Macy’s CEO says the department store chain is prepared should additional tariffs on Chinese goods go into effect next year.
“The first two tranches of tariffs have had very limited effects so far on the products we’re offering …” Macy’s CEO Jeff Gennette told CNBC from inside the retailer’s flagship Herald Square location on Black Friday. “We will see if the next tranche of tariffs goes through in January, and we are prepared and ready for that.” The next tranche of tariffs under consideration, he said, includes a lot of cotton-based products such as apparel.
“At the end of the day, we want to make sure that whatever changes are coming, the consumer is not affected by this,” Gennette said. He added the retailer has been working “aggressively” with suppliers overseas, especially those that help build its in-house brands, in preparation for more tariffs.
One concern among analysts this holiday season was that companies such as Macy’s would have piled inventory too high earlier in the year, in an attempt to buy more goods before tariffs went into effect. But Macy’s has for the most part managed to keep its inventory at healthy levels.
“I think most great retailers right now are very controlled on their inventories,” Gennette told CNBC. “They are buying closer to customer demand, and we’ve enjoyed over the past four quarters inventories below the rate we’re selling at,” he said, giving the department store chain more flexibility.
Macy’s shares have rallied near 60 percent from a year ago. The stock was recently hit after Macy’s reported earnings, however, with some investors skeptical the company will be able to top its same-store sales growth from last holiday quarter. Macy’s is also planning to hit $1 billion in mobile sales by the end of the year.