Macy's reported a 0.8% increase in comparable-store sales, reversing a multi-year decline and surpassing analysts' expectation of a 0.5% decrease. The stock jumped 19% on the surprise result but remains down year-to-date. The sales reversal followed investments in store modernization, merchandise selection, and customer experience enhancements that encouraged shoppers. Rising tariff-related costs and an uncertain economic backdrop are pressuring margins, prompting Macy's to diversify import sources and pull unprofitable items. Management is taking a "surgical approach" to selective price increases, trimming orders where price changes hurt demand, and is cautious in guidance while monitoring tariff impacts.
Comparable-store sales are considered a good barometer of a retailer's health and, for the last three years, they had been been a reminder that the storied department store chain had a long way to go. Macy's reported an 0.8% increase in comparable sales. Industry analysts, who had expected a 0.5% decrease, were caught off guard by the swing, and the company's shares rocketed 19% higher on Wednesday. They remain negative for the year, however.
Macy's is grappling with an uncertain economic backdrop and higher costs, particularly because of the tariffs, and said Wednesday that even though its customers have proven resilient, they remain choosy about what they are buying, and executives are unsure how tariffs will affect spending for the remainder of the year. The company said in May that it was diversifying the origin of its imports and pulling items when the math doesn't work.
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