Macy’s CFO says the American consumer is still healthy, but lower-income shoppers could soon cut back

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Pedestrians carry Macy’s shopping bags in San Francisco, California, on Thursday, Sept. 16, 2021.
David Paul Morris | Bloomberg | Getty Images

Macy’s says the American consumer is still healthy and spending. But, as escalating oil prices translate into higher prices at the gas pump and bigger grocery bills, the department store chain said it anticipates some consumers will be impacted more than others.

“From a consumer demand standpoint, we still have a healthy consumer,” said Macy’s Chief Financial Officer Adrian Mitchell, during a Wednesday presentation at the UBS Global Consumer & Retail Conference.

He noted that many American families benefited from rounds of government stimulus payments around this time last year, but that savings rates have remained elevated this year compared with prepandemic levels.

However, according to Mitchell, the consumer is also under increased pressure. “Inflation is elevated with the geopolitical instability that we’re seeing with Ukraine and Russia. We’re seeing oil prices escalate, which will only elevate the expenses around essential goods,” he said.

Mitchell said that Macy’s forecasts that lower-income families, which devote a bigger portion of their monthly paychecks toward essential goods such as groceries, will be affected more than others. As a result, the company said it is already thinking about how to communicate value to those customers differently, versus a luxury customer who has more capacity to spend, Mitchell said.

“Clearly value is going to matter, but it’s going to mean something different depending on the tier [of income],” he said at the UBS conference.

Oil prices spiked to start this week, with U.S. crude hitting a 13-year high of $130 per barrel, but have since eased in Wednesday morning trading. The consumer price index for January, which measures the costs of dozens of everyday consumer goods, also rose 7.5% from the prior year. That was the highest reading since 1982.

In late February, Macy’s offered a better-than-expected financial outlook in 2022, in spite of macroeconomic headwinds including inflation and supply chain challenges.

Macy’s shares are up about 57% over the past 12 months.

Sophie Tremblay

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