Macy’s CEO Jeff Gennette says an increase in tariffs to 25% on $300 billion in Chinese goods that’s still being considered by the White House, which would impact apparel and footwear, would likely trickle down and hit consumers.
“When you do the math, it’s hard to find a path through that wouldn’t impact customers,” he said. “It will affect a lot of apparel and accessories categories,” for both Macy’s in-house brands and national labels, Gennette added. It would be hard for Macy’s to get to a place “where you don’t have a customer impact,” he reiterated.
He made the comments after Macy’s reported first-quarter earnings that topped analysts’ expectations. But sales fell from a year ago, as Macy’s is still struggling — like many apparel-focused and mall-based retailers — to find ways to draw shoppers into stores, when they could just buy from Amazon.
Gennette went on to explain that the latest tariff hike, to 25% from 10%, on $200 billion worth of Chinese goods put into effect last Friday will hurt its furniture business, albeit not drastically.
“We have strategies to mitigate [the impact on shoppers],” he said. “We think those strategies will limit customer concern.”
Macy’s on Wednesday reaffirmed its profit outlook for 2019. But another round of tariffs could change that.
“This potential fourth tranche of tariffs was not contemplated when we provided the annual guidance,” Gennette told analysts during a conference call.
Macy’s shares, which initially surged 7% in premarket trading Wednesday, were last up about 1.5%.