By Jennifer Williams
Retailers are moving to protect their all-important holiday sales season from the double downer of this year's U.S. presidential election and a compressed shopping period.
The dead-heat election is injecting hesitation into some already-stretched consumers' willingness to spend. And a quirk in the calendar means there are five fewer shopping days than usual between Thanksgiving and Christmas, eating into the time retailers have to attract shoppers and convince them to splurge.
"The number of days is lower, so the importance on those days is greater, " said Chuck Grom, a senior retail analyst at Gordon Haskett.
Retailers including Macy's, Lululemon Athletica, Skechers and Academy Sports & Outdoors are working to resist the undertow. Some are rolling sales out earlier, or plan to run additional promotions and showcase more new wares. Others, despite planned efforts to woo shoppers, are cutting their expectations for sales this year.
U.S. shoppers' spending was strong in September, rising 0.4% from a month earlier, but consumer confidence declined unexpectedly in mid-October. American consumers' retail spending this November and December is anticipated to grow between 2.5% and 3.5% from the holiday period last year, totaling between $979.5 billion and $989 billion, according to a forecast from the National Retail Federation. That growth rate would be down from 3.9% last year and 4.7% in 2022, according to the NRF.
Shoppers in the U.S. will be looking for bargains this winter. Sixty-two percent of Americans anticipate feeling financial strain this holiday season, down from 67% in 2023, according to a holiday shopping consumer survey from Bank of America. As a result of rising prices, nearly six in 10 survey respondents plan to do more of their winter shopping at discount stores than they did last year.
Academy is focusing on value to entice its customers, who tend to be middle-income and are increasingly using credit cards or buy now/pay later options for purchases, said Chief Financial Officer Carl Ford.
"They've been budget-conscious for a while," he said. "I don't think that that's going to magically get better."
The sporting goods and outdoor recreation retailer is offering sales earlier this year, in November, to maximize the number of holiday shopping days, he said. Academy is also keeping its inventory tight, while carrying trendy brands and products, such as certain Nike footwear, in more stores, he added.
The chain is additionally planning to be more promotional this winter where it makes sense, Ford said. In recent years, the company narrowed its promotion strategy to focus on specific occasions, such as back-to-school, Fourth of July and Memorial Day. Promotions will pick up for the winter holiday period, according to the finance chief.
Others are relying on fresh merchandise.
Footwear and apparel brand Skechers is counting on new items, some in collaboration with farm-equipment maker John Deere, new golf shoes and expanded hands-free slip-in footwear offerings, to appeal to consumers, said CFO John Vandemore.
"You could argue that we over-innovate to test a lot of things to see what works," he said. "But the current environment tells us that we can't stop." Skechers doesn't disclose how much it invests in product innovation.
Vandemore says he is watching for signs that consumers are meaningfully cutting back -- both online and in stores -- as the holidays approach. That would spur him to look at a range of options, including increased promotions to clear out inventory.
At midyear, however, Skechers shoppers were spending, with second-quarter sales up 7.2%, to $2.16 billion, compared with a year earlier. Skechers reports third-quarter results on Thursday.
"I don't expect it to be robust holiday growth," Vandemore said. "But we'd like to see measured growth."
Macy's, the company behind the namesake department-store chain as well as Bloomingdale's and Bluemercury, is adding to its mix of holiday gift options with wrapped beauty and fragrance sets and festive apparel. Shoppers will find 40% new products across categories this holiday season.
The retail giant isn't planning more promotions, but the deals will apply to a wider assortment of goods, according to Macy's executives at the Goldman Sachs Global Retailing Conference last month.
Despite plans to lure in shoppers, some companies have already factored a muted holiday season into their financials for the year.
Lululemon is expecting a roughly 3-percentage-point hit because of the shorter shopping period. In August, the athleisure company cut its 2024 outlook to roughly $10.38 billion to $10.48 billion in net revenues, down from the $10.7 billion to $10.8 billion it forecast in June.
The company is trying to halt a slowdown in its women's business through steps such as adding more seasonal colors and styles to its lineup and fast-tracking new styles, executives have said. But these efforts aren't anticipated to fully counter the effects of the more compact holiday shopping period.
"We feel optimistic with the work our teams are doing to improve the newness we offer within our U.S. women's assortment," Lululemon Chief Financial Officer Meghan Frank told analysts at the end of August. "But we continue to acknowledge the uncertainties in the macro environment and plan the business prudently."
Retailers may report slower sales with fourth-quarter results early next year. But a tricky holiday season might not be the only culprit, said John Kernan, a managing director at investment bank TD Cowen.
"There will at times be companies that plead the macro," he said. "To us, that could be code for the competitive environment is too difficult for us right now, and the lower-income consumer is pulling back."
Write to Jennifer Williams at jennifer.williams@wsj.com
(END) Dow Jones Newswires
October 22, 2024 06:00 ET (10:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments