By just about any measure, retailer earnings have been positive nearly across the board. The majority of companies who’ve reported second quarter earnings have surpassed analyst expectations and all indications are that consumers were still spending at a relatively healthy clip through the middle of August.
A surprising number of chains raised full-year guidance, and the general consensus is that shoppers have so far readily absorbed price increases without much push-back. However, many analysts are questioning whether retailers are simply being too optimistic too early.
With stock prices plunging, consumer confidence tumbling and economic reports pointing to an increasingly likely chance for another recession, we take a look at retail executive commentary from recent earnings conference calls. The bottom line is caution seems to be the watchword for apparel executives heading into the all-important holiday season:
“In addition to the increased uncertainty in the markets and economy, we also don’t know how higher sourcing costs will impact us or how customers might react to expected price increases throughout all of retail. We also can’t predict how promotional traditional retailers could become in the back half of the year. All of this makes it much more challenging to forecast business trends for the important back-to-school and holiday periods.” – Michael Balmuth – CEO, Ross Stores
“As expected, we’ve incurred significant cost increases across all apparel categories this fall, approximately 10% to 15% overall. Our results in the second quarter, in addition to more specific testing by price point and lifestyle, indicate that our plans in fall for price elasticity on a 1:1 ratio are very sound. They won’t be the same by area or price point, but overall, that’s our plan for the fall season, and the plan appears to have been well-founded.” – Kevin Mansell – CEO, Kohl’s Continue reading ‘Retail Executive Commentary on Cost Inflation Pressures & Economic Uncertainty’
