Macy's Q1 Sales, Profits Decline Amid Trade War, Cautious Spending

Macy's, a leading department store chain, reported a decline in both sales and profits for the first quarter of this year. The company cited cautious consumer spending and the impact of the ongoing U.S. trade war as the primary reasons for this downturn. As a result, Macy's has revised its earnings forecast for 2025, indicating a more conservative outlook for the future.

The retailer, which owns high-end brands such as Bloomingdale’s and the beauty chain Bluemercury, reported that its net sales for the quarter ending May 3 fell to 4.79 billion, slightly above analyst expectations of 4.42 billion. The company's same-store sales, including online channels, decreased by 2%, while Bloomingdale’s and Bluemercury saw growth in their same-store sales.

Macy's reported a net income of 38 million for the quarter, or 13 cents per share, compared to 62 million, or 22 cents per share, in the same period last year. Excluding certain items, the company's earnings per share were 16 cents, exceeding analyst expectations by 1 cent. Despite these challenges, Macy's maintained its full-year sales forecast, expressing confidence in its targets despite rising import tariffs and reduced consumer spending on non-essential items.

The company's adjusted earnings per share forecast for the full year was lowered to between 1.60 and 2.00 dollars, down from the previous range of 2.05 to 2.25 dollars. Macy's also maintained its net sales forecast for the year between 21 billion and 21.4 billion, aligning with analyst expectations of 21.03 billion.

Macy's, along with other retailers, is grappling with the uncertainty caused by tariffs, which has made planning difficult. The company is also facing challenges due to consumers reducing their spending amid similar concerns. Earlier this month, American Eagle Outfitters withdrew its full-year financial outlook, citing macroeconomic uncertainty, and wrote down 75 million in spring-summer inventory. Last week, Ross Stores took similar measures.

Macy's executives have emphasized that the company is focusing on areas within its control, such as improving products and services, despite the changing tariff policies. The company has been working with suppliers to increase product variety, reduce style duplication, and introduce more exclusive items. Macy's is also focusing on enhancing its private label brands.

Macy's plans to close approximately 150 underperforming stores nationwide by early 2027. During the first quarter, the Macy's brand continued to underperform, with same-store sales for the company's own brands, licensed brands, and online marketplaces declining by 2.1%. In contrast, Bloomingdale’s and Bluemercury, both high-end chains, saw sales growth of 3.8% and 1.5%, respectively.

To reverse the decline in its namesake stores, Macy's has invested in 50 stores, known as the "first 50," by increasing staff, improving displays, and adjusting product offerings. This initiative has since been expanded to an additional 75 stores, bringing the total number of focus stores to 125. These 125 stores, which represent slightly more than a third of the 350 namesake stores Macy's plans to retain, have outperformed the overall Macy's brand. The company's renovated comparable stores saw a 0.8% decrease in sales compared to the previous year.

Macy's CEO Tony Spring, who took over in early 2024, has focused on closing underperforming Macy's stores while investing in the 125 namesake stores with the highest growth potential. The company is increasing staff and renovating product displays in these stores, among other initiatives.

Over the past decade, the landscape of U.S. department stores has shifted significantly as consumers increasingly turn to online shopping, and luxury brands sell directly to consumers. Last year, Nordstrom announced plans to go private to reshape its image away from public market scrutiny, while Saks Fifth Avenue, which acquired the Neiman Marcus Group, faced challenges due to supplier payment issues.