Macy’s Inc cut its full-year sales and profit forecasts on Tuesday, with the company saying it will need to offer more discounts to get rid of excess inventories of casual and athleisure apparel, even as demand for luxury products holds up.

The company joined other top retailers, including rival Kohl’s Corp, in warning of a hit to profitability in recent weeks, as soaring prices of everyday goods made Americans wary of spending on apparel and other discretionary items.

Macy’s inventories were up 7 percent at the end of the second quarter, prompting the department store chain to warn of increased markdowns to get back to normal stock levels by the end of the year.

“We have seen declining retail traffic and areas of weakening apparel sales over the quarter as the consumer faces higher costs on essential goods, particularly grocery,” Macy’s chief financial officer Adrian Mitchell said.

The company said it expects fiscal 2022 adjusted earnings of $4.00 to $4.20 per share, compared with its previous outlook of $4.53 to $4.95 per share.

Macy’s did not see any slowdown in spending from shoppers making more than $150,000, chief executive Jeff Gennette said.

Comparable sales at the company’s upscale Bloomingdale’s department stores rose 5.8 percent in the second quarter, while they rose 7.6 percent at its luxury beauty outlet Blue Mercury.

However, comparable sales at Macy’s namesake stores fell 2.8 percent.

“These numbers are far from terrible, especially as they come off the back of a tough prior-year figure and have been delivered during a time of modest consumer distress,” Neil Saunders, managing director of GlobalData, said.

On an adjusted basis, Macy’s earned $1 per share, compared with estimates of $0.85, according to Refinitiv IBES data, sending the company’s shares up 3 percent.

By Uday Sampath; Editor: Shounak Dasgupta

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