As social calendars fill with weddings, parties and other activities, companies in the beauty and fashion business have posted upbeat earnings reports.
“In April, we relaunched makeup services in all stores, just in time to support special events such as proms, graduations and weddings,” said Ulta Beauty Inc.
Chief Executive David Kimbell on that company’s first-quarter earnings call, according to FactSet.
Ulta reported profit and sales that sailed past expectations.
“Macy’s sales were also affected by an accelerated category shift away from the popular pandemic categories, such as casual and activewear as well as soft home, and into more occasion-based apparel, like dresses, women’s shoes, men’s clothing and furnishings,” said Macy’s Inc.
Chief Executive Jeff Gennette on the department-store retailer’s first-quarter earnings call, also according to a FactSet transcript.
“This shift accelerated faster than we expected. It contributed to an increase in store foot traffic as consumers are more likely to shop in-person for occasion-based apparel.”
Macy’s also beat expectations.
And Nordstrom Inc.’s
Chief Executive Erik Nordstrom said the luxury retailer’s shoppers were looking for merchandise for “long-anticipated” occasions during its most recent earnings.
See: For Nordstrom, Allbirds is in and the Trunk Club styling service is out
These reports differ from those of Walmart Inc.
and Target Corp.
which were hurt by consumer spending shifts. Also commenting on the speed of the change in consumer behavior, Target Chief Executive Brian Cornell said it had too many “bulky” items for the home, like TVs, kitchen appliances and outdoor furniture, which hurt the quarter.
To be sure, Target and Walmart both sell clothing and beauty items as well. Target executives note that its customers are coming to its stores willing to “splurge” on a pair of shoes or other items for a summer gathering. And beauty was a standout category for Target.
Read: Target stock plunges as profit drops on consumer spending shifts and jump in freight costs
And: Target stock downgraded as multiple analyst groups blame execution for profit hit
But the merchandise mix at Macy’s and Nordstrom, for example, differs from Target and Walmart.
Moreover, Macy’s Gennette pointed out that the spending behavior for upper income customers diverged from lower income shoppers.
“During the first quarter, all income tiers continued to engage with us, led by the higher income and middle income consumers,” Gennette said.
“Luxury sales remained a standout for our business, as shopping behavior among high-income consumers has so far remained much less affected by inflation. These trends show the benefit of our balanced portfolio.”
Macy’s lineup also includes luxury retailer Bloomingdale’s and beauty retailer Bluemercury, which, Gennette said, also saw a surge in color cosmetics in the lip, eye and face categories as mask restrictions eased.
Also: Walmart says consumers are trading down to private label for items like dairy and bacon
Other premium beauty and fashion companies that reported earnings that beat expectations are Olaplex Inc.
Ralph Lauren Corp.
and Capri Holdings Ltd.
parent to Michael Kors and Versace.
“Upbeat earnings reports from department stores like Macy’s and Nordstrom somewhat complicate the overall narrative of a weakening consumer,” wrote David Silverman, senior director at Fitch.
“While retail headwinds such as rising costs and shifting consumer spending patterns should continue to pressure the sector, results are likely to remain disparate across companies given varying category and price point exposure and relative success navigating the current, dynamic environment.”
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Americans with middle incomes are increasingly feeling inflation pressure, which could further alter consumer behavior in the months to come.