Apparel sales might catch a chill as winter nears
Apparel sales might catch a chill as winter nears
Nike reported stronger than expected earnings Thursday, though revenue came in lower than investors forecast. The sneaker maker is the most valuable apparel company in the world and is often looked to as a bellwether of consumer demand. American shoppers have proven remarkably resilient in the face of higher prices, but there are signs of caution ahead.
The outlook for apparel sales has a lot to do with the all-important end-of-year shopping season. Which has arrived.
But there’s some softening in the winter shopping forecast, said Zachary Warring, an analyst at CFRA.
“We don’t think it’s, you know, an apocalypse. We just think maybe it’s flat to down slightly this year,” Warring said.
Inflation has eased. But many low- and middle-income consumers have run through their pandemic savings.
And they’re still feeling the pinch of higher prices for things they have to buy — like food and gas.
“It’s kind of the first thing that people cut when, you know, they’re in rough times is the nonessentials. If you already have clothes, you don’t need more clothes,” Warring said.
And some shoppers could be feeling even more pessimistic with student loan payments resuming next week, said Audrey Chee-Read, an analyst at Forrester.
“I do think that there is going to be more of a pause and a hesitancy when it comes to buying,” Chee-Read said.
But she stressed that it’s a pause from a period of nearly nonstop buying over the last few years.
And some people will continue to shop.
“Especially in a category like apparel and footwear, where it’s so important for consumers to signal ‘This is who I am, this is my identity,’ consumers are going to find a way to buy what they want to buy to show who they are,” Chee-Read said.
They might just be looking in different places, said Sonia Lapinsky, a retail strategist at AlixPartners.
“They’re really trading down, they’re being much more cost-conscious,” Lapinsky said.
She said discount retailers, fast fashion and used clothing are likely to do well. So it’s a good time for ’80s, ’90s and 2000s style to be trending.
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