March 21, 2023


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Macy’s, Best Buy sales decline, reflects shoppers’ withdrawal

Consumers have cut back on their purchases of clothing and electronics in recent months while continuing to spend on groceries and other essentials, according to some of the largest retailers in the United States.

Macy’s chain of stores a company.

M 10.08%

He said Thursday that sales fell 4.6% in the fourth quarter, as people spent less online and in stores. The company doesn’t expect sales to start growing again until 2024, as consumers remain under pressure this year and shift spending away from discretionary items and also away from purchasing goods to services.

CEO Jeff Genette said he sees weakness across all income levels. He said Macy’s is focused on finding ways to grow by adding new categories. It now sells electronics, video games, food and wine on its online marketplace to third-party sellers and plans to add 2,000 more brands to the marketplace this year.

Macy’s profit in the quarter fell 32% from a year earlier to $508 million, but it came in better than analysts expected, in large part because the company was able to reduce excess inventory without having to “chase unprofitable sales,” he said. Mr. Genet. He said the company has benefited from being able to offer shoppers more targeted promotions.

best buy a company.

BBY -1.26%

He said that macroeconomic conditions continued to affect the business and its customers. For the three months ended Jan. 28, Best Buy sales in the United States fell nearly 10%, hurt by weak spending on everything from computers and phones to home theaters and appliances. The company noted some bright spots, reporting growth in its video game and tablet products.

Amid rising inflation, more people than ever are splurging on luxury items while still pinching other goods and services like groceries. Daniela Hernandez of the Wall Street Journal explains why. Photo composite: David Fang

Macy’s shares were up 9% in morning trade, while Best Buy shares were down about 2%.

The findings illustrate the challenges that discretionary sellers may face in getting consumers to pay for items that were purchased collectively earlier in the Covid-19 pandemic. Retail analysts and executives said persistent inflation, shifts in the job market and stagnation in the corners of the stock market have all contributed to the malaise of shoppers across the country.

To deal with the rising levels of inflation, people have cut back on some purchases and, in some categories, opted for cheaper, private label brands. Walmart a company.

It said it has added more high-income customers seeking bargains on goods.

Sales growth has been easier for grocery and food suppliers. Walmart and Target corp.

He said the food and drink categories have helped them post an increase in sales as more people spend their time making more food at home. Brands that deliver value like TJ Maxx parent TJX Cos. and Burlington Stores a company.

Continue to post sales gains.

“It’s the medium that gets compressed,” said Neil Saunders, managing director of research firm GlobalData PLC.

Kroger supermarket operator a company

K 3.76%

He said Thursday that same-store sales, excluding fuel, rose 6.2% in the most recently completed quarter from a year ago as shoppers continued to spend on groceries. The results were bolstered by a 10% increase in sales of its own-brand products, which are generally priced lower than its own-brand competitors.

Inflation is also driving some of these increases. Federal data showed that consumer prices for food items at grocery stores and supermarkets rose 11.3% in January compared to the same month a year earlier.

Kroger said it worked to reduce supply chain costs last quarter and manage high product cost inflation by optimizing its sourcing. Kroger has kept its profit margins nearly flat and posted better earnings than analysts had expected. The shares were up nearly 3% in morning trade.

Many retailers’ financial projections for this year reflect challenges in anticipating consumer spending. Big Lots Furniture & Home Décor Company a company.

He said Thursday that he is not providing annual guidance at this time, citing greater uncertainty in the macroeconomic environment.

Macy’s said sales could drop 3% this year, acknowledging that it was cautious in its forecasts. Meanwhile, the department store chain’s annual earnings guidance was stronger than analysts expected.

Macy’s said sales began to slow in the late first quarter of 2022. It said the holiday season was marked by a lull in spending that lasted longer and was deeper than expected. But it said demand rose in January.

However, the company expects consumers to be in worse shape in 2023 than they were last year. The retailer said it expects prices to rise slightly this year, but not as much as last year.

For the current fiscal year, Best Buy has projected a 3% to 6% decline in same-store sales. Total revenue is expected to be between $43.8 billion and $45.2 billion, less than the $45.69 billion that analysts expected, according to FactSet.

Best Buy expects adjusted earnings to be between $5.70 per share and $6.50 per share, also below the $6.72 per share analysts were looking for.

— Will Foer contributed to this article.

Write to Suzanne Kapner at [email protected] and Dean Seal at [email protected]

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