Department store and retail giant Macy’s Inc. slashed profit forecasts for the year due to record inflation.
As of June, inflation within the United States hit a 40-year-high, according to the Labor Department. Subsequently, the spending ability of many Americans has been significantly affected, especially those in the lower and middle classes, which comprise the bulk of the Macy’s customer base.
In its report Tuesday morning, Macy’s stated its new anticipated fiscal closing of 2022 had been adjusted to $4.00 to $4.20 per share, down from their original forecasting of $4.53 to $4.95 per share earlier in the year.
Macy’s Inc. had a 7% inventory surplus at the end of Q2. The department store planned more sales events to combat an excess of stock, particularly within casual apparel. Conversely, luxury apparel was not difficult to move; inventory still met demands, which remained the same.
Adrian Mitchell, chief financial officer of Macy’s, stated: “We have seen declining retail traffic and areas of weakening apparel sales over the quarter as the consumer faces higher costs on essential goods, particularly grocery.”
Macy’s competitor Kohl’s also reported a loss, and to help move excess inventory, have increased sales and discounts across departments.
Chief Executive Officer Jeff Gennette commented that Macy’s did “not see a slowdown in spending from shoppers who earn more than $150,000.” While Macy’s has struggled, competitor Bloomingdale’s reported a 5.8% increase in Q2.