Jamie Spencer
Macy’s projected lower-than-expected annual sales and profit on Thursday, highlighting ongoing struggles for U.S. retailers facing reduced consumer spending and new trade restrictions. Shares of the company fell 3% in early trading as investors reacted to the lackluster outlook.
Tariffs Add Pressure to Macy’s Performance
The department-store giant, which sources a significant portion of its private-label merchandise from China, is expected to feel the impact of President Donald Trump’s newly imposed tariffs. These additional trade costs could further strain household budgets already tightened by inflation.
Macy’s forecasts 2025 net sales between $21 billion and $21.4 billion, missing the average analyst estimate of $21.81 billion, according to LSEG data. The company also expects annual adjusted earnings per share (EPS) between $2.05 and $2.25, below the consensus estimate of $2.31.
Turnaround Plan Faces Skepticism
“The outlook is not inspiring. This company is still struggling, and you can’t just blame it on the tariffs or inflation,” said Morningstar analyst David Swartz.
CEO Tony Spring, who took over a year ago, has launched an ambitious plan to revive Macy’s by closing 150 underperforming stores through 2026 while reinvesting in high-potential locations. However, analysts remain skeptical about the effectiveness of these efforts.
Macy’s flagship banner saw comparable sales drop 0.9% on an owned-plus-licensed basis in the fourth quarter. In contrast, its luxury divisions, Bloomingdale’s and Bluemercury, reported owned-basis comparable sales increases of 4.8% and 6.2%, respectively.
Despite these positive trends in its luxury segment, Swartz noted that there is little evidence that the overall turnaround strategy is “really working.”
Mixed Earnings Results
While Macy’s reported better-than-expected fourth-quarter earnings, concerns over its long-term growth persist. Adjusted EPS came in at $1.80, surpassing analysts’ expectations of $1.53 per share.
The company’s quarterly revenue fell 4.3% year-over-year to $7.77 billion, slightly missing the $7.87 billion analyst forecast. However, Macy’s announced it is resuming share buybacks under its remaining $1.4-billion repurchase authorization, a move that could provide some support to its stock price.
Uncertain Future for Macy’s
Macy’s remains under pressure from weak consumer spending, inflation, and trade policy shifts. While its luxury divisions are performing well, skepticism around the broader turnaround strategy lingers. Investors will be watching closely to see if Macy’s can stabilize its business amid these challenges.
