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Macy’s executives warned on Wednesday that the retailer will raise the prices of select products due to global tariffs.
CEO Tony Spring, who took over last year to lead the company’s turnaround, said during an earnings call on Wednesday that the company is reducing its exposure to China, renegotiating orders with suppliers and canceling or delaying orders “where the value proposition is just not where it needs to be” in order to minimize the impact on the business.
Chief Financial Officer Adrian Mitchell said the company is taking a “surgical” approach to tariffs and implementing selective price increases in specific brands and categories where the company believes the customer value equation remains strong.
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This is the latest woe for Macy’s, which has long been struggling to keep up with rapid industry changes and competition, forcing it to create a new strategic plan last year to return the company to profitability.
A shopper exits at Macy’s on November 24, 2023 in Union Square, San Francisco, California. (Ethan Swope/Getty Images / Getty Images)
“We’re closely monitoring Southeast Asia and Europe, and we’ve had limited sourcing exposure to Canada and Mexico. In this evolving environment, we are controlling what we can control based on actions taken through today and our assumption that current tariffs remain in place,” Spring said.
Still, “some of the impact on our gross margin this year is going to be around the tariffs,” Mitchell said. The company estimated that tariffs will impact Macy’s annual gross margin by about 20 to 40 basis points. This projection includes inventory previously bought under the 145% levy temporarily imposed on China in April.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| M | MACY’S INC. | 11.99 | -0.10 | -0.83% |
The company cut its full-year profit guidance due to tariffs, some moderation in consumer discretionary spending and a heightened competitive promotional landscape.
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The company expects adjusted earnings per share of $1.60 to $2, which is lower than the $2.05 to $2.25 it previously forecast for fiscal 2025. It still expects full-year sales guidance of between $21 billion and $21.4 billion, down from the prior year.
People walk past the large Macy’s billboard on a building in front of the Macy’s Herald Square store on October 8, 2021 in New York City. (Gary Hershorn/Getty Images / Getty Images)
Macy’s is one of a handful of retailers reeling from the ongoing trade war. Last week, Target reported softer-than-expected revenue and cut its guidance for the year as it grapples with tariff uncertainty. The company already warned earlier this year that there would be year-over-year profit pressure in its first quarter relative to the remainder of the year, due in part to tariff uncertainty.
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Meanwhile, Walmart warned of possible price hikes given the magnitude of the tariffs.
The Macy’s company logo is seen at the Macy’s store on Herald Square on January 19, 2024 in New York City. (Michael M. Santiago/Getty Images / Getty Images)
“Even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” Walmart CEO Doug McMillon said.
Shortly after, Trump slammed the company in a post on Truth Social, saying the company should “eat the tariffs.”
