Macy’s and Costco sound a warning about the economy
New York (CNN) — Macy’s, Costco and other big chains say shoppers are pulling back at their stores and changing what they buy. That could be a red flag for the U.S. economy.
Macy’s (M) on Thursday cut its annual profit and sales forecast after customer demand slowed in March.
“We planned the year assuming that the economic health of the consumer would be challenged, but starting in late March, demand trends weakened further in our discretionary categories,” Macy’s CEO Jeff Gennette said in a statement.
Same-store sales at the Macy’s sank 8.7% last quarter, while the higher-end department store Bloomingdale’s dropped 3.9%.
Macy’s stock dropped around 6% during pre-market trading Thursday.
The company was the latest retailer to note shifts in customer demand.
Costco (COST) finance chief Richard Galanti said last week that that some customers were switching from pricier steaks and beef for cheaper meats like pork and chicken. This is a trend that has been common in previous recessions, he said.
Macy’s and Costco appeal to middle and higher-income shoppers, and their results show a pullback among that demographic.
Also on Thursday, Dollar General (DG) said its core lower-income customers were passing up discretionary products like home goods and clothing. The company slashed its outlook on weak customer demand, sending its stock falling 10% during pre-market trading.
“The macroeconomic environment is more challenging than the [company] had previously anticipated,” Dollar General said in a statement. It’s “having a significant impact on customers’ spending levels and behaviors.”