Macy’s discounted spring goods amid cautious spending in 2Q, but results beat Wall Street views

Macy’s heavily discounted spring goods to make room for fresh fall and holiday merchandise amid customers’ cautious spending, but adjusted profits and sales for the second quarter still beat Wall Street expectations.

Macy’s, which also operates upscale Bloomingdale’s as well as Bluemercury beauty stores, reaffirmed on Tuesday its annual sales and profits forecasts, noting uncertainty about the economy in the second half. The company highlighted on an investor conference call that it had already planned for a rise in credit card delinquencies, but noted the increase was faster than anticipated, signaling more financial pressure shoppers in the back half of the year.

Macy’s also joined many other retailers in flagging uncertainty over the end of the student loan moratorium, which had provided one-time college students a little more financial breathing room.

Shares were down more than 9% in morning trading on Tuesday.

“As we plan the remainder of the year and we think about 2024, we remain cautious on the pressures impacting our customer, especially at Macy’s, where roughly 50% of the identified customers have an average household income of $75,000 or under, ” Macy’s CEO Jeff Gennette told analysts during the earnings call on Tuesday.

Gennette noted that over the past several quarters, he has seen Macy’s customers more aggressively pull back on discretionary items and are becoming more intentional in their purchases.

Macy’s is one of the last remaining retailers to report second-quarter results in an earnings season that shows how still high inflation, despite some easing, and higher interest rates, are forcing shoppers to continue to cut back on discretionary items like clothing in order to afford their larger grocery bills.

Target reported its first quarterly sales decline in six years last week,…