People are pushing aside their old sweatpants for $150 Ultra-Soft Train Winter Knit pullovers. Lululemon and other retailers reported higher-than-expected Q4 sales yesterday, as shoppers spent more on clothes, shoes, and accessories during the holiday season—but it wasn’t enough to wow growth-hungry investors.
Cher Horowitz mindset: Mall darlings Lululemon, Abercrombie, and American Eagle bumped their forecasts for Q4, and Nordstrom raised its annual forecast after positive shopping data from the end of the year.
Credit card networks also noted a jump in clothes shopping. Visa said spending on clothes and accessories increased 5% this holiday season, and for Mastercard, online retail spending in the category surged 6.7%.
Wall Street was underwhelmed. Shares fell across the board for retailers yesterday, with Abercrombie down as much as 18%. Investors are concerned about where these somewhat modest sales increases came from, such as through discounted prices that got shoppers to buy merchandise but may eat into profit margins.
Keep an eye out for fresh ’fits. It’s possible that everyone had the same new year’s resolution, but there’s another more likely driver behind the bursting interest in fashion: return-to-office mandates. Large employers, such as Amazon and JPMorgan, have instituted the controversial 5-day in-office workweek that calls for a capsule wardrobe.—CC
This report was initially published by Morning Brew.