US retail profits show sinkhole among shoppers as inflation rises


NEW YORK, May 26 (Reuters) – Retail earnings this week illustrated a split in the shopping habits of more and less affluent Americans facing the highest inflation in four decades.

As high inflation has pushed up the prices of everything from televisions to toothpaste, low-income consumers have curtailed their spending habits, according to the stores that supply them. High-income shoppers have shown resilience, buying tailored suits, designer dresses and shoes, according to the department stores that serve them.

On Thursday, Dollar General said shoppers were buying more food and beverage items instead of clothing, home and seasonal products. Rival Dollar Tree said shoppers are responding “favorably” to its new “higher value” products and wider range of items priced at $3-$5. Read more

Join now for FREE unlimited access to Reuters.com

Register

Stores under the Dollar Tree banner achieved their best quarter in company history. Same-store sales jumped 11.2%.

At department store operator Macy’s, which tends to appeal to middle-to-upper-income shoppers, shoppers spent money on non-essentials such as tailored suits, dresses and beauty products. Read more

Sales at its high-end department store Bloomingdale’s rose 28% in the first quarter, while sales were up 25% at its luxury beauty store Blue Mercury. Macy’s CEO Jeff Gennette said that in households earning more than $75,000 a year, the customer was “very healthy and spending levels were quite high.”

Although households earning less than $75,000 a year were “hardest hit” by inflation, Gennette said, they spent more time shopping at Macy’s discount outlets.

Macy’s reaffirmed its full-year sales forecast and raised its profit forecast after several other retailers, including Walmart (WMT.N), Target (TGT.N) and rival Kohl’s (KSS.N), reported cut their forecast, citing inflation, inventory and supply chain issues. Read more

Macy’s rival Nordstrom (JWN.N) also bucked the gloomy outlook trend, posting a solid boost to its forecast.

Michael Witynski, CEO of Dollar Tree, said it was increasing investment in workforce, distribution and its supply chain.

“We are now taking the necessary steps to position ourselves for accelerated growth in what I consider to be the most attractive retail sector, especially in the current macroeconomic environment,” he said Thursday. .

Biggest rival Walmart revealed in its results last week that many shoppers were saving money by choosing more private label, private label meat, deli meats, bacon and dairy products. Many low-income shoppers also opted to buy milk in half-gallon containers rather than full gallons, Walmart said.

But even at Walmart, some more affluent shoppers bought more expensive items such as game consoles and patio furniture.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Siddharth Cavale in New York; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

Previous Remolino on money at SEA Games: "It's very special"
Next RTL Today - Drug cartel: Colombian police kill fugitive drug baron