Macy’s reported falling sales in the second quarter as U.S. consumers, squeezed by high inflation, spend less time and money at department stores. The company said overall comparable sales fell 4 percent in the quarter. Macy’s, which also owns Bloomingdale’s and Bluemercury, lowered its annual net sales forecast to $22.1 billion to $22.4 billion, compared with its prior forecast of $22.3 billion to $22.9 billion.
The forecast cut comes ahead of the busy back-to-school and holiday shopping period. “The context that we are operating under is a consumer that’s really oriented on value,” Adrian Mitchell, Macy’s chief financial officer, said on a call with analysts. The results contrast with Walmart and Target, as the big-box retailers raised their annual profit forecasts this quarter thanks to robust demand for lower-priced essentials.
Target’s profits and sales exceeded Wall Street expectations, with sales rising 3% to $25.45 billion.
Macy’s lowers annual sales expectations
Target CEO Brian Cornell noted that customers becoming choosier with their spending poses a challenge for retailers.
“In an environment where consumers continue to make meaningful trade-offs, our results demonstrate the power that comes from the right combination of newness, seasonal relevance, and compelling value,” Cornell said during an earnings call. The Minneapolis-based company reported that comparable sales rose 2% in the second quarter. This increase reversed months of declines, including a 3.7% drop in the first quarter and a 4.4% decline during the company’s final quarter of 2023.
The discrepancy between struggling department stores and thriving budget retailers underscores a consumer trend: Shoppers are “increasingly careful and discerning,” despite cooling inflation, said Quincy Krosby, chief global strategist at LPL Financial. Macy’s is betting on refreshed stores and better merchandise even as shoppers hunt for bargains. The company will give an update on its turnaround efforts with quarterly results this week.
