Nordstrom employees secure floral dresses to mannequins at one of the retail department stores.
Ben Nerms | Bloomberg | Getty Images
With stunning prints on sweatpants, blazers, lipsticks and dresses.
Americans are getting their wardrobes in order and spending more on more dressy clothes, cosmetics and accessories. According to analysts and executives, this trend is especially noticeable among high-income shoppers who are eager to regain such goods in the face of rising inflation and uncertain economies. ..
I said, “The mask is off.” Macy’s CEO Jeff Jennet after the company upheld its sales guidance for the year on Thursday and raised its profit outlook.
This sentiment was repeated by a series of other retailers reporting this week’s quarterly results, including the cosmetics and beauty products chain. Alta Beauty And Anthropologie-Parent Company Urban Outfitters.. When they left home again, people were paying to do their best, they said.
The latest results provide a more subtle view of the economy after the two biggest retailers — Walmart When Target — A shock wave across the market, with weak forecasts and warnings, warning that some shoppers have been price-sensitive in high inflation for decades.
Soaring food and gas prices are pinching low-income Americans who are lowering spending, according to executives. But so far, even the threat of a potential recession hasn’t stopped high-income consumers from spending on items they missed during the early stages of the pandemic.
At Macy’s, Jennett said shoppers are increasingly spending “hours” browsing stores, especially in urban markets like New York. A year ago he said people were likely to come and go.
“Luxury customers are back a lot,” he said in a telephone interview.
However, Jennet said shoppers under $ 75,000 a year want more discounts.
It seems that the division of behavior is also taking place in Urban Outfitters. Known for its playful dresses and catering to high-income consumers, the company’s anthropologie chain saw a 18% surge in sales this quarter. In the chain of the same name, which caters to young shoppers in the first or second job, sales increased by only 1%.
“Some kind of divergence has happened,” Urban Outfitters CEO Richard Hayne said in a conference call Tuesday night.
However, according to one retail expert, even shoppers looking to save money may be willing to buy items such as shirts and wallets they crave.
“That’s the idea. It’s psychology.” I want to do something, but I need something new to wear, “Jan Kniffen, CEO of retail consultancy J Rogers Kniffen Worldwide, said on CNBC’s Squawk Box this week. I mentioned in an interview. ..
“People are more likely to try to save on groceries, and cheaper options may not be as different in quality from well-known brands,” Kniffen said. “The alternative in the grocery space is very easy.” Said.
Makeup chain Ulta Beauty also easily exceeded Wall Street’s sales expectations this week, with shoppers buying items to spoil themselves and dress up for a get-together. The company raised its full-year outlook after first-quarter sales surged 18% where it was established a year ago.
“We’re seeing a new trend that’s exciting. We’re definitely heading for bold looks, bright, engaging, and sparkling,” said Ulta CEO Dave Kimbell. “People are ready to go out into the world, and that’s what they look like.”
Makeup is considered an affordable luxury, even when the budget is tight, Kimbell said.Clothing retailer Limited express It also benefits from the enthusiasm of those who want to go out and dress up again, with same-store sales up 31% this quarter.
“One of the major fashion trends for women today is head-to-toe color suits,” Express CEO Tim Baxter said in a telephone interview. “We haven’t participated in such a fashion cycle for a long time.”
Behavioral changes mean that retailers selling casual clothes such as pajamas and sweatpants can be more hurt than their rivals after sales grow when people are hanging out at home. ..
Some people have an inventory of pandemic-friendly clothes when people want comfort above all else. These items may eventually need to be significantly discounted.
American Eagle adjusted its profit forecasts this year, saying Thursday that first-quarter demand was “well below expectations.” Inventory has increased by 46% from a year ago. The company’s Aerie division sells casual wear, training gear and lingerie to women under the age of teens.
“Last year we had a big win with active and fleece, and the old navy sweets spots kids and babies,” Gap CEO Sonia Singal said in a telephone interview. She said weddings, special occasions and the resurgence of office life are now putting pressure on these categories.
Gap’s inventory increased by 34% during this period, significantly reducing the company’s 2022 profit forecast. Only the Banana Republic chain, which caters to high-income customers, reported a surge in same-store sales.
She said Singal’s recent visit to an Old Navy store, with an average income of about $ 100,000 in the area, hasn’t changed much for shoppers. But elsewhere, where the average income in the region was about $ 50,000, financial pressure is clear, she said.
“More focus is on the value of money,” she said, adding that people don’t come too often.
Stacey Widlitz, president of retail consulting firm SW Retail Advisors, said various results across the industry reflect how the economy is affecting people out of the pandemic.
“It’s a change in spending, it’s a change in behavior, and it’s hitting different companies differently,” she said.
-CNBC Melissa Repco Contributed to this report.