Why Nordstrom Steamed Ahead as Old Navy Sank

Goodbye, sweatpants; hello, skirt pants.

One clear signal from apparel retailers reporting recent results is that customers are finally starting to dress like adults again. However, as with the customers they attract, there are do’s and don’ts: Brands with higher price tags are feeling much less inflationary than affordable brands .

Among Gap’s brand portfolio, Banana Republic, which sells work-appropriate clothing, saw sales for the quarter ended April 30 grow 24% from a year earlier in the year. As sales for higher value, Old Navy’s comfort focus fell 19%. compounded by self-inflicted inventory woes. Sales of women’s clothing, dresses and skirts at Banana Republic increased 62%, while sales of men’s suits nearly doubled. Urban Outfitters URBN 3.98%

has seen the pricier brands, Anthropologie and Free People, fare much better than the brand of the same name, catering to younger buyers.

A similar move is taking place among department stores. Macy’s USA 2.27%

shows that sales at luxury department store chain Bloomingdale’s rose 27% last quarter compared with 10% at the eponymous chain. Macy’s CEO Jeffrey Gennette said in an earnings call Thursday that luxury sales are a “highlight” for the business, noting that shopping among consumers High-income consumers have so far been less affected by inflation. Nordstrom,

JWN 7.84%

another luxury department store chain, saw sales for the quarter ended April 30 increase by nearly 19% or nearly double the levels polled by analysts. of FactSet was expecting.

It’s not entirely surprising that higher-income consumers – who are more likely to have worked remotely during the pandemic – are now shopping for clothes that fit their travel, social and back to their office. With hybrid working arrangements becoming the norm for office workers, returnees can spend lavishly on lesser but nicer items.

Stores at that higher price point can control inflation much better. Ralph Lauren RL 0.47%

said the average retail unit – or average selling price – grew 13% last quarter from a year earlier after growing 31% the year before. According to Chief Financial Officer Jane Nielsen, the price growth has helped the company “more offset” higher-than-expected shipping costs. In contrast, while Abercrombie & Fitch ANF 3.20%

After posting better-than-expected revenue, the company still suffered a net loss due to high transportation costs.

There can be many opposites. Although office occupancy has recovered since the Omicron outbreak, the rate is still around 43 percent of pre-pandemic levels, according to Kastle Systems. The Wedding Report, a research firm that surveys the wedding industry, predicts there will be a record number of weddings in the US this year.

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As more consumers continue to travel, apparel sellers who rely more heavily on tourist traffic could also reap more benefits in the upcoming quarters. Checkpoint travel numbers from the Transportation Security Administration are recovering, but are yet to return to 2019 levels. Macy’s says its department stores are starting to benefit from traffic. international tourists – especially the bullet trains at Herald Square in New York and Union Square in San Francisco.

Historically, 3% to 4% of Macy’s Inc.’s business. international tourism. According to a research note from JP Morgan,

Tourists accounted for 10% to 15% of Ralph Lauren’s pre-pandemic North American brick and mortar sales. Tourists account for about a fifth of global sales at owner Michael Kors .’s Capri Holdings CPRI 3.68%

and 30% to 40% of US sales at PVH, owner of Calvin Klein, according to JP Morgan.

Some high-end clothing brands still have pretty attractive pricing. For example, shares of Ralph Lauren will sell about 1.1 times over the next 12 months, or 26% below the 10-year average. Capri Holdings’ valuation on the same basis is about 48% below the 10-year average. Unlike the clothes that decorate their racks, there are still some deals to be found.

Write letter for Jinjoo Lee at jinjoo.lee@wsj.com

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https://www.wsj.com/articles/why-nordstrom-steamed-ahead-as-old-navy-sank-11653746400?mod=rss_markets_main Why Nordstrom Steamed Ahead as Old Navy Sank

Edmund DeMarche

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