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Macy's CEO Jeff Gennette: Shoppers have 'no appetite' for price increases from looming tariffs
CNBC
Wed, 14 Aug 2019 14:22

Macy's CEO Jeff Gennette: Shoppers have 'no appetite' for price increases from looming tariffs

CNBC
Wed, 14 Aug 2019 14:22

Jeff Gennette, CEO of Macys.

Macy's CEO Jeff Gennette: Shoppers have 'no appetite' for price increases from looming tariffs


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Macys CEO Jeff Gennette, on the heels of the retailers dismal quarterly earnings report, said consumers will have "no appetite" for price increases thanks to new tariffs.

Tariffs of 10% on roughly $300 billion worth of goods imported to the U.S. from China were set to go into effect on Sept. 1, forcing apparel and footwear retailers to scramble ahead of the holiday season.
But President Donald Trump on Tuesday said his administration would be delaying China tariffs for some goods until Dec. 15. The United States Trade Representative office said the delay is for electronics including cellphones, laptops and video game consoles and some clothing products and shoes and "certain toys." "Were doing this for the Christmas season," Trump said.

Still, companies like Macys arent in the clear. Theyre now having to figure out how they will work around the 10% taxes without passing too much of the costs onto consumers.

If prices were to increase at Macys, for example, shoppers could just turn to an off-price retailer like T.J. Maxx to find something less expensive. Thats the fear that apparel, footwear and accessories makers are faced with.

"We are working with our sourcing and tariff partners to mitigate the risk between vendors and our margins," Gennette told CNBC in an interview Wednesday morning.

The CEO said he doesnt expect Macys will have to raise prices on goods with 10% tariffs. But if they were to go up to 25%, as was once being proposed by Trump, "we have more work to do," he said.
Gennette also said Macys had accelerated some shipments of holiday goods to the U.S. amid the ongoing trade war with China, but that "the bulk" of Macys holiday inventory is still offshore.

Macys shares were falling more than 16% in premarket trading Wednesday, sending shares of other department store operators like Kohls, J.C. Penney and Nordstrom down.