Macy's, the largest department store in the United States, saw sales improve slightly during the holiday season, but IT and other retailers are warning of a rocky year as prices push prices up and sow shoppers' uncertainty.
Macy's said Thursday that comparable sales in all stores, including Bloomingdale and Blu Marcury, rose 0.2% last quarter, delivering the best results in nearly three years.
Though a small improvement, the results were welcomed as retailers face many challenges, including inflation, reduced margins and consumers narrowed down to strange accounting errors. Macy's is in the middle of a turnaround plan that involves closing low-performance locations. Over 60 of its 150 planned stores have closed so far.
Like other retailers, Macy's gave him a careful outlook this year. Some expect to reduce revenues due to store closures and by equal declines by 2%. The company's shares, which fell roughly 20% this year, were monitored during early trading on Thursday.
Neil Saunders, managing director of retail consulting firm GlobalData, said this year will be “cranking” for Macy's, but he said “now it's at least heading in the right direction.”
That plan could be derailed by a series of tariffs recently imposed by President Trump on imports from Canada, Mexico and China.
Macy's CEO Tony Spring on Thursday called on investors that the quarter would not be effective from tariffs as the company's inventory is in “good condition.”
“Looking at the rest of the year, we're trying to take a case-by-case base and respond in real time,” he said.
Target noted on Tuesday that tariffs are a factor that could encourage customers to keep their spending down. Corie Barry, CEO of Best Buy, said the price rise for American consumers was “highly likely” as vendors expected “to hand over some tariff costs to retailers.”
Some retailers noted that they were already working to reduce the likelihood of exposure to tariffs and reduce the potential impact.
Warby Parker's chief financial officer Steve Miller said last week that the company has diversified its suppliers over the past five years to reduce tariff exposure, with China accounting for 20% of product costs.
“There are multiple levers to manage a dynamic customs environment,” he said.
TJ Maxx and Marshalls owner TJX said last week that they expect to expect a “small negative impact” from the tariffs in the first half of the year. “We have seen tariffs before, but we are confident that future shopping will allow us to get through the current Chinese tariff environment,” said John Klinger, retailer's finance chief.
Other brands emphasize their ability to adapt, while acknowledging the uncertainty created by Trump's tariffs, which can undermine business activities.
Skechers Chief Financial Officer John M. Vandemore joked with investors before asking their questions on Tuesday, “When I left my hotel room and got off, I had to check and make sure there were no new Talis.” Still, he noted that footwear companies have a “pretty solid path” to absorb costs.
David Swartz, senior equity analyst at Morningstar, said retailers are concerned about tariffs, but it is not necessarily a new threat as some of China's tariffs date back to Trump's first term.
If investors think that the latest tariffs are the beginning of a long-term trade war, “we'll see stocks squashed here and there,” he said. Ultimately, he added that Trump “is very angry with him to actually cause a recession” and “it makes no sense.”