Macy's Shoppers Are Buying Pricey Items, but the Retailer Doesn't Expect That To Last
Macy's customers have been buying fine jewelry, mattresses, and other "big-ticket" home-furnishing items, but the retailer is unsure how much of this shift is due to consumers wanting to get ahead of tariff-fueled price increases.
Consumer sentiment has been relatively weak, but Macy's and Wells Fargo executives said they have yet to notice a significant shift in customer behavior.
Nonetheless, both Macy's and Wells Fargo are planning for softer consumer spending in the remainder of the year.Shoppers are snapping up bling and bedding again, Macy's executives (M) say.
Big-ticket items, including mattresses and fine jewelry, have been selling well, Macy's CEO Tony Spring said during a first-quarter earnings call Wednesday. Americans aren't spending dramatically less despite economic sentiment deteriorating in recent months, he said, echoing other executives and economists. Still, the company behind Macy's, Bloomingdale's, and Bluemercury is bracing for a behavioral shift over the rest of the year.
Watches, jewelry, mattresses, sheets, and other 'big-ticket' home-furnishing sales were relatively strong in the latest quarter, Spring said, adding that it was unclear how much of the demand was fueled by the fear that prices will rise under tariffs.
'It's hard to say what part is pull forward,' Spring said, describing forces fueling shoppers' recent buying amid threats of tariffs, according to a transcript made available by AlphaSense. 'Maybe that's a part of some of the growth we've seen in fine jewelry, for instance, maybe some of the big-ticket areas."
Demand continues to outstrip readings of weakening consumer sentiment, Spring said. That disconnect has been highlighted by a number of executives, including Wells Fargo (WFC) CEO Charlie Scharf. Consumer sentiment improved in May but previously fell for five months in a row, according to the Conference Board's Consumer Confidence Index.
'We do see less spend on travel, but you see more spend in other categories,' Scharf said at a conference Wednesday. 'And the overall level of debit and credit card spend has been roughly the same.'This consistency in spending 'says consumers haven't changed behavior dramatically at this point,' Scharf continued, adding that Wells Fargo is planning for 'a slight worsening' in consumer spending.
Macy's executives also said they expect that sales will soften and retailers will ramp up promotions to compete for customers over the course of the year.
The retailer expects comparable sales to be down 0.5% to 2% for the full fiscal year, when looking at digital sales and Macy's locations receiving investment that are not being considered for closure, according to its earnings presentation. Macy's reduced its anticipated earnings per share for the year, now forecasting adjusted results in the range of $1.60 to $2, rather than the $2.05 to $2.25 seen in early March.
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