Mass market retailers are absorbing cost increases rather than passing them onto consumers.
Keeping prices at levels consumers are used to remains the top priority, at least for now.
FINANCE
Macy’s (USA) reported Q3 net income totaled $239 million, compared with a $91 million loss a year ago. Sales reached $5.44 billion, up 36.4% year-on-year. The retailer raised its outlook for the full year.
- Macy’s added 4.4 million new customers.
- Same-sales rose 37.2%, while digital sales were up 19% year-on-year.
- Online accounted for 33% of Macy’s sales.
- Dresses and men’s tailored clothing continued to improve.
TJX Cos (USA) said that Q3 net sales totaled $12.5 billion, up 24% year-on-year. Net income totaled $1.02 billion, up 17.6% year-on-year.
Walmart (USA) reported Q3 revenue reached $140.5 billion, up 4.3% year-on-year.
- Inventory is up 11.5%, helping the retailer to avoid stock outs.
- The company also raised its forecast for the year.
Target (USA) reported Q3 total revenue rose 13% year-on-year to $25.65 billion. Net income rose from $1.01 billion a year ago to $1.49 billion, up 47.5% year-on-year.
- Same-store sales grew 12.7%, beating analysts’ estimates of 8.7%.
STRATEGY: Big box retailers put inventory over profits this quarter. Better to take a short term profit hit then suffer the potentially long term impact of losing customers who search elsewhere for goods.
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RETAIL
“We are in an excellent inventory position” ahead of the holidays, said Ernie Herrman,CEO of TJX. Most other big box and discount retailers have made similar statements.
Foot Locker (USA) is combining its Champs lifestyle brand and its performance brand, Eastbay, within the same stores offering shoppers a wider selection of merchandise.
Macy’s (USA) said it will ‘pause’ its planned closing of 125 stores noting that stores have played a key role in driving both online and offline sales.
House of Fraser (UK) is to close its flagship store on London’s Oxford Street in January, after landlords opted not to renew the department store’s lease. The property will allegedly be redeveloped into office space.
MARKETS
Despite rising inflation, US consumers spending rose 1.7% in October. Though consumer sentiment surveys show declining confidence, actual spending numbers show that, at least for now, consumers are keen to spend
- Sales are up 16.3% year-on-year.
- Clothing stores fell 0.7% year-on-year, but were still up 25.8% from the same period in 2020.
UK retail sales rose 0.8% in October – the first increase in six months, according to the Office for National Statistics. Some analysts attribute this to consumers starting their Christmas shopping earlier on rumours of looming inventory shortages.
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