Macy’s sales and profit slipped in its first quarter and the department store, citing more cautious customers and the impact that a trade war launched by the U.S., trimmed its profit forecast for 2025.

The New York retailer, however, topped most performance expectations for the first three months of the year and maintained its annual sales forecast.

Yet Macy’s CEO Tony Spring said that after seeing almost no price increases linked to tariffs in the first quarter, some “limited” price increases are appearing now, leading to the more cautious annual profit outlook.

“I think it’s important to understand that we are not just broadly increasing price,” Spring said in a conference call Wednesday. “We’re being incredibly surgical about the situation with tariffs.”

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The company is diversifying the origin of its products as well, and will pull items when the math doesn’t work, he said.

About 20% of Macy’s products came from China at the end of its last fiscal year. Private brands sourced approximately 27% from China, down from 32% last year.

“With the recent announcement of these tariffs, we’ve renegotiated orders with suppliers,” Spring said. “We’ve canceled or delayed orders where the value proposition is just not where it needs to be.”

Shares rose 1% Wednesday.

Sales at Macy’s, which also owns upscale Bloomingdale’s and the Bluemercury cosmetics chain, dropped to $4.79 billion, from $5 billion a year earlier. That’s better than the $4.42 billion that analysts polled by FactSet expected.

Comparable sales, which include those online, dipped 2%. There was comparable store sales growth at Bloomingdale’s and Bluemercury.

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Neil Saunders, managing director of GlobalData, said it wasn’t a bad quarter for Macy’s, particularly as the retailer closes underperforming locations.

Macy’s said previously that it would close 66 stores, mostly in the first quarter.

“The 2.0% dip in comparable sales is below market growth but is not entirely unexpected,” Saunders wrote. “It is also, barring the robust holiday quarter, a somewhat better performance than Macy’s delivered across most of the last fiscal year.”

For the period ended May 3, Macy’s earned $38 million, or 13 cents per share. That compares with $62 million, or 22 cents per share, a year ago.

Stripping out one time charges, earnings were 16 cents per share, which topped Wall Street’s estimate by a penny.

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The company stuck by its 2025 sales forecast which ranged from $21 billion to $21.4 billion. But it now expects full-year adjusted earnings between $1.60 and $2 per share. Its prior forecast was for an adjusted profit of $2.05 to $2.25 per share.

Industry analysts had been projecting full-year sales of $21.03 billion and an adjusted per-share profit of $1.91.

Macy’s and other retailers are wrestling with uncertainty about tariffs which are making it difficult to plan. The same goes for many American consumers who have are growing increasingly uncomfortable about the U.S. economy and watching their spending.