Nov 21 (Reuters) – U.S. retailers including apparel, electronics and home improvement stores are bracing for a tough holiday season, as higher discounts are expected to boost spending expected by businesses during the most important time of the year. This indicates that there is a possibility that the level will not be stimulated.
U.S. economic demand is slowing, October retail sales statistics showed. Many retailers said Tuesday their outlook for the holiday season was mixed after a shaky start to the fourth quarter as most Americans gear up for Christmas shopping.
Retailers plan to rely on competitive promotions and will start holiday sales early to motivate customers to open their wallets over Thanksgiving weekend.
However, home center retailer Lowe’s (LOW.N), electronics retailer Best Buy (BBY.N), and department store chain Kohl’s (KSS.N) all reported sales of stores that had been open for at least a year in the most recent quarter. He said it had decreased. This year’s sales forecast has been revised downward.
“In today’s macro environment, consumer demand has become even more uneven and difficult to predict,” Best Buy CEO Cory Barry said in a statement.
The S&P 500 Consumer Discretionary Sector (.SPLRCD) fell about 1% on Tuesday, but the index was up more than 31% so far in 2023.
U.S. holiday sales are expected to increase at the slowest pace in five years as Americans are likely to skip the holiday shopping season, according to data from the National Retail Federation.
A woman carries a Staud shopping bag as she walks past people lining up for a pop-up shop in the Soho neighborhood of New York City, USA, on September 21, 2023.Reuters/Bing Guan/File photo Obtaining license rights
Industry leader Walmart (WMT.N) last week warned of cautious consumer spending as the holiday season begins.
“As we saw in the third quarter, we believe the discretionary goods category will continue to be challenged, including categories such as household goods, apparel and consumer electronics,” Fitch analyst David Silverman said. “It is likely that the economy will remain as difficult or sluggish as it has been in the past.”
Retail industry executives said rising interest rates, inflation and the resumption of student loan repayments will put pressure on consumers’ wallets.
Lowe’s CEO Marvin Ellison said on a conference call with analysts that while consumer spending remains relatively resilient, “spending on so-called activities, like services, concerts, restaurants, travel, etc. “But that discretionary money is now being spent on more activities than it was in a year.” Before. “
Still, some investors expect “some positive surprises” in the holiday sales starting on Black Friday.
Thomas Hayes, chairman of hedge fund Great Hill Capital, said: “People are feeling some hope now that the inflation numbers have improved and interest rates have stopped rising…Black Friday and Cyber Monday were worse than expected. I wouldn’t be surprised if it was a little better.” He said.
Apparel retailers Abercrombie & Fitch (ANF.N) and American Eagle Outfitters (AEO.N) reported strong quarterly results on Tuesday, but their shares remained depressed on widespread concerns about falling consumer spending. did.
“With so many retailers warning of weaker demand for discretionary products, investors are skeptical that American Eagle and Abercrombie can maintain their upward trajectory,” said Rachel Wolf, senior analyst at Insider Intelligence. It may become.”
Report from Bangalore by Ananya Mariam Rajesh, Sabyata Mishra, Granth Vanaik and Jubee Babu.Editing: Shaunak Dasgupta
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