Headed into the year-end shopping season, retailers have had mixed success as consumers have turned much more cautious. — Reuters
NEW YORK: Retailers are trying various strategies to counter the drag from inflation and tariffs, from leaning on wealthier customers and celebrity ads to outright store closures.
Headed into the year-end shopping season, they have had mixed success as consumers have turned much more cautious – even as they opened their wallets for the Black Friday shopping season.
Among the retailers that reported thus far this week, Dollar Tree raised its annual profit expectations, American Eagle forecast an upbeat holiday quarter, Macy’s hiked annual targets and Zara owner Inditex surpassed expectations for fourth-quarter sales.
“The unexpectedly positive results are likely a function of two key factors: lowered corporate expectations and greater consumer resilience,” said Jeff Derman, a partner in the consumer retail group at financial advisory firm Solomon Partners.
American Eagle’s “Great Jeans” denim campaign with actress Sydney Sweeney was among a flurry of celebrity tie-ups that helped the company boost demand – and bump its stock price, which has gained more than 60% since September.
Shares of American Eagle rose 15% on Wednesday after the company raised its annual comparable sales forecast after markets closed on Tuesday.
The results also show that consumers are loyal to specific brands and looking for bargains, said Jay Woods, chief market strategist at Freedom Capital Markets.
Dollar Tree drew in more customers from different income groups as it expanded its product assortment. It, too, beat earnings estimates.
“The low-end consumer has been joined by the high end looking for bargains and has become more frugal and trading down in their shopping habits,” Woods said.
Department store operator Macy’s, which has been undergoing a months-long turnaround, on Wednesday surprised investors with a profit – but still warned of a “more choiceful” consumer due to inflation pressures.
It forecast holiday-quarter profit below expectations, pushing its shares down about 1%. “Consumers are more discerning about how and where they spend their dollars,” Macy’s chief executive officer Tony Spring said on a post-earnings call.
The crucial five-day Thanksgiving holiday shopping event saw a surge in online spending, mainly from more affluent shoppers. — Reuters
