Macy's cuts annual profit forecast as tariffs loom over consumer demand
Business
Macy's cuts annual profit forecast as tariffs loom over consumer demand
(Reuters) - Macy's cut its annual profit forecast on Wednesday as the top U.S. department store operator navigates tariff-induced uncertainty and signaled early discounts on its spring collection to better manage its stock.
Department store chains have consistently lost market share to cheaper products from off-price and big-box players and competition will likely intensify this year with inflation expected to jump following the Trump administration's tariffs.
Several firms have withdrawn or lowered their revenue and profit targets for the year, and retailers, in particular, are preparing for a significant impact on their supply chain costs, as well as on demand from the sweeping duties.
"(Higher) pricing is working its way into the system slowly… That's why we have taken a more cautious approach to our outlook for the year," CEO Tony Spring said on a post-earnings call.
Macy's was increasing prices selectively to soften the hit to margins from tariffs, he said.
The company expects 2025 adjusted profit per share to be between $1.60 and $2.00, compared with the between $2.05 and $2.25 forecast earlier.
"Management did not pull F25 guidance as others have done (which is a positive)," analysts at Citi wrote in a note.
Its shares were last up 1% in volatile morning trading. They have lost about 28% of their value this year as of last close.
Macy's beat first-quarter estimates and maintained its annual net sales forecast of $21 billion to $21.4 billion, as Spring's turnaround efforts lifted performance at remodeled banner stores.
His focus on beauty and skincare products seller Bluemercury and high-end Bloomingdale's have also helped ease the hit on the company's namesake label.
"The remodeled Macy's stores are performing better. But this company isn't reporting consistently positive comparable sales so there's still a lot of work to do," said Morningstar analyst David Swartz.
The company flagged a 10 cents to 25 cents per share impact on annual earnings from tariffs, adding that about 20% of its private brand products were sourced from China.
Macy's net sales were $4.6 billion for the three months ended May 3, topping expectations of $4.5 billion, according to data compiled by LSEG, while adjusted profit per share of 16 cents beat estimates by 2 cents.
