Macy's Q2 Profit Drops 42% Amid Tariff Pressures, Beats Expectations

Macy's, the prominent retailer based in New York, reported a decline in both profit and sales for the second quarter of 2025. The company is grappling with dual pressures: cautious consumer spending and rising costs due to the tariff policies implemented by Donald Trump. Despite these challenges, Macy's exceeded Wall Street expectations and raised its full-year performance outlook. The company also reported its best same-store sales performance in three years, highlighting its efforts in improving customer service and optimizing product categories.

Macy's is navigating an uncertain economic environment, particularly the impact of tariffs. The company expressed caution about the full-year outlook on Wednesday. Macy's operates Bloomingdale’s department stores and the beauty retail chain Bluemercury. In May, the company announced initiatives to diversify the sourcing of imported goods, halting purchases if certain items become unfeasible due to cost considerations.

According to Macy's disclosure, approximately 20% of its merchandise was sourced from China at the end of the last fiscal year. For its private-label products, the proportion sourced from China decreased to 27% from 32% the previous year. For the quarter ending August 2, 2025, Macy's reported a net profit of 87 million dollars, or 31 cents per share, compared to 150 million dollars, or 53 cents per share, in the same period last year. Adjusted earnings per share for the quarter were 41 cents, significantly higher than the average analyst estimate of 19 cents.

Revenue for the quarter decreased to 49.9 billion dollars from 50.9 billion dollars in the same period last year. Analysts had expected revenue to be 47 billion dollars for the quarter. Including authorized businesses, Macy's same-store sales increased by 1.9% year-over-year. The company has invested heavily in modernizing its physical stores, with the first 125 renovated stores showing a 1.4% increase in same-store sales, outperforming the average increase of 1.2% across all Macy's stores.

For the full year, Macy's raised its earnings per share guidance from 1.60 dollars to 2.00 dollars, to 1.70 dollars to 2.05 dollars. The company also increased its full-year sales forecast from 210 billion dollars to 214 billion dollars, to 211.5 billion dollars to 214.5 billion dollars. Wall Street had previously expected Macy's full-year earnings per share to be 1.79 dollars and revenue to be 211.8 billion dollars.