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It was a strong week for retail earnings. That doesn’t spell a consumer comeback
Retail’s Biggest Winners During First-Quarter Earnings: Success Amid Selective Consumer Spending
Retail's biggest winners during first-quarter earnings aren’t thriving because consumers are suddenly spending more on discretionary goods — it’s because they’re executing well, and cash-strapped shoppers are choosing them over competitors. If there’s one takeaway from results posted by the largest U.S. retailers over the last few weeks, it’s that shoppers are still spending but are far more selective about where they do so. Feeling the brunt of sticky inflation, high interest rates, and an economy that feels tougher than it may actually be, consumers are prioritizing purchases that have the right combination of value, convenience, and fun.
Impressive Performances and Strategic Successes
Companies like Abercrombie & Fitch, TJX Companies, and Gap impressed Wall Street with their results, while others like Kohl’s, American Eagle, and Target disappointed. Gap and Foot Locker are two unlikely winners that posted results on Thursday. Both retailers are in the midst of ambitious turnaround plans and are performing better than expected because of new strategies they’ve implemented.
Gap posted positive comparable sales for all four of its brands — Athleta, Old Navy, Banana Republic, and its namesake banner — for the first time in many years, beating Wall Street’s expectations across the board. Under new CEO Richard Dickson, the marketing guru credited with reviving the Barbie franchise, the apparel chain has focused on financial rigor, brand storytelling, and product development. In under a year, Gap’s sales and profits have meaningfully improved, and its brands are beginning to be part of the cultural conversation again.
A few weeks ago, actor Anne Hathaway attended a Bulgari party wearing a white Gap shirt dress designed by the company’s new creative director, Zac Posen. Critically, Gap released the $158 dress to consumers, and it sold out within hours. This combination of marketing and exclusive product drops is what Gap had long been lacking and what competitors had already been doing.
Foot Locker had been declining over the last couple of years, but with the right combination of new strategies and a bit of luck, its turnaround is showing signs of life. Under CEO Mary Dillon, Foot Locker has worked to change its stores, where it does more than 80% of its sales. It has tried to create not only a better shopping experience for consumers but also a better place for its critical brand partners. Instead of two walls of shoes with competing brands mixed together, Foot Locker is changing its fleet so the brands have their own unique displays. Its new “store of the future” concept at a New Jersey mall has become its best-performing store in North America in just a few weeks.
Years into Nike’s strategy to cut out wholesalers and sell directly to consumers, the retailer is realizing it went too far and is now changing course. With refreshed stores and better product displays, consumers are converting more, too, and paying full price — even Foot Locker’s lower-income shoppers. “Our consumer... this is a category that is very important to them. So when people have discretionary income, it may be limited, but you’re gonna prioritize where you spend it, right?” said Dillon. “We’re proving that people are willing to spend full price, but you have to have the right products and serve it up in a way that makes it enticing, right? So that’s where the whole customer experience really matters.”
Dick’s Sporting Goods and Denim Trends
Elsewhere, Dick’s Sporting Goods posted a solid first-quarter report, with executives noting that average selling prices and transactions rose, and they saw no signs of consumers trading down for cheaper options. This might not mean shoppers are spending more broadly, though: Dick’s has long been considered a best-in-class operator that offers a solid shopping experience, meaning it can win even when consumers are picky with their spending.
Two retailers that didn’t have great quarters — American Eagle and Kohl’s — tell a story of executing poorly or missing out on trends. American Eagle handily beat earnings estimates thanks to a new strategy designed to boost profitable growth, but it fell short on revenue and issued cautious guidance that was slightly below Wall Street’s expectations. American Eagle president and executive creative director Jennifer Foyle told CNBC that the brand is working to cut out items that aren’t landing with shoppers and focus on the ones that are. She said the retailer was overly focused on jeggings in the past, but now, low-rise, baggy fits are in.
Denim is having a moment with shoppers. Search levels for denim are hitting peaks in a 20-year data set, particularly for categories like tops and dresses, according to a Morgan Stanley research note. However, American Eagle’s in-store execution seemed to miss the mark. During a store visit at the American Dream mall in New Jersey, an associate told CNBC that the location didn’t have the low-rise, baggy fit in-stores, and they were only available online. Meanwhile, there was a wall of jeggings. Still, denim was a strong performer for the company during the quarter, and it had a variety of other styles that resonated with customers.
Kohl’s Struggles and Competitive Landscape
Kohl’s is missing the mark in a far more meaningful way. The retailer posted dismal numbers, with both earnings and revenue falling well short of expectations. It cut its full-year forecast, and its shares plunged more than 20%, the stock’s biggest single-day percentage decline ever. The weak results illustrated a challenge the retailer is still contending with: keeping up with trends and staying relevant. CEO Tom Kingsbury told CNBC he expects the “head-to-toe” denim trend to play a role in the back half of the year, but it could already be out of style by the time Kohl’s gets around to adding the clothing items to its shelves.
Gap, one of the longtime denim leaders, didn’t seem to be concerned about denim going out of favor because the weather is warmer. CEO Dickson said the company is getting ready to launch its “exclusive lightweight denim fabric” dubbed “Ultra Soft” in time for the summer. Failing to chase trends has been an ongoing issue for the aging department store Kohl’s. Kingsbury told CNBC in March that Kohl’s used to buy product for the juniors department catering to teen girls — one of the most trend-driven areas of its stores — 12 to 14 months in advance. When the apparel hit the sales floor, it was “dead on arrival.”
In an age where viral TikTok videos dictate the life and death of trends, it’s more important than ever for retailers to stay on top of what’s working with customers and what isn’t. They’re not just competing with legacy players; they’re also vying for customers with innovative yet controversial upstarts like Chinese-linked Shein, which can go from an idea to an online product in a matter of weeks. That’s a far cry from the lead times at Under Armour, where it currently takes about 18 months to get a product from an idea to a showroom floor. During an earnings call with analysts, CEO Kevin Plank called the system “just plain uncompetitive in the 2024 landscape” as he laid out a plan to streamline the process.
Abercrombie & Fitch’s Stellar Performance
Meanwhile, Abercrombie & Fitch posted another stellar set of results, even as it begins to lap tougher comparisons. It has posted torrid growth in part because the company is responsive to its customers and has a nimble supply chain that has allowed it to chase trends quickly and efficiently. It posted its strongest first quarter in history and now expects sales to grow 10% in fiscal 2024, up from previous guidance of between 4% and 6%. CEO Fran Horowitz told CNBC that low-rise, baggy jeans are also uber-popular with its customers. During a recent visit by CNBC to its Hollister store just a short walk from American Eagle’s outpost, plenty of those styles of jeans were on display for shoppers as soon as they walked into the store.
Conclusion
The first-quarter earnings season has highlighted the importance of strategic execution and responsiveness to consumer trends. Retailers like Gap, Foot Locker, and Abercrombie & Fitch have demonstrated that with the right strategies, even in a challenging economic environment, it is possible to capture consumer attention and drive sales. As shoppers become more selective and value-conscious, retailers must continue to innovate and adapt to maintain their competitive edge. The lessons from this earnings season underscore the critical role of understanding and responding to consumer behavior, staying ahead of trends, and creating an engaging shopping experience. This approach will ensure they remain relevant and successful in an increasingly competitive and rapidly changing retail landscape.
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All insurance companies are accepted including
Allstate, State Farm, Geico (Government Employees Insurance Company), Progressive, USAA (United Services Automobile Association), Liberty Mutual, Nationwide, Travelers, Farmers Insurance, American Family Insurance, AAA (American Automobile Association), AIG (American International Group), Zurich Insurance Group, AXA, The Hartford, Erie Insurance, Amica Mutual Insurance, Mercury Insurance, Esurance, MetLife Auto & Home, Safeway and many , many more!
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AutoGlass Services Provided
Front Windshield Replacement, Door Glass Replacement, Back Glass Replacement, Sun Roof Replacement, Quarter Panel Replacement, Windshield Repair
#1 Free Windshield Replacement Service in Arizona and Florida!
Our services include free windshield replacements, door glass, sunroof and back glass replacements on any automotive vehicle. Our service includes mobile service, that way you can enjoy and relax at the comfort of home, work or your choice of address as soon as next day.
Schedule Appointment Now or Call (813) 951-2455 to schedule today.
Areas Served in Florida
Miami, Orlando, Tampa, Jacksonville, Fort Lauderdale, Destin, Naples, Key West, Sarasota, Pensacola, West Palm Beach, St. Augustine, FT Myers, Clearwater, Daytona Beach, St. Petersburg, Gainesville, Kissimmee, Boca Raton, Ocala, Panama City, Panama City Beach, Miami Beach, Bradenton, Cape Coral, The Villages, Palm Beach, Siesta Key, Cocoa Beach, Marco Island, Vero Beach, Port St. Lucie, Pompano Beach, Florida City, Punta Gorda, Stuart, Crystal River, Palm Coast, Port Charlotte and more!
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We work on every year, make and model including
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All insurance companies are accepted including
Allstate, State Farm, Geico (Government Employees Insurance Company), Progressive, USAA (United Services Automobile Association), Liberty Mutual, Nationwide, Travelers, Farmers Insurance, American Family Insurance, AAA (American Automobile Association), AIG (American International Group), Zurich Insurance Group, AXA, The Hartford, Erie Insurance, Amica Mutual Insurance, Mercury Insurance, Esurance, MetLife Auto & Home, Safeway and many , many more!
States We Service
Front Windshield Replacement, Door Glass Replacement, Back Glass Replacement, Sun Roof Replacement, Quarter Panel Replacement, Windshield Repair
AutoGlass Services Provided
Front Windshield Replacement, Door Glass Replacement, Back Glass Replacement, Sun Roof Replacement, Quarter Panel Replacement, Windshield Repair
#1 Free Windshield Replacement Service in Arizona and Florida!
Our services include free windshield replacements, door glass, sunroof and back glass replacements on any automotive vehicle. Our service includes mobile service, that way you can enjoy and relax at the comfort of home, work or your choice of address as soon as next day.
Schedule Appointment Now or Call (813) 951-2455 to schedule today.
Areas Served in Florida
Miami, Orlando, Tampa, Jacksonville, Fort Lauderdale, Destin, Naples, Key West, Sarasota, Pensacola, West Palm Beach, St. Augustine, FT Myers, Clearwater, Daytona Beach, St. Petersburg, Gainesville, Kissimmee, Boca Raton, Ocala, Panama City, Panama City Beach, Miami Beach, Bradenton, Cape Coral, The Villages, Palm Beach, Siesta Key, Cocoa Beach, Marco Island, Vero Beach, Port St. Lucie, Pompano Beach, Florida City, Punta Gorda, Stuart, Crystal River, Palm Coast, Port Charlotte and more!
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We work on every year, make and model including
Acura, Aston Martin, Audi, Bentley, BMW, Buick, Cadillac, Chevrolet, Chrysler, Dodge, Ferrari, Fiat, Ford, Freightliner, Geo, GM, GMC, Honda, Hyundai, Infinity, Jaguar, Jeep, Kia, Lamborghini, Land Rover, Lexus, Lincoln, Maserati, Mazda, McLaren, Mercedes Benz, Mercury, Mini Cooper, Mitsubishi, Nissan, Oldsmobile, Peugeot, Pontiac, Plymouth, Porsche, Ram, Saab, Saturn, Scion, Smart Car, Subaru, Suzuki, Tesla, Toyota, Volkswagen, Volvo and more!
All insurance companies are accepted including
Allstate, State Farm, Geico (Government Employees Insurance Company), Progressive, USAA (United Services Automobile Association), Liberty Mutual, Nationwide, Travelers, Farmers Insurance, American Family Insurance, AAA (American Automobile Association), AIG (American International Group), Zurich Insurance Group, AXA, The Hartford, Erie Insurance, Amica Mutual Insurance, Mercury Insurance, Esurance, MetLife Auto & Home, Safeway and many , many more!
States We Service
Front Windshield Replacement, Door Glass Replacement, Back Glass Replacement, Sun Roof Replacement, Quarter Panel Replacement, Windshield Repair
AutoGlass Services Provided
Front Windshield Replacement, Door Glass Replacement, Back Glass Replacement, Sun Roof Replacement, Quarter Panel Replacement, Windshield Repair
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It was a strong week for retail earnings. That doesn’t spell a consumer comeback
Retail’s Biggest Winners During First-Quarter Earnings: Success Amid Selective Consumer Spending
Retail's biggest winners during first-quarter earnings aren’t thriving because consumers are suddenly spending more on discretionary goods — it’s because they’re executing well, and cash-strapped shoppers are choosing them over competitors. If there’s one takeaway from results posted by the largest U.S. retailers over the last few weeks, it’s that shoppers are still spending but are far more selective about where they do so. Feeling the brunt of sticky inflation, high interest rates, and an economy that feels tougher than it may actually be, consumers are prioritizing purchases that have the right combination of value, convenience, and fun.
Impressive Performances and Strategic Successes
Companies like Abercrombie & Fitch, TJX Companies, and Gap impressed Wall Street with their results, while others like Kohl’s, American Eagle, and Target disappointed. Gap and Foot Locker are two unlikely winners that posted results on Thursday. Both retailers are in the midst of ambitious turnaround plans and are performing better than expected because of new strategies they’ve implemented.
Gap posted positive comparable sales for all four of its brands — Athleta, Old Navy, Banana Republic, and its namesake banner — for the first time in many years, beating Wall Street’s expectations across the board. Under new CEO Richard Dickson, the marketing guru credited with reviving the Barbie franchise, the apparel chain has focused on financial rigor, brand storytelling, and product development. In under a year, Gap’s sales and profits have meaningfully improved, and its brands are beginning to be part of the cultural conversation again.
A few weeks ago, actor Anne Hathaway attended a Bulgari party wearing a white Gap shirt dress designed by the company’s new creative director, Zac Posen. Critically, Gap released the $158 dress to consumers, and it sold out within hours. This combination of marketing and exclusive product drops is what Gap had long been lacking and what competitors had already been doing.
Foot Locker had been declining over the last couple of years, but with the right combination of new strategies and a bit of luck, its turnaround is showing signs of life. Under CEO Mary Dillon, Foot Locker has worked to change its stores, where it does more than 80% of its sales. It has tried to create not only a better shopping experience for consumers but also a better place for its critical brand partners. Instead of two walls of shoes with competing brands mixed together, Foot Locker is changing its fleet so the brands have their own unique displays. Its new “store of the future” concept at a New Jersey mall has become its best-performing store in North America in just a few weeks.
Years into Nike’s strategy to cut out wholesalers and sell directly to consumers, the retailer is realizing it went too far and is now changing course. With refreshed stores and better product displays, consumers are converting more, too, and paying full price — even Foot Locker’s lower-income shoppers. “Our consumer... this is a category that is very important to them. So when people have discretionary income, it may be limited, but you’re gonna prioritize where you spend it, right?” said Dillon. “We’re proving that people are willing to spend full price, but you have to have the right products and serve it up in a way that makes it enticing, right? So that’s where the whole customer experience really matters.”
Dick’s Sporting Goods and Denim Trends
Elsewhere, Dick’s Sporting Goods posted a solid first-quarter report, with executives noting that average selling prices and transactions rose, and they saw no signs of consumers trading down for cheaper options. This might not mean shoppers are spending more broadly, though: Dick’s has long been considered a best-in-class operator that offers a solid shopping experience, meaning it can win even when consumers are picky with their spending.
Two retailers that didn’t have great quarters — American Eagle and Kohl’s — tell a story of executing poorly or missing out on trends. American Eagle handily beat earnings estimates thanks to a new strategy designed to boost profitable growth, but it fell short on revenue and issued cautious guidance that was slightly below Wall Street’s expectations. American Eagle president and executive creative director Jennifer Foyle told CNBC that the brand is working to cut out items that aren’t landing with shoppers and focus on the ones that are. She said the retailer was overly focused on jeggings in the past, but now, low-rise, baggy fits are in.
Denim is having a moment with shoppers. Search levels for denim are hitting peaks in a 20-year data set, particularly for categories like tops and dresses, according to a Morgan Stanley research note. However, American Eagle’s in-store execution seemed to miss the mark. During a store visit at the American Dream mall in New Jersey, an associate told CNBC that the location didn’t have the low-rise, baggy fit in-stores, and they were only available online. Meanwhile, there was a wall of jeggings. Still, denim was a strong performer for the company during the quarter, and it had a variety of other styles that resonated with customers.
Kohl’s Struggles and Competitive Landscape
Kohl’s is missing the mark in a far more meaningful way. The retailer posted dismal numbers, with both earnings and revenue falling well short of expectations. It cut its full-year forecast, and its shares plunged more than 20%, the stock’s biggest single-day percentage decline ever. The weak results illustrated a challenge the retailer is still contending with: keeping up with trends and staying relevant. CEO Tom Kingsbury told CNBC he expects the “head-to-toe” denim trend to play a role in the back half of the year, but it could already be out of style by the time Kohl’s gets around to adding the clothing items to its shelves.
Gap, one of the longtime denim leaders, didn’t seem to be concerned about denim going out of favor because the weather is warmer. CEO Dickson said the company is getting ready to launch its “exclusive lightweight denim fabric” dubbed “Ultra Soft” in time for the summer. Failing to chase trends has been an ongoing issue for the aging department store Kohl’s. Kingsbury told CNBC in March that Kohl’s used to buy product for the juniors department catering to teen girls — one of the most trend-driven areas of its stores — 12 to 14 months in advance. When the apparel hit the sales floor, it was “dead on arrival.”
In an age where viral TikTok videos dictate the life and death of trends, it’s more important than ever for retailers to stay on top of what’s working with customers and what isn’t. They’re not just competing with legacy players; they’re also vying for customers with innovative yet controversial upstarts like Chinese-linked Shein, which can go from an idea to an online product in a matter of weeks. That’s a far cry from the lead times at Under Armour, where it currently takes about 18 months to get a product from an idea to a showroom floor. During an earnings call with analysts, CEO Kevin Plank called the system “just plain uncompetitive in the 2024 landscape” as he laid out a plan to streamline the process.
Abercrombie & Fitch’s Stellar Performance
Meanwhile, Abercrombie & Fitch posted another stellar set of results, even as it begins to lap tougher comparisons. It has posted torrid growth in part because the company is responsive to its customers and has a nimble supply chain that has allowed it to chase trends quickly and efficiently. It posted its strongest first quarter in history and now expects sales to grow 10% in fiscal 2024, up from previous guidance of between 4% and 6%. CEO Fran Horowitz told CNBC that low-rise, baggy jeans are also uber-popular with its customers. During a recent visit by CNBC to its Hollister store just a short walk from American Eagle’s outpost, plenty of those styles of jeans were on display for shoppers as soon as they walked into the store.
Conclusion
The first-quarter earnings season has highlighted the importance of strategic execution and responsiveness to consumer trends. Retailers like Gap, Foot Locker, and Abercrombie & Fitch have demonstrated that with the right strategies, even in a challenging economic environment, it is possible to capture consumer attention and drive sales. As shoppers become more selective and value-conscious, retailers must continue to innovate and adapt to maintain their competitive edge. The lessons from this earnings season underscore the critical role of understanding and responding to consumer behavior, staying ahead of trends, and creating an engaging shopping experience. This approach will ensure they remain relevant and successful in an increasingly competitive and rapidly changing retail landscape.