Macy’s recently provided a reduced earnings guidance for fiscal 2025. This shift is mostly the result of increasing tariffs, a more cutthroat promotional landscape, and a modest dip in consumer discretionary spending. The department store chain now expects adjusted earnings per share (EPS) to fall somewhere between $1.60 and $2.00. This is down from the last forecast of $2.05 to $2.25. This significant downward adjustment calls attention to the difficulties the big-box retailer is having as it manages a rapidly changing economic climate.
Even with the increased profit outlook, Macy’s maintained its full-year sales guidance, predicting revenues of $21 billion to $21.4 billion. This new projection is a drop from last year’s total of $22.29 billion. The company’s same-store sales have floundered, with a 1.9% drop in its go-forward business. This count spans the spectrum from owned businesses to licensed entrepreneurs to the digital marketplace.
Macy’s is in the middle of a three-year plan to reconfigure the business as a thinner but more profitable operation. In order to make this happen, the company is focusing their strategy on 125 core markets. These places have been focused on heavily looking to make performance improvements. This year, Macy’s has greatly increased this effort by adding 75 additional stores to the program. Currently, 125 of these locations are projected to do better than the Macy’s brand as a whole.
The company’s eponymous brand has faltered on its home turf, turning in the worst performance of all of fiscal first quarter. Macy’s is taking significant steps to address these challenges. To get back on track they have brought on a new chief financial officer to overhaul finances, replacing Adrian Mitchell who is leaving the company.
In response to the uncertain market conditions, CEO Tony Spring stated that the company “assumes a certain level of uncertainty” regarding future performance. He recognized that these days company executives and consumers alike are feeling disoriented and frightened by the new economy.
“I am just as uncertain and as confused and concerned by what’s transpiring.” – Tony Spring, CEO of Macy’s
Even with the lowered profit outlook, Macy’s stock was up nearly 2% in premarket trading. The stock price increase reflects a measure of positive sentiment from investors even as the company cuts guidance and continues to face pressures with its own strategy.
Macy’s last reported adjusted earnings per share was 16 cents. This figure omits certain one-time charges, such as restructuring expenses. Deepening that commitment to not go below 350 namesake locations, even as the company continues to find its way through these historically choppy economic waters.