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Retailers are raising their forecasts as resilient and optimistic consumers open their wallets again.
Crocs (CROX), Lululemon (LULU), American Eagle (AEO), and Abercrombie & Fitch (ANF) posted sales gains this week as consumers demonstrated a willingness to spend in the past quarter amid increasingly positive economic trends. Outlook has been updated.
“It looks like the holiday season has been pretty strong for a lot of retailers,” Telsey Advisory Group’s Joe Feldman told Yahoo Finance at the ICR conference. While consumers remain selective about their purchases, the increase in spending was consistent with expectations that people would shift their spending away from Taylor Swift. [experience] I ended up buying things,” Feldman said.
With food inflation slowing (up just 1.7% last month), excess funds are being shifted to discretionary spending, Feldman said. The fact that gas prices have remained relatively flat has also been “a big help.” As of Tuesday, the national average was $3.08, compared to $3.28 a year ago.
Crocs now expects its total revenue in 2023 to be $3.95 billion, up 11% year over year. This is higher than previous guidance for a 10-11% increase. Crocs brand sales are expected to increase 13% to more than $3 billion, while HEYDUDE brand sales are expected to be approximately $949 million.
“Overall, we felt we had a very strong holiday season, with developments in line with expectations,” Crocs CEO Andrew Rees said at the ICR conference. “We thought it would be a difficult environment with a big promotion going on. We came up with a plan that worked really well and we’re very happy.”
Trends toward casual wear, comfort-focused functionality, and personalization continue to make customers fall in love with Crocs. Mr Rees said affordability was also “very important” in this environment. Crocs stock jumped 20% on Monday following the announcement, but has since pared some of its gains.
Lululemon, another beneficiary of casualization, expects fourth-quarter 2023 sales to be in the range of $3.17 billion to $3.19 billion, up 14% to 15% year over year. There is.
William Blair analyst Sharon Zakfir said the athleisure wear brand, which recently joined the S&P 500, is seeing both category growth and global growth.
U.S. consumers “want to do business…they want to be aspirational,” Zachfir told Yahoo Finance. “These kinds of affordable luxuries are almost out of the way…Twenty years ago, people would have said Starbucks was an affordable luxury.”
This could be just the beginning of a new boom cycle for the company, Zakfir added, as “the company is still very early in its brand awareness cycle.”
Specialty retailers Abercrombie & Fitch and American Eagle also enjoyed the holidays.
Abercrombie expects fourth-quarter net sales to increase in the high teens, compared with previous guidance of a low double-digit increase. Operating margin for the quarter was expected to be 15%, beating expectations of 12% to 14%.
CEO Fran Horowitz said in a release that customers responded to the company’s “compelling product selection and compelling marketing.”
Similarly, at American Eagle, revenue for the fourth quarter ended Dec. 30 was up 8% year-over-year. The company raised its fourth-quarter operating profit forecast to $130 million from its previous estimate of $105 million to $115 million.
CEO Jay Schottenstein is confident in his team’s ability to maintain “inventory and promotional discipline” and “achieve healthy revenue growth and improved occupancy” while prioritizing cost control. said.
However, Adam Davis, managing director of Wells Fargo Retail Finance, told Yahoo Finance at a conference that the holiday promotion will not be included in the next quarter’s results because discounts could weigh on profitability. He said that people should be careful about the impact.
”[The holiday], it was very promotional…there were sales at the end of September, October and November. “It was like Black Friday all month… it never went away,” he said.
Feldman said the promotion wasn’t as “deep” as last year, so he’s not too worried.
“The product was 30% off. [this holiday]It wasn’t 40-50% off,” he explained, noting that “overstock” in 2023 caused the deep discounts.
“All retailers say their full-price sales this season were higher than last season,” Feldman added.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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