Macys cuts profit outlook as tariffs, promotions hit its business

Published: Wednesday, May 28, 2025 at 11:39 am

Macy's Lowers Profit Outlook Amid Economic Headwinds

Macy's, the iconic department store chain, is facing a challenging retail environment, leading the company to cut its profit outlook for the year despite exceeding Wall Street's earnings expectations for the first quarter. The company cited a combination of factors, including higher tariffs, increased promotional activity, and a "moderation" in consumer spending as the primary drivers behind the revised forecast.

While Macy's maintained its full-year sales guidance, projecting between $21 billion and $21.4 billion, the adjusted earnings per share (EPS) forecast was significantly lowered. The company now anticipates adjusted EPS of $1.60 to $2.00, down from the previous estimate of $2.05 to $2.25.

In the fiscal first quarter, Macy's reported adjusted earnings of 16 cents per share, surpassing the expected 14 cents. Revenue also beat expectations, reaching $4.60 billion compared to the anticipated $4.50 billion. However, net income for the quarter decreased to $38 million, or 13 cents per share, from $62 million, or 22 cents per share, in the year-ago period. Sales also declined year-over-year.

Macy's is navigating economic uncertainty, including the impact of tariffs and shifting consumer behavior. The company is in the midst of a three-year turnaround plan, involving store closures (approximately 150 underperforming stores by early 2027), investments in stronger brands like Bloomingdale's and Bluemercury, and efforts to enhance the customer experience. The Macy's brand itself continues to struggle, with comparable sales declining, while Bloomingdale's and Bluemercury saw positive growth. Macy's is also investing in revamping select stores, with 125 locations receiving increased attention.

Macy's shares have declined approximately 29% year-to-date, underperforming the broader market. The company is scheduled to hold an earnings call where it may provide more details on its tariff and pricing strategies.

BNN's Perspective: Macy's is clearly facing a tough balancing act. While the company is making strategic moves to adapt to the changing retail landscape, the economic headwinds are significant. The success of their turnaround plan hinges on their ability to navigate these challenges, manage costs effectively, and resonate with consumers in a competitive market. The focus on luxury brands and customer experience improvements seems like a smart move, but the overall success will depend on the broader economic climate and Macy's ability to execute its strategy.

Keywords: Macy's, earnings, profit outlook, tariffs, promotions, sales, Bloomingdale's, Bluemercury, retail, department store, turnaround, store closures, comparable sales, adjusted earnings per share, economic uncertainty, consumer spending, Q1 earnings, stock price, Tony Spring, Thomas Edwards

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