Beauty market

Unlike Target and Walmart, beauty and fashion retailers post better-than-expected quarterly results as shoppers fill their social calendars

As social calendars fill with weddings, parties and other activities, companies in the beauty and fashion industry have released 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,” Ulta Beauty Inc. told ULTA,
Chief Executive David Kimbell during the company’s first quarter earnings call, according to FactSet.

Ulta posted earnings and sales that exceeded expectations.

“Macy’s sales were also impacted by an accelerated category shift from popular pandemic categories, such as casual and athletic wear and loungewear, and towards more casual wear, such as dresses, shoes women’s clothing, men’s apparel and home furnishings,” said Macy’s Inc. M,
Chief Executive Jeff Gennette during the department store’s first quarter earnings call, also according to a FactSet transcript.

“This change has accelerated faster than expected. This has contributed to an increase in store traffic, as consumers are more likely to purchase second-hand clothes in person. »

Macy’s also exceeded expectations.

And JWN of Nordstrom Inc.,
Chief executive Erik Nordstrom said shoppers at the luxury retailer have been seeking merchandise for “long overdue” occasions during its latest earnings.

See: For Nordstrom, Allbirds is here and the Trunk Club style serve is out

These reports differ from those of Walmart Inc. WMT,
and Target Corp. TGT,
who have suffered from changes in consumer spending. Also commenting on the rapid change in consumer behavior, Target chief executive Brian Cornell said he had too many “bulky” items for the home, such as televisions, kitchen appliances and furniture. outside, which hurt the quarter.

Of course, Target and Walmart also sell clothing and beauty items. Target executives note that its customers come to its stores ready to “splurge” on a pair of shoes or other items for a summer gathering. And beauty was a standout category for Target.

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But the merchandise mix at Macy’s and Nordstrom, for example, differs from Target and Walmart.

Additionally, Macy’s Gennette pointed out that the buying behavior of high-income customers differed from that of low-income shoppers.

“During the first quarter, all income levels continued to engage with us, led by high-income and middle-income consumers,” Gennette said.

“Luxury sales have remained outstanding for our business, as the buying behavior of high-income consumers has so far remained much less affected by inflation. These trends show the advantage of our balanced portfolio.

Macy’s lineup also includes luxury retailer Bloomingdale’s and beauty retailer Bluemercury, which Gennette said has also seen an increase in color cosmetics in the lip, eye and face categories as restrictions on mask have relaxed.

Also: Walmart says consumers are opting for private label for products like dairy and bacon

Olaplex Inc. OLPX,
Ralph Lauren Corp. RL,
and Capri Holdings Ltd. CPRI,
parent of 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 changing consumer spending habits are expected to continue to pressure the industry, results are likely to remain disparate from company to company account. given the varying category and price exposure and relative success in navigating the current dynamic environment.”

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Middle-income Americans are increasingly feeling inflationary pressure, which could further alter consumer behavior in the months ahead.