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Top Retailers Offer Mixed Consumer Trends

American Eagle, Gap, Ralph Lauren Offer Mixed Consumer Trends

Retail earnings reports show a divergence, with affluent consumers maintaining their spending, while lower-income consumers are holding off on nonessential purchases. Mall retailer American Eagle Outfitters confirmed this trend, cutting its revenue outlook. It now sees sales flat to slightly down this year.

  • American Eagle stock sank 11.9% on Thursday. An earlier forecast had sales trending flat to slightly higher this year. CEO Jay Schottenstein said spending by mid- to low-income customers seems volatile.
  • Fellow clothing retailer Gap posted a surprise first-quarter adjusted profit, though revenue fell 6%, and same-store sales fell 3%. Shares jumped 16%. Gap, which has been a turnaround story, expects second-quarter net sales to drop in the mid- to high-single digits from a year ago.
  • Despite a forecast drop in sales, Gap believes its margins will expand in both the second quarter and the remainder of fiscal 2023. First-quarter adjusted gross margins increased 5.7 percentage points compared with the previous year.
  • Luxury apparel maker Ralph Lauren beat expectations for fourth-quarter results, benefiting from a 13% surge in revenue from Asia that offset slight drops in North America and Europe. Ralph Lauren expects first-quarter revenue to be “down slightly.” Its stock rallied 5.3%.

What’s Next: Beauty products chain Ulta Beauty fell 8.2% late Thursday after missing same-store sales expectations and keeping its full-year same-store sales outlook, citing an “evolving” consumer backdrop. Same-store sales rose 9% in the first quarter and are seen rising 4% to 5% for the full year.

Janet H. Cho via barrons