Consumers are still bargain shopping, Macy’s and Target reports show

As U.S. consumers navigate an economy still rocked by high inflation, they are guided by tight wallets and cheaper goods, a trend that’s hitting department store chains like Macy’s harder than discount retailers like Target and T.J. Maxx.

On Wednesday, Macy’s, the largest department store chain in the United States, reported falling sales in the second quarter, while Target and T.J. Maxx found lower prices were luring consumers.

The discrepancy between struggling department stores and thriving budget retailers underscores a consumer trend: Shoppers are “increasingly careful and discerning,” despite cooling inflation, said Quincy Krosby, chief global strategist at LPL Financial.

Macy’s, which also owns Bloomingdale’s and Bluemercury, said overall comparable sales, a metric for stores open more than a year, fell 4% in the second quarter. The retailer added that it was expecting its net sales for the year to be down as much as 2.2%, to $22.4 billion. The company expects comparable sales also to be lower for the full year.

“The context that we are operating under is a consumer that’s really oriented on value,” Adrian Mitchell, Macy’s chief financial officer, said on a call with analysts.

Discount retailers, including Target, appear better positioned to reap the benefits of price-conscious consumers. In May, Target announced modest price cuts on 5,000 food products and household goods, which contributed to traffic growth, executives said.

Target said Wednesday that its comparable sales grew 2% in the three-month period ending Aug. 3, beating expectations. Discretionary spending picked up, too — particularly in its clothing business.

Consumers remain resilient, Brian Cornell, Target’s CEO, said on a call with analysts. But they “continue to focus on value as they work hard to manage their household budgets,” he added.

Target said it expected that sales for the full year would be flat or increase 2%, but the company acknowledged that it would probably come in on the lower end.

TJX, the parent company of off-price retailers T.J. Maxx and HomeGoods, also reported its quarterly earnings Wednesday, saying its comparable sales rose 4%. The company raised its guidance on its pretax profit margin for the year.

Target and TJX have extended a trend of strong quarterly sales for retailers deemed as value-oriented, set in motion last week by Walmart. Walmart reported that sales at its U.S. stores rose just over 4%, to $115.3 billion, as its customers were attracted to lower prices and the ease of receiving their merchandise.

This article originally appeared in The New York Times.

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