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But the season of free spending isn’t picking up sales for everyone.
Earnings reports from retailers over the past two weeks have highlighted the gap between brands that are winning sales and those that are disappearing.
target, Kohl’s And Best buy Each reported disappointing third-quarter results as early holiday deals failed to meaningfully boost their business. on the other hand, Walmart, Dick’s Sporting Goods And Abercrombie & Fitch Posted strong sales in its most recent quarters.
The reports come after more than two years of inflation in the U.S. that has forced shoppers to make spending choices while balancing higher prices for groceries, lodging, restaurant meals and more. Those patterns persist, Even when inflation has cooled.forcing retailers to work harder to get customers to open their wallets.
Neil Saunders, managing director of Global Data Retail, said the picky consumer made the gulf between successful and struggling retailers even clearer heading into the holiday shopping season.
“People are still spending, but maybe not as much,” he said. “So instead of buying five things, they’ll be buying three things. And under that environment, it’s easy to say, ‘Well, where am I not going to buy things? Who am I going to cut?’ And they will cut out the weaker retailers.”
Setting expectations
According to the National Retail Federation, a retail trade group, holiday spending in November and December is expected to increase 2.5 percent to 3.5 percent over 2023 and range between $979.5 billion and $989 billion. That’s a smaller increase than the 3.9 percent increase for the 2022 to 2023 holiday season year-over-year, when spending totaled $955.6 billion. The NRF data does not include automobile dealers, gasoline stations and restaurants.
Yet retailers’ forecasts for the holiday quarter varied widely. Both Abercrombie and Dick Raised its full-year outlook. this week and said they expect a strong holiday shopping season.
“We’ve seen a strong early response to our holiday assortment, and we’re ready and excited for a high-selling period this week,” Abercrombie Chief Operating Officer Scott Lipsky said on the company’s earnings call.
Nordstrom And Walmart struck a more cautious note.
On Nordstrom’s earnings call, CEO Erik Nordstrom said the department store owner Looked at slow shopping trends in late October and included them in his forecast. The company offered a muted guidance adjustment despite beating Wall Street’s third-quarter sales expectations, adding to the lower end of its sales forecast.
Walmart Chief Financial Officer John David Rainey told CNBC that the holidays are off to a “very good start,” but consumers are still cautious about spending and waiting for better prices.
Big box retailers Its sales forecast increased However, its results reflect a promising change in trends. For the second quarter in a row, sales of Walmart’s general merchandise items — items outside the grocery department or household essentials — rose year-over-year. Prior to that, general merchandise sales had declined for 11 consecutive quarters.
Rainey said the swing likely reflects both easing inflationary pressures on families as food prices come down, as well as the company’s own ability to sell more discretionary items as it buys third-party supplies. Added more to your website through the marketplace.
Target and Kohl’s had it. A foreboding of despair. Kohl warns that there will be one. Deeper than expected decline in sales And Announced a change in CEO. Before the main shopping season.
Target said it expects comparable sales to be roughly flat for the holiday quarter. This metric includes sales on Target’s website and at stores open at least 13 months.
Even with its poor forecast, Target emphasized the ways it is trying to capture shoppers’ attention and dollars. On an earnings call last week, Chief Commercial Officer Rick Gomez said Target will carry more than 150 items inspired by Universal’s “Wicked” movie, including clothing, food, beauty products and toys. It will also release an exclusive vinyl and book for Taylor Swift fans on Black Friday.
And Target will rely on a tried-and-true retail tactic to try to drive traffic: It will cut prices on an additional 2,000 items for the holiday season, following on from 5,000 items earlier this year. After
Wants and needs
GlobalData’s Saunders said department stores like Target, Kohl’s and Macy’s are in a tough spot this holiday season, as they sell more than they need.
Consumers are “leaning more towards experiences” this year and want to buy gift items that have practical value.
“Little silly games and trendy socks and things — those are areas where people are really pushing back a little bit because they’re just pointless purchases, and people don’t want to waste money, even if it’s just for a gift. ” he said. “They want gifts to be useful and relevant.”
Some companies may have bought too much inventory during the shopping season — or the wrong mix of items. At Kohl’s, for example, Saunders said he’s seen a lot of clothing and small appliances like coffee makers and air fryers on display as the retailer gets ready for Black Friday. If shoppers don’t come in full force, those items can wind up on clearance racks.
“I’m just looking at it and thinking, ‘Is this going to sell?'” he said. “Because you’re already not getting foot traffic into the stores. So why would that change on Black Friday?”
The winning formula this holiday season will be value, not just with low prices, but with items that have a “best bang for the buck” concept, said Marshall Cohen, chief retail advisor at market research firm Sarcana. There is quality.
And, he added, retailers are already blaming external factors when their holiday season takes a hit.
“Every year, retailers always come up with a good reason why they can’t make their numbers,” Cohen said. “So when they talk about the weather, or they talk about the dock strike, or they talk about supply chain issues, it has more to do with the fact that they Guessing there might be some challenges in front of them.”
“I always say, ‘Well, here comes the excuse this year. What’s it going to be?'”
Disclosure: Comcast is the parent company of CNBC and NBCUniversal. NBCUniversal distributed “Wicked.”
— CNBC’s Gabriel Fonrouge contributed to this report.