Macy’s Is Raising Prices as Tariffs Erode Sales and Profits
Tariffs are forcing Macy's to make some pricing adjustments as it navigates ever-changing customs fees.
Macy’s is increasing prices and discontinuing some items as tariffs are affecting its bottom line. Moving forward, the iconic retailer plans to be very strategic with pricing and will avoid a “one-size-fits-all kind of approach.”
According to leadership, with costs going up due to tariffs, the company is evaluating different tactics to deal with the quickly changing retail business landscape. With current uncertainties, Macy’s hopes it can effectively navigate these changes without negatively impacting its relationships with customers.
“There are going to be items that are the same price as they were a year ago,” CEO Tony Spring told CNBC. “There is going to be, selectively, items that may be more expensive, and there are items that we might not carry because the pricing doesn’t merit the quality or the perceived value by the consumer.”
Macy’s purchases about 20% of its merchandise from China. The Trump administration currently has a 30% tariff on goods imported from the Asian country, which exports much of the apparel the retailer buys. From its most recent earnings report, it appears tariffs have impacted Macy’s profits as well as its outlook for the year.
Is Macy’s Doing Well Financially?
Macy’s reported disappointing fiscal first-quarter earnings. Revenue for the three-month period that ended May 3 was $4.6 billion, a 5.1% drop year-over-year. Net income fell from $62 million a year ago to $38 million.
The chain’s owned and licensed locations, as well as its online retail site, saw a 2.1% decline in comparable sales versus the same period last year. Excluding under-performing stores, which the retailer plans to close within two years, comparable sales didn’t look as bad, declining only 1.9%.
Sales revenue for fiscal 2025 is predicted to fall between $21 billion and $21.4 billion. Comparatively, Macy’s income reached $22.3 billion last year.
The company’s other well-known brand, Bloomingdale’s, did much better in the last quarter. Comparable sales increased 3.8% compared to Q1 2024. Bluemercury, also owned by the retailer, reported a 1.5% rise in sales.
Macy’s is currently in year one of a three-year “Bold New Chapter” turnaround plan. The retailer has been investing heavily in Bloomingdale’s and Bluemercury. Meanwhile, Macy’s is revamping several of its better-performing namesake stores, adding more staff, expanding merchandise selection, and improving in-store advertisements.
