Macy's said it was taking a "prudent approach" to its outlook, as it forecast a fall in annual revenue and profit, citing macroeconomic and geopolitical risks that could affect consumer spending.
Shares of the company were up about 6% in early trading after the department store said it expected a comparatively smaller impact from tariffs in the second half of the year and beat quarterly profit estimates, helped by strong growth at its high-margin Bloomingdale's stores.
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"Guidance assumes the first half of the year will have a larger tariff impact than the second half, with the first quarter having the most meaningful impact," the company said in a statement.
The outlook largely reflects rates before recent (tariff) changes, as prior tariffs are incorporated into existing inventory costs, CFO Tom Edwards said on a post earnings call, signaling a margin hit in the first half of the year.
Washington has moved to a uniform 10% tariff following a Supreme Court ruling that struck down broader U.S. levies, but the company, which relies on manufacturing in China, heavily exposed to import duties.
Macy's expects an adjusted profit of $1.90 to $2.10 per share, compared with $2.15 last year and estimates of $2.17, while seeing a 20 to 30 basis point tariff hit to gross margin.
It also forecast annual net sales between $21.4 billion and $21.7 billion, down from $21.8 billion in 2025. Analysts were expecting $21.42 billion.
GREEN SHOOTS FROM TURNAROUND
Under CEO Tony Spring, Macy's has focused on higher-end labels, expanding full-price sales, reinvesting in high-potential locations and closing underperforming stores, while improving product offerings and loyalty programs.
Macy's customers skew more toward the middle-and upper-income tiers, where performance remains stronger, Spring said on the call, but warned that macroeconomic and geopolitical factors could influence discretionary spending.
Sales at the Macy's brand fell 3.2% in the quarter, including store closures, though on a comparable basis, sales rose 0.4%, compared with a 1.1% decline a year earlier.
Excluding items, Macy's earned $1.67 per share, beating estimates of $1.53, according to data compiled by LSEG.
Analysts at Telsey Advisory Group warned that macro pressure, weak traffic, tariff uncertainty and a competitive, highly promotional retail environment could weigh on near-term results.
Source Name : Economic Times