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Although C-suite executives seem less stressed regarding the economy, consumers could still be in a state of shock. Kohl’s and Macy’s both revealed lower sales in the second quarter earnings call on Wednesday.
At Kohl’s, its sales fell 4.8 percent YoY and 4.1 percent from the year-to-date, and same-store sales fell 5 percent YoY. Macy’s had a harder time its net sales were down by 8 percent YoY, and same-store sales were down from Q2 the previous year. The two retailers have reiterated their full-year forecasts.
These earnings calls show that consumers of all income levels are cutting back on spending their discretionary funds. The two retailers, Kohl’s and Macy’s, focus on middle-income buyers. However, Bloomingdale’s the premium retailer that Macy’s owns, has seen its net sales as well as same-store sales decrease year over one year, by 3.6 percent and 2.6 percent, respectively.
Backstage Macy’s stores-in-stores that are off the mark, beat their parent store this quarter, which suggests that the preferences of consumers are moving towards lower-cost items.
Macy’s has taken “a cautious view on the consumer,” CFO Adrian Mitchell said, pointing at higher interest rates and less job creation as two possible reasons why customers could have a lower spending.
In the same way, the “macro environment continues to be challenging for our customer,” Tom Kingsbury, Kohl’s CEO, stated.
The problems of consumers were also apparent in Macy’s lower credit card profits. Its credit card sales were lower by $84 million compared to last year’s figures, Mitchell said, and Macy is experiencing more late payments than they anticipated. The rate of delinquency increased in July and June.
Beauty is on the rise:Though consumers may feel pressured, they’re eager to spend money on cosmetics. Beauty is growing across all brands that fall under the Macy’s brand, Tony Spring, president and CEO-elect of Macy’s said. The Sephora mini-stores in Kohl’s stores are an excellent source of revenue. They’ve helped Kohl’s cosmetics category increase by nearly 90% year-over-year and have seen a 20% similar sales increase in stores that opened in 2021 and 2022, as well as bringing people of a younger age and broader demographics to the stores, Kingsbury said.
