Macy’s sees holiday shopping red flags

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Macy’s, the iconic department store chain famous for its Thanksgiving Day Parade and other holiday traditions, is battling a shift in customer behavior during the most critical time of the year for retailers across the country.

During the third quarter of this year, Macy’s, which also owns Bloomingdale's and Bluemercury, saw its net sales decrease by 0.6% year over year, according to its latest earnings report.

At namesake Macy’s, net sales fell by 2.3%. Also, the company reported a net income of $11 million during the quarter, representing a 60% decrease from what it earned during the same time period the year before.

Additionally, recent data from Placer.ai found that foot traffic at Macy’s stores during the third quarter declined by almost 11% year-over-year, reflecting weakening consumer demand.

The change in customer behavior comes after Macy’s rolled out price increases in its stores earlier this year, shortly after President Donald Trump implemented his tariff policy.

It is no secret that consumers nationwide have been more cautious about their spending as tariffs raise concerns about the state of the U.S. economy.

How U.S. consumers are battling tariffs in 2025:

• Approximately 87% of consumers are concerned about the impact of tariffs on their finances or shopping habits, while 63% are worried that tariffs will raise prices of everyday goods.

• Additionally, 82% of consumers plan to adjust their shopping habits in response to tariffs, which include cutting back on nonessential spending, seeking sales or coupons, delaying nonessential or big-ticket purchases, and switching to lower-priced retailers or discount stores.

• Also, 77% are concerned about the possibility of arecessionin 2026. Source: Numerator

“Changes in consumer sentiment are a leading indicator for changes in purchasing behaviors, and if consumers remain this pessimistic about the future of the U.S. economy, we can expect cutbacks in consumption going forward and a potential recession later this year,” said Numerator Chief Economist Leo Feler in a statement in April.

Macy's bets big on new strategy to lure customers

During an earnings call on Dec. 3, Macy’s Chief Operating Officer Thomas Edwards said that the tariff impact this year has been lower than the company previously anticipated due to “proactive mitigation efforts” such as cost negotiations, vendor discounting and price increases in stores.

“As we look to next year, we’re going to continue those same efforts and look to mitigate tariffs and certainly keep an eye out on the ongoing tariff situations to what they will be,” said Edwards.

Macy’s CEO Antony Spring said during the call that despite recent economic uncertainty, the company’s core customer base, which is predominantly made up of middle-to-upper-income shoppers, “remained resilient” during the third quarter.

Related: Marshalls makes bold change to return policy ahead of holidays

However, he did acknowledge that consumers across the retail industry are being more careful about how they spend their money.

“Looking at the evolving retail landscape, consumers are more discerning about how and where they spend their dollars,” said Spring. “They want curated product assortments, consistent service and a seamless omnichannel shopping experience.”

During the quarter, he said the company saw a "softness" in sales in its active categories as "consumers are investing into dresses and career sportswear," as well as its "contemporary collections and denim."

"I just think it’s the ebb and flow of the nature of our business," said Spring. "We are prepared and will stay committed to a strong and healthy active business, but it just happened to be softer for the category."

Spring said that the company’s Bold New Chapter strategy, which involves reimagining the Macy’s nameplate, accelerating and differentiating luxury, and simplifying and modernizing end-to-end operations, is successfully engaging consumers as they change their spending habits.

While the strategy, which was announced last year, involves Macy’s closing 150 underperforming stores through 2026, the company has been focused on elevating its product assortment in its remaining stores by adding more ”newness” and reducing redundancies.

Macy's remains cautious about changing consumer behavior

For the fourth quarter of this year, which encompasses the holiday season, Spring believes that Macy’s is “very well positioned against other department stores for the holidays.”

“We are better than a year ago,” said Spring. “We are well-positioned for the holiday season with about 50% newness in terms of gifting for the holidays, a good balance where the cold weather is helpful to our cold-weather categories, but we’re not reliant on cold weather.”

More Retail:

• Marshalls makes bold change to return policy ahead of holidays

• Walmart quietly shrinks generous offer for holiday shoppers

• BJ’s Wholesale announces free offer for customers amid struggles

However, despite recent progress, the company has only slightly increased its full-year sales expectations.

Macy’s now expects $21.5 billion to $21.6 billion in net sales, up from its previous expectation for between $21.2 billion and $21.5 billion.

During the earnings call, Edwards said that Macy’s updated guidance “continues to assume the consumer is more choiceful” during the fourth quarter this year.

“We are pleased with the start of the fourth quarter,” said Edwards. “With the majority of our sales volume still ahead, our guidance continues to incorporate a more choiceful consumer, assumes that the current tariffs remain in place and provides flexibility to respond to changes in consumer demand and the competitive landscape.”

Macy’s cautious sales outlook for the year comes as many Americans plan to reduce their spending during the holiday season due to economic pressures, according to a recent survey from financial services company Thrivent.

How Americans plan to save money during the 2025 holiday season: 

• Approximately 70% of Americans say inflation is negatively impacting their finances this holiday season.

• Also, 68% believe that tariffs will make the holidays more expensive.

• Seven in 10 Americans plan to reduce their spending during the holidays, with 44% cutting back on dining out, 32% will scale back gifts and 28% will cut travel. Source: Thrivent

“We often think of the holidays as a time full of joyful moments – like gift giving, celebratory gatherings and family travel – and we know those things can also bring financial challenges and stress,” said Thrivent Financial Advisor Sarah Hamlen in a press release. “While there’s still so much to celebrate and be thankful for, we expect the pressure of higher prices and less disposable income to change holiday traditions and spending for many people.”

Related: Lowe’s announces free offer for customers amid struggles

This story was originally published by TheStreet on Dec 6, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.