Retailers battle uncertain back-to-school demand after âunstableâ quarter

Retailers battle uncertain back-to-school demand after ‘unstable’ quarter



Stocking shelves, slashing prices on low-priced notebooks and sneakers and uniforms, major retailers including Walmart, Foot LockerMarks & Spencer

Foot Locker

U.S. shoppers’ spending in the summer ahead of the college and K-12 school year has grown steadily since 2015, according to the National Retail Federation, a trade group. NRF

Although shoppers have been spending on essentials this year, they’re much choosier on where to splurge as inflation remains stubbornly high, executives from UltaMacy’sRalph LaurenNordstrom

On Friday, Doug McMillon, CEO of Walmart, the world’s biggest retailer by sales, said at its annual meeting that it would roll out more back-to-school merchandise – notebooks, pencils, pens – at “opening price points” this year. Walmart CFO John David Rainey told investors last week that the retailer, while not immune to “economic whims,” is better positioned than others thanks to its reputation for low prices.

Clothing and sneakers previously made up the biggest chunk of back-to-school-related expenses for many families, and Foot Locker said on May 19 that it would rely on promotional discounts to drive demand for sneakers. The chain is stocking Adidas

In Britain, where consumers are facing the biggest two-year squeeze in living standards since comparable records started in the 1950s, Marks & Spencer is holding the prices on its school uniform range for a third straight year. Prices start at 7 pounds ($8.69) for a multipack of three cotton unisex polo shirts. M&S

The challenge for retailers is predicting whether parents will buy less clothing and sneakers when the cost of necessities – such as pencils, notebooks and laptops – strains many households. Purchases of discretionary goods such as clothing and shoes have fallen since January, according to U.S. Commerce Department data.
Retailers face a “volatile time,” said Jessica Ramirez

Ratings agency Moody’s in late May predicted “nascent and uneven” operating profit growth overall for global retail and apparel companies this year, with a 6.2% jump in North America-based operating profit following last year’s 13% decline.

Big-box retailers including Walmart and Target are poised to benefit from falling production costs thanks to their ability to renegotiate costs with suppliers, Moody’s

Off-price stores such as T.J. Maxx are also likely to benefit from the sharp increase in consumers looking for savings, while dollar stores will be hurt by a shortage of disposable income among their core low-income customer base, according to Moody’s.

Victoria’s Secret‘s CEO Martin Waters said it plans a “complete overhaul” of its struggling Pink

Executives at Abercrombie & FitchUrban OutfittersKohl’s all said in earnings calls they were focusing on new styles – especially in activewear, dresses and non-denim bottoms – as a way to get parents to open their wallets.

Abercrombie & Fitch CEO Fran Horowitz said cargo pants, dressed-up denim that can be worn to the office and tailored trousers had all performed well for the millennial-focused Abercrombie brand. The mall retailer is in the process of adding similar styles in teen-focused Hollister

Young shoppers often have less disposable income. Hedging its bets, American Eagle, which traditionally caters to teens, launched a new line of premium denim, including $128 jeans, that would also “entertain an older customer,” Executive Creative Director Jennifer Foyle said during an earnings call in May.

​Even chains that grew overall sales reported recent losses among brands catering to teens. Those included Abercrombie’s Hollister brand and Urban Outfitters, whose parent company, URBNAnthropologieFree People

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