Macy's stock is tanking because it put too many clothes on sale
Macy’s profit fell 48% during its spring quarter compared with the same period a year ago, the company said in earnings on Wednesday. Macy’s lowered its profit expectations for the remainder of the year.
During the spring, Macy’s said it had a “fashion miss” in its key private-label athletic brand and struggled to sell warm weather gear. International tourism to its stores also slowed down, as the global economy slows, according to the company. That left Macy’s with too many clothes on the shelves, forcing the company to put them on sale to clear out inventory for the fall. Discounts pinched Macy’s quarterly profit.
“We had a slow start to the quarter and finished below our expectations,” Macy’s CEO Jeff Gennette said in prepared comments. “We took markdowns to clear the excess spring inventory.”
Tariffs on goods from China are another concern for Macy’s and other retailers.
Trump said the move was designed in part to avoid any pain for consumers heading into the holiday season.
Macy’s has been working to move its private label product manufacturing out of China in recent years. But consumers will likely see prices go up at Macy’s and other retailers if tariffs are placed on all Chinese goods.
Macy’s still has close to 700 US stores and has searched for new ways to draw customers on its website, mobile app and through buy online, pickup in store. Macy’s said Wednesday that mobile sales are its fastest-growing channel.
The company insisted it’s on the right track and has a plan to draw shoppers and reshape its business.
“Our team has responded quickly to the external environment, course corrected when needed and we remain confident,” Gennette said.