Out with sweatpants, in with blazers, lipstick and eye-popping prints on dresses.
Americans are sprucing up their wardrobes and spending more on dressier clothing, makeup and accessories as they start going out more and venturing back to offices. The trend is particularly pronounced among higher-income shoppers who are eager to splurge on such items again, even amid soaring inflation and an uncertain economy, analysts and company executives say.
"The masks are coming off," said Macy's Chief Executive Officer Jeff Gennette after the company boosted its profit outlook and stood by its sales guidance for the year on Thursday.
The sentiment was echoed by a string of other retailers reporting quarterly results this week, including makeup-and-beauty products chain Ulta Beauty and Anthropologie-parent company Urban Outfitters. People are paying to look their best as they leave the house again, they said.
The latest round of results offer a more nuanced look at the economy after two of the biggest retailers — Walmart and Target — sent shock waves across the market with downbeat forecasts and warnings that some shoppers are becoming more price sensitive amid decades-high inflation.
Rising prices for food and gas are pinching lower-income Americans who are pulling back on spending, executives say. But so far, even the threat of a possible recession isn't stopping higher-income consumers from spending on items they missed during the earlier days of the pandemic.
'Head-to-toe color suits'
At Macy's, Gennette said shoppers are increasingly spending "hours" browsing in stores, especially in urban markets like New York. A year ago, he said people were more likely to get in and out.
"The luxury customer is back in a big way," he said in a phone interview.
But Gennette noted that shoppers who make less than $75,000 a year are seeking out more discounts.
The split in behaviors also appears to be playing out at Urban Outfitters. The company's Anthropologie chain, which is known for playful dresses and caters to higher-income consumers, saw sales surge 18% in the quarter. At its namesake chain, which caters to younger shoppers in their first or second jobs, sales rose just 1%.
"There is a sort of bifurcation that has happened," said Urban Outfitters CEO Richard Hayne on conference call Tuesday evening.
But even shoppers who are trying to economize might be willing to shell out for items like shirts or purses they covet — especially if they think a store might be running low on stock, according to one retail expert.
"It's a mindset. It's a psychology: 'I want to go do things and I need new stuff to wear'," Jan Kniffen, CEO of retail consultancy J Rogers Kniffen Worldwide, said in an interview on CNBC's "Squawk Box" this week.
Kniffen said people are more likely to try and save on groceries, where cheaper options might not be that different in quality from name brands: "Substitution is so easy in the grocery space," he said.
Makeup chain Ulta Beauty also easily beat Wall Street's sales expectations this week, with shoppers buying items to pamper themselves and dress up for social gatherings. The company hiked its full-year outlook after first-quarter sales jumped 18% at established locations from a year ago.
"There's new trends that are coming into makeup that we're excited about, definitely a push towards bold looks, bright, glam, glitter," said Ulta CEO Dave Kimbell. "People are ready to get out in the world and that's shown up in the looks."
Kimbell said makeup is seen as an affordable indulgence even when people are on tighter budgets. Clothing retailer Express is also benefitting from people's eagerness to get out and dress up again, with same-store sales up 31% in the quarter.
"One of the major fashion trends in women's right now is head-to-toe color suits," Express CEO Tim Baxter said in a phone interview. "We haven't been in that kind of a fashion cycle in a long time."
Choppy environment for some
The shifting behaviors mean retailers that sell more casual clothing, such as pajamas and sweatsuits, might now be hurting more than their rivals after seeing a boost in sales when people were hunkering down at home.
Some are now saddled with inventories of pandemic-friendly clothes they stocked up on when people were seeking comfort above all else. Those items might eventually need to be heavily discounted.
American Eagle said Thursday that demand in the first quarter was "well below" its expectations and trimmed its profit forecast for the year. Inventory was up 46% from a year ago. The company's Aerie division sells casual clothing, workout gear and lingerie to teens and younger women.
Abercrombie & Fitch also said inventory was up 45% in its fiscal first quarter from a year ago and cut its sales forecast for the year. And Gap's first-quarter sales fell, dragged down by Old Navy.
"Last year, we won big with active and fleece, and kids and baby, which is our sweet spot for Old Navy," Gap CEO Sonia Syngal said in a phone interview. She said the return of weddings, special occasions and office life is now pressuring those categories.
Gap's inventory was up 34% in the period, and the company slashed its profit guidance for 2022. Only its Banana Republic chain, which caters to a higher-income customer, reported a bump in same-store sales.
At an Old Navy store Syngal recently visited where the average income in the area is about $100,000, she said shopper behavior hasn't changed much. But at another location where the average income in the area was about $50,000, she said the financial pressures are clear.
"There's much more focus on value for money," she said, adding that people aren't coming in as often either.
Stacey Widlitz, president of retail consulting firm SW Retail Advisors, said the mixed results across the industry reflect how the economy is affecting people as they emerge from the pandemic.
"It's a shift in spending. It's a behavior shift. And it's hitting different companies differently," she said.
—CNBC's Melissa Repko contributed to this reporting.
Business - Latest - Google News
May 27, 2022 at 10:45PM
https://ift.tt/zUR2jJs
Glam makeup and dressing up are back – and that's benefiting retailers like Macy's and Ulta - CNBC
Business - Latest - Google News
https://ift.tt/eJ2z9gS
Bagikan Berita Ini
0 Response to "Glam makeup and dressing up are back – and that's benefiting retailers like Macy's and Ulta - CNBC"
Post a Comment