Macy’s gave Wall Street a masterclass in mixed signals on Wednesday: The department store chain beat first-quarter earnings expectations — then cut its full-year profit forecast, citing tariff pressures and cautious consumer spending related to the U.S. trade war.

The retailer reported adjusted earnings per share (EPS) of $0.16, a penny ahead of analyst forecasts. Revenue came in at $4.6 billion, topping Wall Street’s $4.42 billion estimate.

But in a retail environment where companies are already walking a tightrope between inflation-wary shoppers and margin-squeezing costs, Macy’s earnings have seemingly made one thing clear: You can put a price on geopolitical uncertainty. The company now expects adjusted EPS for the year to fall between $1.60 and $2.00, down from its earlier range of $2.05 to $2.25.

Shares fell almost 4% by 10 a.m. ET. They had been up about 4% in premarket trading.

The Trump administration’s tariffs, particularly those on apparel and accessories from Asia, are rewriting the math behind Macy’s bottom line. Chairman and CEO Tony Spring addressed the issue on the company’s earnings call, emphasizing Macy’s efforts to adapt.

“We are confident that we can continue to diversify countries of origin for both our private and national brands,” Spring said. “With the recent announcement of these tariffs, we’ve renegotiated orders with suppliers. We’ve canceled or delayed orders where the value proposition is just not where it needs to be.”

Spring added that Macy’s currently has “a good handle on the tariff-related costs” but said the situation is “constantly changing.”

Several major retailers are flashing warning signs as tariffs and economic uncertainty cloud the outlook for 2025.

Target (TGT) reported a steeper-than-expected sales decline in the first quarter and expects sales to fall throughout the year. Walmart, meanwhile, has already raised prices (drawing President Donald Trump’s ire) and expects to raise them again during the back-to-school season. And both American Eagle (AEO) and Ross Stores (ROST) have pulled their full-year guidance, citing macroeconomic volatility.

Meanwhile, not all parts of Macy’s business have been equally successful. High-end Bloomingdale’s and cosmetics company Bluemercury (M) both posted growth in comparable sales, suggesting that more affluent shoppers remain resilient, but the flagship Macy’s brand saw a 2% dip in comparable sales as its core middle-income customers pulled back.

“We continued to execute against our Bold New Chapter strategy during the quarter, scaling key initiatives that improved our customer experience and contributed to stronger than expected performance across all three of our nameplates,” Spring said in the earnings report. “Our first quarter results give us confidence that we have the right strategy and team in place to navigate the current environment while we continue to invest in our customer on the path to returning Macy’s, Inc. to sustainable profitable growth.”

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