Macy's forecasts 2025 sales, profit below estimates on inflation, tariff uncertainty

By Ananya Mariam Rajesh

(Reuters) - Macy's forecast annual sales and profit below Wall Street expectations on Thursday, reflecting a broader trend among U.S. retailers grappling with reduced consumer spending amid the added pressure of new trade restrictions.

Shares of the company were down 3% in early trading.

The department-store chain, which sources a significant portion of its self-branded goods from China, is also expected to take a hit as President Donald Trump's newly announced tariffs will likely place an additional burden on already tight American household budgets.

"I don't think the consumer is going to feel a sense of relief in the short term," CEO Tony Spring said in a post-earnings call.

Macy's executives said they expect inflation and tariff pressures to persist in the first quarter.

Retailers from Walmart to Target have also issued cautious forecasts for the year on concerns about a potential hike in product prices, which could deter consumers.

Macy's said it expects 2025 net sales between $21 billion and $21.4 billion, compared with the average analyst estimate of $21.81 billion, according to data compiled by LSEG.

The company sees annual adjusted profit per share between $2.05 and $2.25, compared to an estimate of $2.31.

"The outlook is not inspiring. This company is still struggling and you can't just blame it on the tariffs or inflation," said Morningstar analyst David Swartz.

Spring, who took over a year ago, has outlined a plan to turn the struggling department-store chain around by closing 150 Macy's stores through 2026 and reinvesting in high-potential locations.

Macy's nameplate banner saw comparable sales fall 0.9% on an owned-plus-licensed basis in the fourth quarter, while its Bloomingdale's and Bluemercury luxury divisions saw comparable sales on an owned basis rise 4.8% and 6.2%, respectively, in the same period.

There isn't a lot of evidence that the turnaround plan is "really working", Swartz said.

The company's adjusted profit per share of $1.80 topped analysts' estimates of $1.53 per share. Macy's is also resuming share buybacks under its remaining $1.4-billion share repurchase authorization.

Its fourth-quarter sales fell 4.3% to $7.77 billion, compared to analysts' estimate of $7.87 billion.

(Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Pooja Desai)