The department store chain’s first-quarter profit and revenue exceeded Wall Street’s projections, ending a three-quarter run of misses, and Macy’s Inc.’s stock surged in Wednesday trading.
Citing the impact of tariffs, Macy’s (M) also reduced its earnings projection but maintained its full-year revenue outlook. The company indicated that it will absorb part of the costs when judged necessary and stated that it will be cautious when raising prices so as not to negatively impact sales.
The FactSet consensus estimate of 15 cents per share was surpassed by Macy’s adjusted first-quarter earnings of 16 cents per share. The net income decreased from $62 million, or 22 cents per share, in the previous year’s quarter to $38 million, or 13 cents per share.
The retail industry is currently dealing with the effects of the Trump administration’s broad tariffs, which coincides with the company’s performance. Target Corp. (TGT) lowered its full-year profit forecast last week, citing tariff uncertainty as a contributing factor. However, Walmart Inc. (WMT) upheld its full-year outlook earlier this month.
“I think it’s important to understand that we are not just broadly increasing price,” Adrian Mitchell, the chief financial officer at Macy’s, stated on a conference call discussing the findings. “We’re being incredibly surgical about the situation with tariffs.”
Macy’s stated that it has been lowering its exposure to China, renegotiating contracts with vendors, and canceling some orders due to the current tariff rates.
“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 explained. “So we’re making selective price increases in selective brands, selective categories, because we believe the value equation for the customer is still very relevant.”
According to Tony Spring, the CEO of Macy’s, about 20% of the company’s products came from China at the conclusion of the previous fiscal year.
Although Macy’s net sales were below the FactSet consensus forecast of $4.4 billion, they were nonetheless up at $4.6 billion compared to $4.9 billion during the same period previous year.
The FactSet average forecast of a 3.9% fall in comparable-store sales was surpassed by a 2% decline. The business attributed the 1.2% decline in adjusted comparable-store sales to the better-than-expected performance of its nameplate retail brands, Macy’s, Bloomingdale’s, and Bluemercury.
According to the firm, which is now undergoing a turnaround, its redesigned Reimagine 125 stores performed better than the rest of Macy’s fleet.
Macy’s reduced its adjusted earnings-per-share estimate from between $2.05 and $2.25 per share to between $1.60 and $2 per share, while maintaining its previous full-year revenue guidance of $21 billion to $21.4 billion.
The company’s updated outlook was based on a number of factors, including existing and initial tariffs, a more competitive promotional environment, and some slowdown in consumer discretionary spending.
Macy’s noted that investing to increase market share and absorbing some of the tariff impact will be responsible for a portion of the profitability damage.
Wednesday afternoon trading saw a 1.3% increase in the company’s stock price. Following the company’s performance, investors have also been net buyers of Macy’s debt, as the data-solutions provider BondCliQ Inc.’s chart below illustrates.
In 2025, the company’s stock has dropped 27.9%, while the S&P 500 index has gained 0.5%.
