According to recent reports from CNN and Yahoo Finance, Macy’s is facing a concerning increase in the number of customers who are unable to make credit card payments. Macy’s Chief Financial Officer and Chief Operating Officer, Adrian Mitchell, expressed surprise at the speed and magnitude of this rise in delinquencies. Mitchell stated that the rate of delinquencies spiked in June and July, offsetting any revenue increase from rising interest rates. This trend could have broader implications for the US economy.
Mitchell believes that this rise in credit card delinquencies is a reflection of the pressures consumers are currently facing. He specifically mentioned credit card balances, student loans, auto loans, and mortgages as areas of concern. Macy’s Citibank-powered credit card carries an annual percentage interest rate of almost 32%. In response to the increase in delinquencies, Macy’s is working with Citibank to reduce exposure in higher risk segments. Consumer credit card debt in the US exceeded $1 trillion in the second quarter of this year, according to the New York Federal Reserve.
As a result of these developments, Macy’s experienced a 36% year-on-year decline in credit card revenue, causing a downturn in their stock. Other retailers also saw a decrease in their stock prices. Macy’s predicts weak consumer spending during the upcoming holiday season. Mitchell emphasized the importance of maintaining a cautious view on consumer capacity to spend on discretionary categories. Overall, these findings highlight the need for vigilance and careful monitoring of the consumer credit landscape. (Read more Macy’s stories.)
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