MW Macy's isn't 'broadly increasing price' amid tariffs and will eat some costs

By James Rogers

Macy's stock jumps as quarterly earnings beat expectations, while retailer maintains full-year sales outlook but cuts profit view

Macy's Inc.'s stock rallied in early Wednesday trading after the department-store chain's first-quarter earnings and revenue beat Wall Street's expectations, snapping a three-quarter streak of misses.

Macy's (M) also kept its full-year revenue outlook intact but cut its earnings outlook, citing the impact of tariffs. The company said it will be careful with price hikes so as not to hurt sales and suggested it will absorb some of the costs when deemed necessary.

Macy's adjusted first-quarter profit of 16 cents a share beat the FactSet consensus estimate of 15 cents a share. Net income was $38 million, or 13 cents a share, down from $62 million, or 22 cents a share, in the prior year's quarter.

The company's results come at a time when the retail sector is wrestling with the impact of the Trump administration's sweeping tariffs. Last week, Target Corp. (TGT) cut its full-year profit outlook, citing uncertainty about the potential impact of tariffs as a factor. Earlier this month, however, Walmart Inc. $(WMT)$ maintained its full-year outlook.

"I think it's important to understand that we are not just broadly increasing price," Macy's Chief Financial Officer Adrian Mitchell said during a conference call to discuss the results. "We're being incredibly surgical about the situation with tariffs."

Given current tariff rates, Macy's said it has been reducing exposure to China, renegotiating orders with vendors and canceling certain orders.

"We've been able to gain some vendor discounts, which has been helpful to us, but we're absorbing some of that price as well," Mitchell said. "So we're making selective price increase in selective brands, selective categories, because we believe the value equation for the customer is still very relevant."

Roughly 20% of Macy's product originated in China at the end of the last fiscal year, according to Macy's Chief Executive Tony Spring.

Macy's net sales were $4.6 billion, down from $4.9 billion in the same period last year but above the FactSet consensus estimate of $4.4 billion.

Comparable-store sales were down 2%, beating the FactSet consensus estimate of a 3.9% decline. Adjusted comparable-store sales were down 1.2%, which the company said was boosted by better-than-expected performance of its nameplate retail brands Macy's, Bloomingdale's and Bluemercury.

The company, which is in the midst of a turnaround effort, said that its revamped Reimagine 125 stores outperformed the remainder of Macy's fleet.

Macy's reaffirmed its prior full-year revenue guidance of $21 billion to $21.4 billion but lowered its adjusted earnings-per-share outlook to between $1.60 and $2 a share, from between $2.05 and $2.25 a share.

The company cited several factors for its revised guidance, including initial and current tariffs, some moderation in consumer discretionary spending and a heightened competitive promotional landscape.

Macy's added that some of the hit to profitability will come from absorbing some of the tariff impact and from investing in gaining market share.

The company's stock is down 28.9% in 2025, compared with the S&P 500 index's SPX gain of 0.7%.

-James Rogers

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May 28, 2025 09:19 ET (13:19 GMT)

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