Macy’s reduced its full-year profit forecast for fiscal 2025, despite surpassing Wall Street’s expectations for first-quarter earnings. The company cited higher tariffs, increased promotional activity, and softer discretionary spending as reasons for the revised outlook. While earnings per share are now expected to fall between $1.60 and $2.00, down from an earlier projection of $2.05 to $2.25, Macy’s maintained its sales forecast of $21 billion to $21.4 billion for the year.
Targeted Pricing, Tariff Impact, and Stronger Earnings Spark Investor Confidence Despite Declines
CEO Tony Spring attributed 15 to 40 cents of the guidance cut to the effects of tariffs, noting that around 20% of Macy’s merchandise comes from China. In response, Macy’s will selectively raise prices and discontinue certain products that no longer offer sufficient consumer value. Spring emphasized a targeted pricing strategy rather than a blanket approach, ensuring some items remain at previous price points to retain customer loyalty and manage perceptions of value.
Macy’s Cuts Profit Outlook Amid Tariff Strain and Restructuring, But Beats Q1 ExpectationsMacy’s reported adjusted earnings per share of 16 cents, exceeding analyst expectations of 14 cents. Revenue also beat forecasts at $4.60 billion, although both net income and total sales were down from the prior year. The company posted a net income of $38 million compared to $62 million a year earlier. Despite these declines, the stock rose more than 1% midday on the day of the earnings release, reflecting some investor confidence in the retailer’s ability to navigate challenges.
Macy’s Restructuring: Store Closures, Strategic Investments, and Leadership Changes Amid Tariff Pressure
The company continues to execute a long-term turnaround strategy that includes closing weaker stores and investing in stronger assets like Bloomingdale’s and Bluemercury. The volatile tariff environment, spurred by fluctuating trade policies under President Trump, has added complexity to Macy’s plans. The retailer has tried to shield itself by shifting production away from China and renegotiating vendor contracts to absorb tariff-related cost increases.
Macy’s is closing about 150 underperforming namesake stores by early 2027. At the same time, it is investing in 125 higher-performing stores, labeled the “First 50” and subsequent additions, by enhancing staffing and merchandising strategies. These improved locations have outperformed the broader Macy’s brand, with comparable sales down just 0.8%, versus a 2.1% decline across all Macy’s stores and its online marketplace.
Amid the broader restructuring, Macy’s announced that Thomas Edwards will become the new Chief Financial Officer on June 22, replacing Adrian Mitchell. Edwards joins from Capri Holdings, bringing experience from overseeing brands like Michael Kors. Despite strategic moves and leadership changes, Macy’s stock has dropped roughly 29% year-to-date, significantly underperforming the S&P 500, which is up around 1% over the same period.
