The profit recovery signal from US department stores is being re-examined by Chinese textile exporters. Macy's reported a surge in second-quarter profitability in 2025 and raised its full-year guidance, driven by two key factors: US government tariff refunds that improved cost structures, and double-digit growth in its luxury and beauty banners.
Where the Profit Came From
Tariff refunds are essentially a one-time cash flow restoration. Over the past few years, US importers paid additional tariffs on a large volume of Chinese goods, and some companies received returns after legal challenges and administrative reviews. For large retailers like Macy's, refunds directly reduced current costs and amplified profit elasticity.
But the second engine deserves more attention from the textile industry: double-digit growth in luxury and beauty. These two categories carry high gross margins, meaning department store traffic and average transaction values are concentrating toward the premium end. For upstream fabric and garment suppliers, this suggests procurement structures may further tilt toward higher-value-added products.
Industry Impact
The inventory cycle of US department stores is highly correlated with Chinese textile exports. Since 2024, US retailers have generally been in a destocking phase, putting pressure on Chinese textile and apparel exports to the US. Macy's profit improvement and raised guidance could accelerate its restocking pace, especially for autumn and winter merchandise.
However, tariff policy remains the biggest uncertainty. Although some tariff refunds have landed, the US tariff framework on Chinese textiles has not fundamentally loosened. Exporters need to distinguish between "one-time refund dividends" and "sustained order growth" — the former is unsustainable, while the latter depends on real retail sell-through.
From a category perspective, beauty and luxury growth has limited direct pull on textiles, but it indirectly affects clothing display space and procurement budget allocation in department stores. High-end womenswear, home textiles and functional fabrics may benefit from channel resources concentrating on high-margin categories.
Practical Advice for Exporters
For Export Factories - Watch for restocking signals from US department stores, prioritizing high-end womenswear and home textile orders - Leave room for tariff policy changes in quotations, avoiding locked-in long-term pricing - Strengthen US export compliance capabilities, especially rules of origin and tariff classification
For Foreign Trade Companies - Use the tariff refund window to renegotiate cost-sharing ratios with US clients - Diversify market risk by increasing export share to Europe, the Middle East and Southeast Asia - Monitor currency fluctuations and hedge USD-denominated orders
Overall, Macy's performance improvement is a positive signal for Chinese textile exports, but not a trend reversal. Exporters should treat it as a window of opportunity, not an inflection point.