Macy’s and Target Give Cautious Sales Forecasts, Suggesting Consumer Spending Slowdown

Macy’s and Target have both released cautious sales forecasts for the year, signaling possible softness ahead for the all-important consumer spending, which accounts for two-thirds of U.S. economic output.
“The company updated its annual outlook to reflect a more discriminating consumer and heightened promotional environment relative to its prior expectations,” the department store operator said in the report.
Macy’s cut its projected net sales for 2024, now expecting between $22.1 billion and $22.4 billion, compared to the previous estimate of $22.3 billion to $22.9 billion. This would represent a decline from the $23.09 billion Macy’s reported in fiscal 2023.
The company also lowered its expectations for comparable sales, a key retail metric that measures the performance of existing stores over a 12-month period that excludes the impact of new store openings to provide a like-for-like comparison of sales trends. Macy’s now anticipates a comp sales decrease of 2 percent to 0.5 percent, down from the earlier forecast of a 1 percent decline to a 1.5 percent increase.
The downward revision to the outlook range gives Macy’s “the flexibility to address the ongoing uncertainty in the discretionary consumer market,” the department store operator said in the report.
“We see that there is definitely a softness, a carefulness, a delay in the conversion of purchasing,” Spring told the outlet. “And people on the things that they want, the things that are priced sharply, on the newness, they’re responding, but even the affluent consumer is not spending like they were a year ago.”
Target, another barometer of U.S. retail sales, posted relatively strong quarterly earnings and sales numbers on Aug. 21, although the company struck a mostly cautious note in its outlook, dovetailing with Macy’s view of softness in consumer spending.
The discount retailer also reported a return to growth in comp sales in the second quarter, which rose by 2 percent from the year-ago period, after declining in the first quarter.
Target also said that discretionary sales “continued to improve meaningfully,” a positive development from the prior quarter, in which the company’s sales decline was driven by a drop in discretionary items as customers focused their spending on essentials.
However, the company struck a cautious note in its full-year sales outlook, which Cornell described as “measured.”
Macy’s and Target’s caution on their respective sales outlooks dovetail with that of Home Depot, a consumer spending bellwether.