Although Macy’s Inc. has reduced its exposure to products sourced from China, the upscale department store chain stated ahead of the opening bell on May 28 that it will “selectively” raise prices on certain items due to higher tariff-related costs and the currently uncertain economic environment.
Springer said that approximately 20 percent of the company’s products originated in China at the end of fiscal year 2024, down from 32 percent the previous year, and significantly below the pre-pandemic level of around 50 percent. He said the combined tariff impact on Macy’s annual gross margin will be between 20–40 basis points.
“This incorporates inventory previously bought under the 145 percent China tariffs; those bought more recently under shared costs negotiations, vendor discounts, and selectively raising tickets,” he said, noting that Macy’s has little exposure in Mexico and Canada.
“As of today, we have a good handle on the tariff-related costs, but we’re cognizant that the environment is fluid. The impact on demand is less clear.”
Responding to questions from Wall Street analysts about the impact of tariffs on the company’s upscale customer base, Mitchell explained that Macy’s has considerable flexibility in negotiating prices with vendors and absorbing some costs. He noted that the company is taking a cautious approach to raising prices for its upscale clientele, rather than applying increases across all products.
“As a multi-brand and multi-category retailer, we have a lot of optionality if something isn’t priced fairly. We’re going to negotiate fairly and aggressively with our partners as well as with our factories,” Mitchell said, adding, “I think it’s important to understand that we are not just broadly increasing prices, we’re being incredibly surgical about the situation with tariffs.”
Total revenue was $4.6 billion, down by 5.1 percent from $5 billion in the same period last year. Wall Street had expected the company to report first-quarter earnings of $0.16 per share on revenue of $4.42 billion, according to FactSet.
Macy’s same-store sales rose by 3 percent, primarily driven by growth at the company’s Bloomingdale and Bluemercury luxury nameplates. At the namesake Macy’s department stores, however, same-store sales declined by 2.9 percent as the company continues to close underperforming stores and open more of its smaller “Reimagine” store formats.
As noted, Macy’s revised its full-year adjusted profit forecast to between $1.60 and $2.00 per share, which is significantly lower than its previous forecast of $2.05 to $2.25 per share. However, the department store operator stated that its yearly sales outlook, ranging from $21.0 billion to $21.4 billion, remained unchanged.
During the conference call, Springer also shared that the company’s “Bold New Chapter” strategic initiative is beginning to show results across its three flagship brands—Macy’s, Bloomingdale’s, and Bluemercury. In February 2024, Springer unveiled the company’s three-year growth and turnaround plan, just weeks after he was named CEO, following the Macy’s board’s rejection of an unsolicited $6.9 billion takeover offer from activist investors Arkhouse Management and Bridge Capital Management.
Under Springer’s leadership, Macy’s has moved quickly to expand the company’s product assortment, enhance the customer experience, and upgrade the department store chain’s aging store fleet. He also continues to overhaul his executive team with the appointment of Thomas Edwards to the expanded roles as chief operating officer and chief financial officer last month. Edwards, who will assume the new role on June 22, will replace Mitchell, who has served as Macy’s chief financial officer since late 2020.
The company subsequently initiated and completed an independent investigation, stating in December 2024 that there was no indication the erroneous accounting entries affected the company’s cash management activities or vendor payments. The Macy’s employee who engaged in this conduct is no longer with the company, and the investigation identified no involvement from any other staff.
In addition to Mitchell’s resignation, Springer has also restructured the senior leadership team that reports directly to him at the parent company headquarters in New York City. Furthermore, Springer has overseen numerous new hires, promotions, and resignations at Bloomingdale’s, the Bluemercury beauty store chain, and the Macy’s department store chain, which was previously based in Cincinnati, Ohio.
In the past year, Macy’s has also announced the closure of nearly 150 unproductive stores, directing its resources to drive growth through a smaller, more efficient, and profitable store fleet. Springer stated that Macy’s is also planning to expand its Reimagine stores by investing in 350 new locations as part of its strategy to enhance the company’s leadership position in the luxury market.
Springer has also sought to reshape Macy’s private brands, introduce more relevant national products, and eliminate existing store merchandise that has lost its appeal, including luxury apparel, accessories, cosmetics, and home furnishings. His three-year turnaround plan focuses on increasing website traffic and digital sales, modernizing operations through cost-saving initiatives, and integrating emerging technologies such as predictive analytics and AI.
“In this evolving environment, we are controlling what we can control,” Springer told analysts.
