Macy's has today cut its full-year sales and profit forecasts, with the company saying it will need to offer more discounts to get rid off excess inventories of casual and athleisure clothing, even as demand for luxury products holds up.
The company joined other top retailers, including Kohl's and Target, in warning of a hit to profitability in recent weeks.
This comes as soaring prices of everyday goods make Americans wary of spending on apparel and other discretionary items.
Macy's inventories were up 7% at the end of the second quarter, compared with a year earlier, prompting the department store chain to warn of increased markdowns to get back to normal stock levels by the end of the year.
The company said it expects fiscal 2022 adjusted earnings of $4 to $4.20 per share, compared with its previous outlook of $4.53 to $4.95 per share.
However, demand for formal and party-wear from middle and high-income shoppers returning to social events stayed strong, as they still remain relatively insulated from the effects of decades-high inflation.
Comparable sales at Macy's upscale Bloomingdale's department stores rose 5.8% in the second quarter, while they rose 7.6% at its luxury beauty outlet Blue Mercury.
However, comparable sales at Macy's namesake stores fell 2.8% in the reported quarter.
On an adjusted basis, the company earned $1 per share, compared with estimates of $0.85, according to Refinitiv IBES data.
Macy's forecast 2022 net sales of $24.34 billion to $24.58 billion, compared with its previous forecast of $24.46 billion to $24.70 billion.
