In the latest financial quarter, Macy’s navigated through shifting consumer habits and economic uncertainties, pivoting to a profit despite a slight dip in sales as shoppers exercise caution in their spending.
The retailer’s profitability for the fourth quarter surpassed Wall Street’s projections, although sales didn’t quite meet expectations, casting some doubts over the forecast for 2025 amidst concerns about U.S. consumer behavior and new trade tariffs. As a consequence, Macy’s shares witnessed a 1% drop during Thursday’s morning trading session.
Macy’s is not alone in adjusting its outlook; other retail giants like Walmart, Target, Best Buy, and Abercrombie & Fitch are also treading carefully with their 2025 predictions. The latest tariffs imposed by President Donald Trump on key trading nations, including Mexico, Canada, and China, have precipitated retaliatory measures, unsettling financial markets and triggering inflationary fears.
The United States has implemented a 25% tariff on imports from Mexico and Canada, though the latter’s energy sector was taxed at a reduced rate of 10%. Additionally, tariffs on Chinese goods were increased to 20%. This volatile trade environment, marked by President Trump’s shifting policy stance—evidenced by a temporary tariff exemption for U.S. automakers on Mexican and Canadian imports—poses planning challenges for businesses and consumers alike.
Macy’s leadership acknowledges this uncertainty and is committing to strategies within their control, concentrating on enhancing merchandise and service offerings. During an earnings call, company executives highlighted their concerted efforts with suppliers to diversify their products, streamline styles, and introduce exclusive lines. Improving store-label brands also remains a priority.
CEO Tony Spring emphasized Macy’s aspiration to serve as a consumer refuge amid political turmoil, acknowledging that immediate economic relief is unlikely. He urged his team to focus on controllable elements to navigate these waters effectively.
The retail landscape presents challenges in the face of cautious consumer expenditure, yet Macy’s sales have shown resilience. The company, encompassing Bloomingdale’s and Bluemercury, reported a net income of $342 million, or $1.21 per share, for the quarter ending February 1. Adjusted earnings per share soared to $1.80, surpassing analysts’ forecast of $1.54, reversing a prior-year loss of $128 million. However, sales decreased by 4.3% to $7.77 billion from $8.12 billion.
Compared to previous quarters, the company’s overall sales saw a slight increase of 0.2% through established stores and digital channels. However, Macys-branded stores experienced a 1.9% decline in comparable sales. The retailer’s endeavor to revamp stores has yielded positive outcomes; a notable boost of 1.2% in sales at the refurbished 50 stores reflects this drive, with expansion plans to upgrade another 75 locations.
In contrast, other Macy’s brands continue to thrive, with Bloomingdale’s enjoying a 6.5% rise in comparable sales and Bluemercury marking its 16th consecutive quarter of growth, recently jumping by 6.2%. As for the outlook, Macy’s anticipates annual earnings ranging from $2.05 to $2.25 per share on net revenues of $21 billion to $21.4 billion, though analysts foresee slightly higher earnings per share of $2.29 on sales amounting to $21.34 billion.
