10:45 AM EDT, 05/28/2025 (MT Newswires) -- Macy's (M) reported better-than-expected fiscal first-quarter results, but the department store operator lowered its full-year earnings outlook, citing the impact of tariffs, moderating discretionary spending and increased promotional activity.

The company now anticipates adjusted earnings to come in between $1.60 and $2 a share for fiscal 2025, down from its previous projections of $2.05 to $2.25. The current consensus on FactSet is for non-GAAP EPS of $1.91.

Macy's reiterated its guidance for sales of $21 billion to $21.4 billion for the ongoing fiscal year, while six FactSet-polled analysts are currently estimating $21.03 billion. It continues to expect comparable owned-plus-licensed-plus-marketplace sales to be down 0.5% to 2% versus fiscal 2024.

The company's outlook provides it with "flexibility" to navigate an uncertain promotional environment and competitive landscape, with consumers expected to "become more choiceful as the year progresses," Chief Financial Officer Adrian Mitchell said during an earnings call, according to a FactSet transcript.

"Guidance also assumes that our current tariffs remain in place and that we're able to mitigate a meaningful portion, although not all of the increased costs," according to Mitchell. "It does not incorporate the potential for higher (European Union) or other country tariffs."

President Donald Trump recently extended his 50% tariff deadline for the European Union to July 9, following a request by European Commission President Ursula von der Leyen. Earlier in May, the US and China agreed to suspend most levies on each other's goods for 90 days, while Washington reached a trade agreement with the UK.

The department store operator is "confident" it can continue to diversify countries of origin for its private and national brands, Chief Executive Tony Spring said on the call. In light of the recent tariff announcements, the company renegotiated orders with suppliers and canceled or delayed orders "where the value proposition is just not where it needs to be," Spring added.

"As of today, we have a good handle on the tariff-related costs, but we're cognizant that the environment is fluid," Spring told analysts. "The impact on demand is less clear."

For the three-month period ended May 3, the company's adjusted EPS declined to $0.16 from $0.27 the year before, but topped the Street's view for $0.15. Sales decreased to $4.6 billion from $4.85 billion, but came in above the average analyst estimate of $4.42 billion.

Comparable sales moved down 2% on an owned basis. By brand, Macy's comparable sales dropped 2.9% on an owned basis while Bloomingdale's gained 3%. Bluemercury comparable sales inclined 1.5%.

"We continued to execute against our Bold New Chapter strategy during the quarter, scaling key initiatives that improved our customer experience and contributed to stronger than expected performance across all three of our nameplates," Spring said in the earnings release.

For the second quarter, Macy's expects adjusted EPS to be in a range of $0.15 to $0.20 and sales to come in between $4.65 billion and $4.75 billion, Mitchell said on the call. The Street is looking for non-GAAP EPS of $0.32 and sales of $4.68 billion. Comparable sales are set to be down 1.5% to up 0.5%, Mitchell added.

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