Macy's leans on pricier labels to offset consumer spending pressure
Says annual forecasts include tariff impacts of 40 to 60 basis points on annual gross margin
Co beats estimates for second quarter sales and profit
Macy's raised its annual sales and profit forecasts on Wednesday, as the retailer's turnaround strategy boosts demand across its Bloomingdale's and Bluemercury chains, sending its shares up about 21%.
Shedding some underperforming banners and leaning into its pricier labels, which serve higher-income shoppers, helped Macy's offset the hit from pressured consumer spending amid macroeconomic uncertainty, triggered by the Trump administration's volatile tariff policy.
The retailer is benefiting from the turnaround plan that CEO Tony Spring introduced last year February, which included closing 150 Macy's stores by 2026, reinvesting in high-potential locations and improving product offerings and loyalty programs.
Macy's is confident about its recovery, even as holiday spending in the U.S. is expected to see its steepest drop since the pandemic as shoppers — particularly Gen Z — pull back amid economic uncertainty, according to a PwC survey.
The company now sees annual adjusted profit per share between $1.70 and $2.05, compared with its prior target of $1.60 to $2.00.
It also forecast annual net sales to be between $21.15 billion and $21.45 billion, up from $21 billion to $21.4 billion.
The company said its full-year outlook accounts for a 40 to 60 basis point tariff impact to gross margin, compared to its previous forecast of 20 to 40 basis points, and the consumer being more "choiceful" in the second half of 2025.
EMarker analyst Suzy Davidkhanian said Macy's raising its forecasts was a "bold move" as "an overcrowded retail landscape and tighter budgets intensify competition."
Macy's said in May it would increase prices selectively to soften the tariff hit from its reliance on manufacturing in China.
The company reported $4.81 billion in net sales for the second quarter ended August 2, above analysts' average estimate of $4.76 billion, according to data compiled by LSEG.
Its adjusted profit of 41 cents per share also beat analysts' estimates of 18 cents.