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Macy’s flagship store in Herald Square in New York City.
Macy’s, Costco and other big chains say shoppers are backing away from their stores and changing what they buy. That could be a red flag for the US economy.
(M) It cut its annual profit and sales forecasts on Thursday after consumer demand fell in March.
“We planned for the year assuming the economic health of consumers would be challenged, but beginning in late March, demand trends weakened further in our favorite categories,” Macy’s CEO Jeff Gennette said in a statement.
Same-store sales at Macy’s fell 8.7% last quarter, while upscale department store Bloomingdale’s fell 3.9%.
Macy’s shares fell about 6% during pre-market trading on Thursday.
The company was the latest retailer to address changes in customer demand.
(cost) Some customers are switching from expensive steaks and beef to cheaper meats such as pork and chicken, finance chief Richard Gelandy said last week. It’s a trend common in previous recessions, he said.
Macy’s and Costco attract middle- and upper-income shoppers, and their results show resilience among those demographics.
These shoppers have bought most of the clothes, electronics, furniture and other items they wanted during the pandemic over the past three years. Now, many people are now spending discretionary income on trips and other services they couldn’t find during the pandemic. Some airlines and hotels keep check-in records.
That change affects retailers.
“Macy’s significant revenue guidance cut underscores the challenges facing retailers as consumers shift toward services in a softening spending environment and budgets,” said David Silverman, senior director of ratings at Fitch.
Low-income shoppers have less money to spend on discretionary purchases and slow down.
(DG) Its core low-income customers pass on discretionary products such as household goods and clothing. The company downgraded its outlook on weak customer demand, and its stock fell 10% in pre-market trading.
“The macroeconomic environment is more challenging than that [company] As expected,” Dollar General said in a statement. It “has a significant impact on consumer spending levels and behaviors.”