Macy's Analysts See Tariffs, Promotions Pressuring Outlook Despite Q1 Beat

Macy’s Inc. (NYSE:M) reported its first-quarter results on Wednesday, with sales and earnings topping expectations.

The announcement came amid an exciting earnings season. Here are some key analyst takeaways.

Goldman Sachs On Macy’s

Analyst Brooke Roach maintained a Neutral rating, while lifting the price target from $12 to $13.

Macy’s reported adjusted earnings of 16 cents per share, beating consensus of 15 cents per share, "with the beat largely driven by stronger comp delivery," Roach said in a note. Despite the beat, management lowered their full-year earnings guidance to $1.60-$2.00 per share, from their prior projection of $2.05-$2.25 per share, he added.

"The company's updated outlook accounts for initial and current tariffs, a somewhat weaker discretionary spending backdrop, and a more competitive promotional environment," the analyst wrote. Macy's forecast for net sales remained at $21.0 billion-$21.4 billion, he stated.

Telsey Advisory Group On Macy’s

Analyst Dana Telsey reaffirmed a Market Perform rating, while lowering the price target from $15 to $14.

Telsey said Macy’s achieved its earnings beat due to a less-steep-than-expected decline in sales and gains related to a real estate sale, which mitigated higher-than-expected operating expenses. The company expects tariffs to impact its gross margin by 20-40 basis points (bps) this year, she added.

"The second quarter guide reflects markdowns on early spring product that arrived late in Q4 and in February, clearing up shelf space to offer newness through the summer and enter fall and winter in a good inventory position," the analyst wrote.

For the full year, the company reaffirmed its revenue guidance but reduced its earnings outlook to reflect challenges in the current macro, she further stated.

JPMorgan On Macy’s

Analyst Matthew Boss reiterated a Neutral rating, while cutting the price target from $13 to $12.

Sales momentum accelerated in March and April, due to improvements in product and experience and more favorable weather, Boss said. There was further improvement in May, he added.

Management reduced their full-year earnings guidance, with gross margin expected to decline by 30-70 bps year-on-year, the analyst stated. The lowered gross margin outlook reflects a tariff hit of 20-40 bps and an "intensifying promotional landscape," he further wrote.

M Price Action: Shares of Macy’s were flat at $12.00 at the time of publication on Thursday.

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