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As Consumers Make Fewer Purchases, American Retailers Are Lowering Clothing Prices

As Consumers Make Fewer Purchases, American Retailers Are Lowering Clothing Prices
American consumers have been buying less clothing due to inflation, which has forced retailers to slash prices in order to clear out inventory. The second-quarter net sales for Gap fell 8% from a year earlier to $3.86 billion, the retailer reported on Thursday. Gap is the latest to report a decline in apparel sales. Executives at American behemoths Walmart and Target offered steep discounts and rollbacks on clothing earlier this month.
Gap is “taking actions to sequentially reduce inventory, rebalance our assortments to better meet changing consumer needs," Katrina O’Connell, Gap Inc. chief financial officer, said in a statement.
The firm's profit margin were harmed by steep discounts on clothing, especially at Old Navy. Certain sizes and styles were unavailable at Old Navy stores, and O'Connell claimed that Gap struggled with product mix disparities for items like "mid-tops and casual shorts."
As the firm starts to get rid of inventory, customers might see more promotions. O'Connell stated in a Thursday earnings call that she anticipates third-quarter inventory levels to be similar to Q2 levels, with improvements in the fourth quarter.
U.S. retailers of clothing and accessories report largely stagnant sales. According to Census Bureau data, they only experienced an average month-over-month growth of 0.2% over the 12-month period that ended in July.
Sales at Hollister, the more affordable division of Abercrombie and Fitch, fell 15 per cent in the second quarter compared to the same period last year, the firm reported on Thursday, as trends shifted away from core categories and pants styles. Sales at Abercrombie were up 5 per cent.
"Assuming recent trends remain consistent, we expect to continue to leverage markdowns in Q3 to keep seasonal items turning," Abercrombie & Fitch CEO Fran Horowitz, said in a Thursday call to investors.
In conference calls this week, Victoria's Secret, Urban Outfitters, and Kohl's informed analysts that customers are only purchasing specific types of clothing. The firms did not provide any specific examples, but a search of the Victoria's Secret website revealed that customers were purchasing bras on sale for $52 for two, while its PINK line for younger customers appeared to be having trouble moving a pair of $52.95 joggers.
Sales for brands geared toward younger customers are falling, according to Urban Outfitters and Victoria's Secret. Compared to the company's Victoria brand of intimates and sleepwear, Victoria's Secret's PINK clothing line experienced slow sales.
“We will be very prudent on our purchases” of apparel “for the back half of the year,” Victoria’s Secret Chief Executive Martin Waters said during the company’s earnings call Thursday.
Younger, less well-off customers at Urban Outfitters resisted buying full-priced items and waited "for promotions before buying," according to the CEO of Urban on Tuesday.
Sales of junior's clothing, according to Kohl's, decreased in the second quarter as a result of "too much fashion, not enough of the basics" in the designs. Women's clothing performed better than other categories.
“Some of the fashion choices were a little too young, I would say. That's been course-corrected,” Kohl’s CEO Michelle Gass said on a Tuesday earnings call. “I'd say one of the things that has hurt us is with all (the) supply chain disruption that's happened, we were not able to get in and out of some of those items.”
Both Walmart and Target are aggressively lowering prices as a result of their struggles to sell clothing that was several seasons late. One encouraging sign, according to Target, was the "meaningful growth" in sales of fashionable women's clothing last week.
When compared to the higher-end Banana Republic brand, which sells dressy office wear, more items have been sold at regular prices, according to Jessica Rami, senior research analyst at Jane Hali and Associates. She has noticed that the Gap and Old Navy labels are heavily discounted.
Demand for dressy looks and business-appropriate clothing, according to Macy's and Kohl's, is strong. As more people started working again, according to Kohl's, "elevated casual" looks for both men and women performed better.
For customers who spend more time in offices, it has been investing in dressier looks from labels like Simply Vera, Lauren Conrad, and Nine West. It is still organising clearance sales to get rid of unwanted items.
According to Macy's CEO Jeffrey Gennette, occasion-based clothing for men and women is a "very healthy category," with men's work clothing average selling prices rising by 29 per cent and "missy career" items rising by 20 per cent. To sell off excess inventory, other categories needed to run aggressive promotions.

Christopher J. Mitchell

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