A person looks into a closed Macy’s Inc. department store near Union Square in San Francisco, California, U.S., on Thursday, June 18, 2020.

Michael Short | Bloomberg | Getty Images

The road to recovery at Macy’s is likely going to be a rocky one because of the coronavirus pandemic. 

The retailer warned Wednesday that sales are falling again in states such as Texas where Covid-19 cases are on the rise. The department store operator expects this pattern could play out as the pandemic continues. 

Macy’s said sales at its stores are down about 35% from year-ago levels.

“We are taking the conservative view and pulling that trend through the back half of the year. If trends improve, we will react aggressively to meet customer demands,” Chief Executive Jeff Gennette said on an earnings call. 

Gennette said the company does not expect another national shutdown because of the coronavirus, and has plans in place in case there are some “regional flare-ups,” and it needs to close smaller groups of stores for a second time.

Meanwhile, its digital business “has shown very strong performance.” Gennette expects online sales to continue at a “healthy double-digit growth rate to the back half of the year by all metrics.”

Macy’s shares were recently up about 1%, on the heels of the company reporting first-quarter results

In Texas, Macys saw sales were ticking up as the local economy was reopening, Gennette said, but about two weeks ago and with Covid-19 cases surging Macy’s saw a 15-point sales drop in the state. 

“I’m very hopeful that it will be better than the down 35, but we wanted to pick a prudent approach,” the CEO said.  

Meantime, Macy’s will take a hit from people not traveling from overseas to the U.S. and shopping at some of its stores, such as its flagship Herald Square location, which are normally a draw for tourists. 

Interim CFO Felicia Williams said the company expects no international tourism sales for the remainder of the year. In 2019, she said international tourism made up a little more than 4% of total sales, “so the impact is quite significant.” 

Macy’s did say it is seeing especially strong sales in luxury goods at Bloomingdale’s as stores reopen during the pandemic, however, in part because of the reduction in travel. 

“Part of it is because you have a lot of domestic tourists that buy … that would go to other countries,” Gennette explained. Now, they’re forced to stay put and shop local, he said. 

Macy’s said it expects to report second-quarter earnings on Sept. 2. 

This story is developing. Please check back for updates.