Macy’s Inc. reported a decline in first-quarter sales and profit on Wednesday, but still managed to surpass Wall Street expectations. The department store chain, however, revised its full-year profit forecast downward, citing more cautious consumer behaviour and the rising cost impact from US trade tariffs.Sales for the three months ended May 3 dropped to $4.79 billion from $5 billion a year ago, beating analysts’ expectations of $4.42 billion, according to FactSet. Comparable sales, which include online and store performance, fell 2%. Macy’s noted comparable sales growth at its higher-end Bloomingdale’s and cosmetics chain Bluemercury, AP reported.Despite the overall decline, Macy’s CEO Tony Spring said the company is carefully managing its pricing strategy amid the evolving tariff landscape. “I think it’s important to understand that we are not just broadly increasing price,” Spring said during a conference call. “We’re being incredibly surgical about the situation with tariffs.”Spring added that Macy’s is diversifying its supply chain and adjusting orders where necessary. “With the recent announcement of these tariffs, we’ve renegotiated orders with suppliers. We’ve canceled or delayed orders where the value proposition is just not where it needs to be,” he said.The retailer disclosed that about 20% of its products came from China at the end of its last fiscal year, with private label brands sourcing 27% from China, down from 32% the year before.Macy’s earned $38 million, or 13 cents per share, in the quarter, compared with $62 million, or 22 cents per share, a year earlier. Excluding one-time items, adjusted earnings came in at 16 cents per share — a penny above analyst estimates.Macy’s maintained its 2025 annual sales guidance between $21 billion and $21.4 billion but lowered its adjusted earnings projection to a range of $1.60 to $2 per share, down from its earlier forecast of $2.05 to $2.25. Analysts had anticipated $1.91 per share in adjusted profit.Shares rose 1% Wednesday following the earnings release.Industry expert Neil Saunders of GlobalData noted Macy’s quarter was relatively solid, especially as the company continues to shutter underperforming stores. “The 2.0% dip in comparable sales is below market growth but is not entirely unexpected,” Saunders wrote. “It is also, barring the robust holiday quarter, a somewhat better performance than Macy’s delivered across most of the last fiscal year.”The company previously announced plans to close 66 stores, most of which occurred during the first quarter.Macy’s joins a growing list of major US retailers navigating rising tariff-related costs and a cautious consumer base. American Eagle Outfitters and Ross Stores recently withdrew their financial outlooks, citing economic uncertainty. Target and Home Depot have also warned of pricing pressures due to tariffs.President Donald Trump’s tariff policies have sparked industry-wide concern. While a recent agreement scaled back some import taxes on Chinese goods to 30% and delayed others, the administration continues to float threats of new levies, including a potential 50% tax on EU imports and a 25% tariff on smartphones unless domestically produced.Despite the pressures, Spring said Macy’s remains committed to balancing competitive pricing and margin stability. “We’re making selective price increase in selective brands, selective categories, because we believe the value equation for the customer is still very relevant,” he said. “So some of the impact on our gross margin this year is going to be around the tariffs, but we’re also investing in getting market share because we really do believe as we get into the back half of the year, that price value dimension is going to be very critical.”
