable sales for Macy’s owned and licensed businesses as well as its online marketplace fell 23.1 percent.
However, trends appeared to improve a little after Macy’s closed the stores it intended to close. Comparable sales of its forward business, which includes its online marketplace and owned and licensed businesses, fell by 1.9 percent.
However, comparable sales at Bloomingdale’s, which includes its owned, licensed, and marketplace businesses, increased 30.8 percent year over year. Bluemercury saw a 12.5 percent increase in comparable sales year over year.
Macy’s has made investments in 50 stores, known as the “First 50,” with improved staffing, slicker displays, and a different product mix in an effort to revive its namesake stores. It has extended that initiative to 75 more stores, increasing the number of places receiving more attention to 125. That amounts to slightly more than one-third of the 350 namesake stores that Macy’s intends to maintain.
Compared to the entire Macy’s brand, those 125 locations did better. Comparable sales in those Macy’s-owned and licensed remodeled stores decreased by 0.8 percent from the same period last year.
Spring stated during Macy’s March earnings call that the company’s guidance “assumes a certain level of uncertainty” regarding the economic outlook, prior to Trump’s numerous abrupt tariff actions that confused businesses and investors. Even wealthy Macy’s customers, he claimed, “are just as uncertain, as confused, and as concerned by what’s transpiring.”. “,”.
A new chief financial officer was one of several significant leadership changes that Macy’s announced earlier this spring. Thomas Edwards will take over as Macy’s new CFO on June 22. Prior to this, he was the chief operating officer and chief financial officer of Michael Kors’ parent company, Capri Holdings. Mitchell, who is leaving Macy’s, will be replaced by him.
Macy’s shares are down roughly 29% so far this year as of Tuesday’s close. That is less than the SandP 500’s gains of almost 1% over the same time frame. With Tuesday’s closing price of $12.04 per share, Macy’s stock now has a market value of $3.35 billion.
