Macy's Forecasts Weaker Sales Amid Cautious Outlook

Forecast Highlights

Macy's has issued a weaker forecast for annual revenue and profit, citing cautious consumer spending and macroeconomic headwinds. The department store operator expects 2026 net sales to be between $21.4 billion and $21.7 billion, a slight decrease from 2025.

The company also projected an adjusted annual profit between $1.90 and $2.10 per share, down from $2.15 a year earlier and below analysts' estimates.

Market Context and Strategy

This conservative outlook reflects a broader trend among retailers facing a fragile U.S. consumer environment. In response, CEO Tony Spring is focusing on attracting wealthier shoppers to bolster demand at its higher-end brands, Bloomingdale’s and Bluemercury, which showed sales growth in the fourth quarter.

Meanwhile, the core Macy's brand continues to face pressure from inflation-hit consumers.

Financial Performance and Tariff Impact

For the fourth quarter, Macy's sales fell 1.7% to $7.64 billion but still topped analyst expectations, helped by holiday demand. The company noted that U.S. import tariffs are expected to weigh on margins in the first half of the year, with relief anticipated in the second half.

This is due to Macy's significant reliance on manufacturing in China.

Summary Outlook

While Macy's higher-end segments show resilience, the overall forecast points to a challenging year ahead. The company's performance will depend on its ability to navigate consumer spending shifts and manage margin pressures from tariffs.

FAQ

Q: Why did Macy's lower its annual forecast?
A: The company lowered its forecast due to expectations of tight consumer spending, macroeconomic risks, and geopolitical uncertainties.

Q: How are tariffs impacting Macy's business?
A: Tariffs on imports from China are expected to pressure profit margins in the first half of the year, but the company foresees the impact easing in the latter half.

Source: Investing.com