What: Macy's forecasts lower-than-expected annual sales of USD 21-21.4 billion amid store closures and consumer spending pressures, while its luxury divisions show resilience.

Why it is important: The company's cautious outlook, despite its aggressive transformation strategy, signals the complex challenges retailers face in adapting to post-pandemic consumer behaviour while managing inflationary pressures and trade uncertainties.

Macy's has issued a conservative forecast for the current fiscal year, projecting net sales between USD 21 billion and USD 21.4 billion, falling short of analysts' expectations. This outlook incorporates the impact of closing more than 60 stores last year and anticipates a potential decline of up to 2% in comparable sales from e-commerce and existing stores. CEO Tony Spring acknowledges the challenging consumer environment, citing ongoing pressures from food prices, housing costs, and persistent inflation affecting shopping behaviours.

Despite these headwinds, the company's luxury chains, Bloomingdale's and Bluemercury, continue to show positive performance. This mixed picture emerges as Macy's joins other major retailers, including Foot Locker, Abercrombie & Fitch, and Walmart, in warning about future weakness despite reporting solid fourth-quarter results. The situation is further complicated by concerns about tariffs from major trading partners and their potential impact on consumer prices, reflecting broader challenges facing the retail sector amid declining consumer confidence and global trade tensions.

IADS Notes: The latest forecast from Macy's aligns with a challenging transformation  journey documented throughout the past year. As reported in February 2024, CEO Tony Spring's "Bold New Chapter" plan acknowledged the company's 15% revenue decline over a decade, leading to aggressive store  closure plans. By December 2024, this strategy accelerated with the announcement of 65 store closures by January 2025, though bright spots  emerged in contemporary apparel and beauty segments. The holiday season performance reported in January 2025 proved particularly telling, with sales reaching only the lower end of rojections, despite success in the  First 50 pilot locations. This context helps explain March 2025's modest 0.2% comparable sales increase and cautious outlook, as the company grapples not only with its internal transformation but also with  broader market challenges including tariff impacts and consumer spending constraints. The current forecast of $21-21.4 billion in net sales for fiscal 2025 reflects both the company's strategic downsizing and the persistent headwinds facing traditional department stores.

Macy’s joins retailers with good results, Dour Outlook