Abercrombie, Urban, and other trendy retail names tumble despite strong holiday growth
Y2K problems… Retailers spruced up their holiday-quarter outlooks yesterday ahead of their earnings reports, but investors weren't cheery. Abercrombie stock sank 16% after the denim dynamo said it expects a 7% jump in holiday sales, a big slowdown from the 21% growth it posted for Q4 a year ago. Urban Outfitters stock dipped even after the company scored record holiday sales fueled by its Nuuly rental service and Free People and Anthropologie brands. American Eagle fell after bumping its quarterly outlook, but said full-year sales would drop because of a shorter shopping window.
Department doldrums: While Nordstrom hiked its forecast, Macy’s and Kohl’s said sales would likely come up short.
Bright spot: Lululemon stock stretched up after the athleisure icon raised its Q4 sales and profit outlook as shoppers paid full price for yoga sets.
Fourth-quarter frenzy… The National Retail Federation expects holiday sales to have grown between 2.5% and 3.5%. Compare that to 2021, when holiday sales surged 14% on stimulus-fueled splurges. The spending slowdown comes as retailers try to lure deal hunters: clothing saw the steepest holiday discounts, with prices slashed about 33% as brands tried to fend off low-priced ecomm rivals Shein, Temu, and Amazon.
It’s hard to stay on the top shelf… Millennial staples like A&F, Urban Outfitters, and American Eagle have been on a tear, but it may be getting harder to keep up double-digit growth as discount competition intensifies. In a survey last year, over a third of Gen Z consumers said they’d made at least one monthly purchase from Shein, Temu, or TikTok Shop.