Macy’s Surpasses Q1 Expectations While Revising 2025 Profit Forecast

Macy’s Inc. has reported a decline in both sales and profits for the first quarter, yet managed to exceed Wall Street’s expectations. The department store chain has adjusted its full-year profit forecast downward, attributing the change to cautious consumer behavior and the rising costs associated with U.S. trade tariffs. Despite the challenges, Macy’s remains focused on strategic pricing and supply chain adjustments to navigate the evolving retail landscape.

Sales Performance and Financial Results

For the three months ending May 3, Macy’s sales fell to $4.79 billion, down from $5 billion during the same period last year. This figure, however, surpassed analysts’ expectations of $4.42 billion, as reported by FactSet. Comparable sales, which account for both online and in-store performance, decreased by 2%. Notably, Macy’s higher-end Bloomingdale’s and cosmetics chain Bluemercury reported growth in comparable sales, indicating some resilience in specific market segments. The company’s earnings for the quarter were $38 million, or 13 cents per share, a decline from $62 million, or 22 cents per share, a year earlier. Excluding one-time items, adjusted earnings reached 16 cents per share, slightly above analyst estimates.

Strategic Adjustments Amid Tariff Pressures

Macy’s CEO Tony Spring emphasized the company’s careful management of pricing strategies in light of the ongoing tariff situation. During a recent conference call, he stated, “We’re being incredibly surgical about the situation with tariffs.” The retailer is actively diversifying its supply chain and renegotiating orders with suppliers to mitigate the impact of tariffs. Spring noted that approximately 20% of Macy’s products were sourced from China at the end of the last fiscal year, with private label brands sourcing 27% from China, a decrease from 32% the previous year. This strategic shift aims to maintain competitive pricing while addressing rising costs.

Revised Profit Forecast and Market Reactions

Macy’s has maintained its annual sales guidance for 2025, projecting between $21 billion and $21.4 billion. However, the company has lowered its adjusted earnings forecast to a range of $1.60 to $2 per share, down from an earlier estimate of $2.05 to $2.25. Analysts had anticipated adjusted profits of $1.91 per share. Following the earnings announcement, Macy’s shares rose by 1%, reflecting a positive market reaction despite the overall decline in sales and profits. Industry expert Neil Saunders from GlobalData remarked that Macy’s performance was relatively solid, especially considering the company’s ongoing efforts to close underperforming stores.

Industry Context and Future Outlook

Macy’s is not alone in facing challenges; many major U.S. retailers are grappling with rising tariff-related costs and a cautious consumer base. Companies like American Eagle Outfitters and Ross Stores have recently withdrawn their financial outlooks due to economic uncertainty. Target and Home Depot have also warned of pricing pressures stemming from tariffs. President Donald Trump’s tariff policies have raised concerns across the retail sector, with potential new levies looming. Despite these pressures, Spring reaffirmed Macy’s commitment to balancing competitive pricing with margin stability, stating that selective price increases will be implemented in specific categories to maintain customer value. As the retail landscape evolves, Macy’s aims to adapt and capture market share in the latter half of the year.

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