Skip to Content

Shoppers are pulling back at Macy’s and Kohl’s

By Nathaniel Meyersohn, CNN Business

Middle-income shoppers have tightened their spending on clothing and home furnishings. That’s squeezing Macy’s, Kohl’s, Target and other chains.

Macy’s sales dropped 3.1% last quarter from a year ago, while Kohl’s tanked 6.9%. Kohl’s also withdrew its financial guidance, citing “significant macroeconomic headwinds” and the abrupt departure of the chain’s CEO Michelle Gass to Levi’s last week.

“We saw our middle-income customers continue to purchase fewer items per trip and trade down” to private brands, Kohl’s board chair Peter Boneparth said on a call with analysts Thursday.

Even Target, which has been one of the strongest retailers in the industry in recent years, has been hurt by the consumer pullback. Target’s sales inched up 2.7% last quarter, but profits tumbled, driving its stock down 13% on Wednesday.

“Consumers are showing increasing signs of stress and pulling back from discretionary purchases,” Target CEO Brian Cornell said on an earnings call.

The company said nearly all of the slowdown was driven by its discretionary categories, including home, clothing and sporting goods.

Families have been strained by inflation and have shifted their spending to groceries and paying for other daily essentials.

“More and more of their household budget goes towards the needs of the family, which limits the amount available for discretionary purchases,” said Christina Hennington, Target’s chief growth officer.

To entice customers to buy, these chains have ramped up promotions. This has pinched their profit margins.

Meanwhile, Macy’s earnings indicate that higher-income demographics have continued to spend on luxury brands, even as prices rise.

Although Macy’s own store sales fell 4.4% last quarter, Bloomingdale’s sales grew 5.3% and Bluemercury’s increased 14%. Macy’s also owns the two brands, which cater to wealthier shoppers.

Macy’s stock gained 12% Thursday as the results exceeded analysts’ forecasts.

The National Retail Federation, a trade group for the industry, says this divide among shoppers will continue during the holidays.

“There’s a continued stratification among households based on income levels,” National Retail Federation CEO Matthew Shay said on a call with reporters earlier this month. “Lower and middle income consumers are feeling the most pressure.”

The-CNN-Wire
™ & © 2022 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.

Article Topic Follows: CNN - Business/Consumer

Jump to comments ↓

CNN Newsource

BE PART OF THE CONVERSATION

ABC 17 News is committed to providing a forum for civil and constructive conversation.

Please keep your comments respectful and relevant. You can review our Community Guidelines by clicking here

If you would like to share a story idea, please submit it here.

Skip to content