Macy’s has lowered its profit forecast for 2025 due to rising tariffs and increased promotional spending, even as it surpassed Wall Street’s expectations for quarterly earnings. The department store chain remains committed to its sales target, but CEO Tony Spring announced that some product prices will rise to counteract the impact of tariffs.
The retailer now expects adjusted earnings per share between $1.60 and $2.00 for fiscal 2025, down from the previous forecast of $2.05 to $2.25. Macy’s confirmed its sales estimate between $21 billion and $21.4 billion, which would be a decline from last year’s $22.29 billion.
Spring told CNBC that tariffs account for 15 to 40 cents per share of the earnings reduction. Approximately 20% of Macy’s merchandise is sourced from China. To mitigate tariff effects, Macy’s will selectively increase prices and discontinue some products.
“It’s a tailored approach — not all prices will rise,” Spring said. “Some items will stay the same price, others may be more expensive, and some will be dropped if the price no longer matches customer value.”
In the first quarter, Macy’s posted adjusted earnings per share of 16 cents, beating the expected 14 cents, with revenue at $4.60 billion, surpassing estimates of $4.50 billion. However, net income dropped to $38 million (13 cents per share) from $62 million (22 cents per share) a year earlier, and sales declined from $4.85 billion.
Economic uncertainty, especially fluctuating tariffs under former President Donald Trump, has complicated Macy’s turnaround strategy. The company is closing about 150 underperforming Macy’s stores and focusing investments on stronger brands such as Bloomingdale’s and Bluemercury. Macy’s is also enhancing customer experience by speeding online deliveries and adding more store staff.
Spring explained that the earnings outlook includes costs from inventory previously imported under 145% tariffs on Chinese goods, now reduced to 30%. It excludes potential new tariffs on the European Union or other trading partners. Macy’s has reduced the proportion of private brand products sourced from China to 27%, down from 32% last year and over 50% pre-pandemic.
Chief Financial Officer Adrian Mitchell noted that Macy’s has worked with vendors to renegotiate or cancel orders to soften tariff impacts and has gained some discounts. The company sometimes keeps prices steady despite cost increases to appeal to value-driven customers and gain market share.
Sales were stronger in March and April, with second-quarter trends continuing positively, according to Spring.
Macy’s flagship stores remain the weakest part of the business, with comparable sales declining 2.1% year over year. Excluding stores slated for closure, the decline narrows to 1.9%. In contrast, Bloomingdale’s comparable sales rose 3.8%, and Bluemercury’s increased by 1.5%.
To improve the core Macy’s stores, the company invested in 125 locations with more staff and better merchandising. These “First 50” plus an additional 75 stores showed smaller sales declines of 0.8%.
Before the recent tariff uncertainties, Spring said the company’s guidance assumed economic unpredictability. Even affluent customers remain cautious amid ongoing global trade tensions.
Macy’s recently announced leadership changes, including appointing Thomas Edwards as the new CFO starting June 22. Edwards comes from Capri Holdings, parent company of Michael Kors, and replaces Mitchell.
Shares of Macy’s have dropped nearly 29% this year, underperforming the S&P 500’s 1% gain. As of Tuesday’s close, Macy’s stock traded at $12.04, with a market value of $3.35 billion.