Both retailers are suffering from an affliction plaguing most of their competitors: A glut of unsold inventory that they're resorting to pricing at deep discounts to move.
They are also cutting back on merchandise orders to match shopper demand. Almost every major retailer has said in recent weeks that shoppers are making fewer trips to the store and when they do, they're looking for deals. Some are trading down to cheaper alternatives.
Kohl’s last week slashed its sales and profit expectations for the year, a result of its stepped-up price cutting to shed unwanted merchandise. Both
Soaring prices have forced families to become more cautious. They are doing without new clothing, electronics, furniture and almost everything else that is not absolutely necessary. And spending habits have shifted faster this year than anyone expected. After being cooped up at home during the pandemic, Americans seemed to shift almost overnight to spending on dinners out, movies or concerts, and travel.
“The consumer's got some pretty sour news out there,"
In a statement,
The shift in spending habits has left retailers with elevated inventories of products that have become difficult to move.
However, according to Gennette, customers are not trading down, or substituting typical purchases with a cheaper brand. That phenomenon is rampant at retailers like
At
Sales slipped roughly 1% to
Yet compared with the same period last year, sales and profit have cooled.
Sales at stores opened at least a year fell 1.5%, or 1.6% including licensed businesses like cosmetics. In contrast, its upscale
In one more pandemic-related shift, Gennette said that store locations in downtown areas are bouncing back as more people return to the office. Those sales have yet to return to levels more common before COVID-19, however.
Uncertainly about what Americans will buy and what they want has made it difficult for retailers to figure out what is coming as the holiday season approaches.
The company said its outlook for the rest of the year is based on the “continued deterioration of consumer discretionary spending” and high levels of inventory, both at
Inventory levels increased 7% in the three-month reporting period compared with last year, but it's down 8% compared with 2019.
Meanwhile,
Analysts were expecting
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