US retail giants Macy’s and Kohl’s are experiencing a significant sales recovery thanks to a robust back-to-school season and a surge in consumer spending on fashion and beauty products. Macy’s shares shot up by 17% following the announcement that it would resume paying dividends, a practice that was halted last year due to uncertainties caused by the pandemic. Similarly, Kohl’s stock saw an 8% increase.
The back-to-school shopping period, typically occurring between mid-July and early September, holds immense importance for department stores. This year, Macy’s is expected to reap significant benefits from the back-to-school season, especially since many students were primarily engaged in remote learning the previous year. Analysts, such as Jessica Ramirez from Jane Hali & Associates, have highlighted the strong demand for apparel, footwear, and backpacks, representing a substantial opportunity for department stores that were deeply impacted by the pandemic.
Industry estimates suggest that back-to-school expenses on various items will surpass $100 billion this year, aided by stimulus checks and advanced child tax credits. Macy’s and Kohl’s have experienced a surge in sales during the second quarter, with Macy’s witnessing a 59% increase and Kohl’s a 31.4% rise. These sales spikes can be attributed to the revival of social events and the gradual reopening of offices in the US as more individuals receive vaccinations.
Jeffrey Gennette, CEO of Macy’s, acknowledged the sustained strength in categories such as formal clothing, fine jewelry, and fragrance as customers prepare for in-person social gatherings and a return to school. Impressively, Macy’s attracted nearly 5 million new customers in the second quarter alone. Recognizing the shift towards physical stores, Macy’s has also announced plans to introduce Toys “R” Us shop-in-shops in 400 of its outlets starting next year.
Both Macy’s and Kohl’s are working diligently to expedite supply chains ahead of schedule to address concerns among shoppers regarding potential shortages during the upcoming holiday season. Macy’s expects full-year net sales to range between $23.55 billion and $23.95 billion, surpassing its previous projection of $21.73 billion to $22.23 billion. Similarly, Kohl’s anticipates a low-twenties percentage increase in full-year net sales, compared to its earlier estimate of a mid-to-high teens percentage rise.
Overall, Macy’s and Kohl’s have a positive outlook for the future due to a robust back-to-school season and increased consumer spending on fashion and beauty products. With strategic moves like the introduction of Toys “R” Us shop-in-shops, the companies aim to further capitalize on these trends and meet their customers’ evolving needs.
Useful Links:
– Back-to-School Indicator: NPD Group Forecasts 6% Rise in Sales, Study Says
– Macy’s Blows Past Wall Street’s Q2 Estimates, Raises Full-Year Sales Outlook
