Business

Glamorous makeup and dress up is back, boosting Macy’s and Ulta

A Nordstrom employee fixes a floral dress on a mannequin at one of the retailer’s department stores.

Ben Nelms | Bloomberg | beautiful pictures

Go out in tight pants, a blazer, lipstick, and eye-catching prints on your skirt.

Americans are saving on wardrobes and spending more on more luxurious clothing, makeup and accessories as they start going out more and venturing back into the office. The trend is especially pronounced among higher-income shoppers, who are eager to buy such items, even amid inflation, analysts and company executives say. rising and the economy is uncertain.

“The masks are slowly coming off,” Macy’s Chief Executive Officer Jeff Gennette after the company raised its profit outlook and laid out sales guidance for the year on Thursday.

This sentiment is echoed by a host of other retailers reporting quarterly results this week, including makeup and beauty chains. Ulta Beauty and Anthropologie-parent company Urban dressers. People are paying to look their best when they get out of the house again, they say.

The latest round of results offers a more nuanced view of the economy after two of the biggest retailers – Walmart and Target – sent shockwaves across the market with upbeat forecasts and warnings that some shoppers are becoming more price-sensitive amid decades of high inflation.

Executives say rising food and gas prices are squeezing lower-income Americans, who are cutting spending. But so far, even the threat of a possible recession has not stopped higher-income consumers from spending on items they missed in the early days of the pandemic. .

‘Colored clothes from head to toe’

At Macy’s, Gennette said shoppers are increasingly spending “hours” browsing through stores, especially in urban markets like New York. A year ago, he said that people are more likely to get in and out.

“Luxury customers have come back significantly,” he said in a phone interview.

But Gennette notes that shoppers making less than $75,000 a year are looking for more discounts.

The split in behavior also seems to be playing out at Urban Outfitters. The company’s Anthropologie chain, known for its playful outfits and catering to higher-income consumers, saw sales jump 18 percent during the quarter. At the eponymous chain, which caters to young shoppers in their first or second jobs, sales grew by just 1%.

Urban Outfitters CEO Richard Hayne said during a conference call Tuesday night.

But even shoppers trying to save money may 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 a retail expert.

“It’s an afterthought,” said Jan Kniffen, CEO of retail consulting firm J Rogers Kniffen Worldwide, in an interview on CNBC’s “Squawk Box” this week.

People are more likely to try and save on groceries, says Kniffen, where cheaper options may not differ in quality from big-name brands: “Replacement is easy in the space. groceries,” he said.

Makeup chain Ulta Beauty also easily beat Wall Street sales expectations this week, with shoppers stocking up on items for self-care and dressing up for social gatherings. The company raised its full-year outlook after first-quarter sales rose 18% at established locations a year ago.

“There are new trends emerging in the makeup arena, certainly a push towards bold, bright, glamorous, glitter looks,” says Ulta CEO Dave Kimbell. “People are ready to go out into the world and that shows in the looks.”

Kimbell said makeup is seen as an affordable hobby even when people are on a tighter budget. Clothing retailer Show also benefited from people’s eagerness to go out and dress up again, with same-store sales up 31% in the quarter.

Express CEO Tim Baxter said in a phone interview: “One of the main fashion trends for women right now is head-to-toe colored suits. “We haven’t been in such a fashion cycle for a long time.”

The environment changes for some

The changing behaviors mean that retailers that sell more casual clothing, such as pajamas and sweets, can now suffer more damage than their rivals after seeing sales Sales increase as people gather at home.

Some are now carrying around stockpiles of pandemic-friendly clothing they’ve stocked up on when everyone is looking for comfort above all else. Those items may eventually need to be heavily discounted.

American Eagle said on Thursday that first-quarter demand was “much below” expectations and cut its profit forecast for the year. Inventories were 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 that inventory has increased by 45% in its fiscal first quarter compared with 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 activewear and fleece, and kids and babies, which is our sweet spot for Old Navy,” Gap CEO Sonia Syngal said in a statement. phone interview. She said the return of weddings, special occasions and office life is now putting pressure on those categories.

Gap’s inventory grew 34% during the period, and the company cut its profit guidance for 2022. Only the Banana Republic chain, which caters to higher-income customers, has reported sales. goods at the same store increased sharply.

At an Old Navy store that Syngal recently visited, where the median income in the area is about $100,000, she said shopper behavior hasn’t changed much. But at another location, where the median income in the area is around $50,000, she said the financial pressures are obvious.

“There’s more of a focus on value for money,” she said, adding that people also don’t come as often.

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 change in behavior. And it hits different companies differently,” she said.

—CNBC of Melissa Repko contributed to this report.

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