Tariff-driven price increases are entering department stores. This week, Macy’s CEO Tony Spring, which also owns Bloomingdale and Cosmetics Chain Bluemercury, said the tariff-related cost increase will soon affect prices in certain product categories. His comments follow similar warnings from Walmart, Target and Nike that their businesses rely heavily on Chinese manufacturing.
About 20% of Macy’s sources come from Chinese goods. “There are some items that are priced at the same price as they were a year ago. [are] Selectively are items that may be more expensive, and there are items we may not carry because the price is not worth the quality or perceived value of the consumer. Spring told CNBC after reporting quarterly earnings on May 28.
Spring stressed that price increases will be limited to specific brands and categories where customers can still perceive strong value. He also noted that Macy’s actively reduces its exposure to Chinese imports by renegotiating supplier contracts and canceling or delaying orders that no longer meet the company’s value standards.
In the quarter ended May 3, Macy’s reported 5% year-on-year revenue to $4.6 billion, with net income falling to $38 million from $62 million the previous year. The company expects tariffs to slightly erode its gross margins in fiscal 2025.
Earlier this month, Nordstrom, one of Macy’s chief competitors, made a $4 billion sale to Mexican retail group El Puerto Liverpool. The deal, first announced in December 2024, faced delays due to tariff-related uncertainties, but ended up.
“Department stores may continue to see pressure on profit margins and less competitiveness than e-commerce players with more flexible supply chains and increased operational complexity,” said William London, an international business lawyer and California-based Kimura London & White LLP partner. He noted that executives cite tariffs not only highlight increased costs, but also the wider strategic volatility they introduce global procurement.
“Now may be an ideal moment to introduce more U.S.-made alternatives that are not susceptible to tariff fluctuations,” said Liya Getachew, head of Sendero Consulting. “She added that retailers must now strike a careful balance between maintaining customer loyalty and building supply chain resilience.
Retail industry concerns about tariffs. Walmart CEO Douglas McMillon told analysts in early May that despite efforts to keep shoppers from rising costs, the scale of tariffs makes it difficult to absorb the full impact. Wal-Mart has raised the price of certain items.
Target CEO Brian Cornell also marked a “huge potential cost” of tariffs, but said the price increase will remain the “latest means.”
Other major consumer brands are already moving forward. Nike will implement price increases starting in June, while Mattel CEO Ynon Kreiz said choosing toys could become more expensive if tariffs on Chinese goods remain in place.
