Holiday retail sales are projected to increase 4%-6% year on year, following a 15.1% increase last year, reflecting the economic slowdown, said Deloitte’s 2022 holiday retail forecast Tuesday. The research firm projects November-January sales of $1.45 trillion-$1.47 trillion, with e-commerce sales rising 12.8%-14.3% to $260 billion-$264 billion, it said. Retail sales are likely to be further affected by declining demand for durable consumer goods, which had been the centerpiece of pandemic spending, Deloitte said. Inflation will boost dollar sales, “although retailers will see less growth in sales volume,” said analyst Daniel Bachman. "As inflation weighs on consumer demand, we can expect consumers to continue to shift how they spend their holiday budget this upcoming season," said analyst Nick Handrinos. E-commerce will likely benefit as consumers “look for online deals to maximize their spending,” he said.
FAO Schwarz toys will be available exclusively at Target, Target.com and FAO stores beginning mid-October under a multiyear agreement between the companies announced Monday. Target stores will have dedicated spaces for FAO Schwarz products for demonstrations through the holiday season; Target.com will also have an allocated FAO Schwarz section. The assortment includes more than 120 toys and a collection celebrating the toy retailer’s 160th anniversary. A Target Bullseye’s Top Toys list, presented by FAO Schwarz, will include “most anticipated toys and games” from various brands, available at Target, they said. Terms of the deal weren't given.
Consumers have become “more cautious” and have “cooled their spending,” but it’s not clear if the U.S. is in a recession, said National Retail Federation Chief Economist Jack Kleinhenz Thursday. “Economic indicators are signaling an unsteady U.S. expansion in the face of several headwinds,” Kleinhenz said, citing ongoing inflation, Federal Reserve interest rate hikes and the “volatile stock market.” Households continue to spend and are using credit cards more, saving less and drawing on savings built up during the pandemic, he said, saying, “Consumer stamina will be the big question going forward.” GDP fell 1.6% year on year in Q1, and another 0.6% in Q2, but gross domestic income (GDI) advanced 1.8% in Q1 and 1.4% in Q2, marking a “sharp contrast” with GDP, Kleinhenz said, saying the numbers “should theoretically be identical.” NRF calculated that core retail sales in July were up 0.8% over June.
Walmart rolled out rewards as a feature of Walmart+, enabling members to log savings for future purchases. As they search for products on Walmart.com or the app, Walmart+ members will see an option to add rewards from “hundreds” of bestselling items, blogged Chris Cracchiolo, Walmart+ general manager. They can clip and bank digital rewards in their Walmart app wallet and use them to save on future purchases in store and online. The retailer is focusing first on providing rewards for purchased items and will evolve over time to include “new ways to earn rewards,” he said. When shopping in store, customers will see the Walmart Pay QR code and can tap a tab to deduct the balance from their bill; online they use rewards during checkout, he said. “Walmart Rewards is not static,” said Cracchiolo, teasing “endless earning possibilities for members in the future” to build new ways to “reward member loyalty.” Walmart doesn’t give out subscriber numbers for the $98 annual membership program. A Consumer Intelligence Research Partners report this month (see 2208110031) pegged Walmart+ membership at 11 million in July, saying it had stalled since April and was up just 2 million year on year. Walmart didn’t comment on the report.
Though Rent-A-Center’s Q2 trends were down compared with the “stimulus-enhanced” 2021 results, “we are encouraged by the performance of the business in the second quarter, given the very different and more challenging macro environment we're experiencing this year,” said CEO Mitch Fadel on an earnings call Thursday. Q2 revenue declined 10.3% to $1.1 billion, slightly above the high end of RAC’s May 4 guidance range, RAC said. “While we executed well in the areas of the business that we could control, external factors like inflation and economic growth and discretionary income worsened during the first half of the year,” said Fadel. As Q2 progressed, “we began to see indications that macro-weakness causing lease volumes and payment behavior to trend below our assumptions for the second half of the year,” he said. Lease-to-own historically “has demonstrated countercyclical attributes, maintaining better top-line and loss-rate trends during economic downturns” than more conventional retailers, he said.
Distribution services company Tekmovil is partnering with Bang & Olufsen to open a retail showroom in the Miami Design District this year, the companies said Tuesday. Consumers will be able to "experience, touch, hear" and buy products at the Bang & Olufsen Monobrand Experience Center, they said.
Walmart is launching a “mini-retail experience” with health and wellness hospitality company Getaway, it said Thursday. The General Store by Walmart will open at select Getaway Outposts, described as collections of tiny cabins, within a two-hour drive of major cities, with “comforts of home” but no Wi-Fi or cellular service. Walmart’s first mini store is due to open next month at Getaway Hill Country in Wimberley, Texas, with others slated for opening this year in Moodus, Connecticut; Running Springs, California; Roscoe, New York; and Osceola, Missouri. Products for sale will include items guests might have left at home and may also include hiking gear, Fujifilm cameras, cast iron skillets, outdoor blankets and lip balm, Walmart said. Items will also be available at Walmart.com for advance shopping. Getaway guests who visit any Outpost over the next year will receive a complimentary Walmart+ trial.
Best Buy updated its comparable-sales guidance Wednesday for fiscal Q2 ending Aug. 1, saying it now expects a 13% decline vs. 19.6% sales growth in the year-earlier quarter. In May, Chief Financial Officer Matt Bilunas said the retailer expected Q2 comp sales to be "very similar" to the 8.5% Q1 comp sales decline. CEO Corie Barry noted Wednesday that the retailer expected FY 2023 financial results to be “softer than last year as we lap government stimulus support and unusually strong consumer electronics industry demand.” As high inflation has continued “and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May," she said. Best Buy “remains committed to its quarterly dividend of $0.88 per share” but has paused share repurchases. The company reports Q2 results Aug. 30.
Conn’s Home Plus is continuing its Florida expansion with a 25,000-square-foot store in Pinellas Park that’s scheduled to open Friday. It’s the 14th site in Florida, bringing the retailer’s store count to over 160 locations in 15 states, the company said Tuesday. Conn's employs 200 people in Florida; the Pinellas Park opening adds a dozen jobs to the local community, it said.
Walmart pared its Q2 outlook Monday, due to price cuts on hardlines it was forced to take in response to double-digit food inflation and higher fuel costs. Rising food prices are affecting customers’ ability to spend on general merchandise categories “and requiring more markdowns to move through the inventory, particularly apparel,” the retailer said. Comparable sales for Walmart U.S., excluding fuel, are expected to be about 6% in Q2, higher than previously expected with a heavier mix of food and consumables, negatively affecting gross margin rate, it said. During the quarter, Walmart “made progress reducing inventory, managing prices to reflect certain supply chain costs and inflation, and reducing storage costs associated with a backlog of shipping containers,” it said. The retailer has “made good progress” clearing hardline categories and is anticipating more pressure on general merchandise in the second half, said CEO Doug McMillon. Consolidated net sales growth for Q2 and full year ending Jan. 31 is projected at 7.5% and 4.5%, respectively; excluding divestitures of U.K. and Japan businesses, consolidated net sales growth for the full year is expected to be about 5.5%, it said. Net sales include a headwind from currency of about $1 billion in the quarter; based on current exchange rates, the company expects a $1.8 billion headwind in the second half. Operating income for Q2 and full-year is expected to decline 13%-14% and 11%-13%, respectively. Adjusted earnings per share for Q2 and full-year are expected to decline 8%-9% and 11%-13%, respectively, it said. On its Q1 earnings call, management guided to Q2 revenue growth of 5% year on year, and it tweaked Q2 operating income to “flat to up slightly” from previous guidance of low-to-mid single-digit growth; it expected a 1% decrease in operating income then, in constant currency, vs. a February projection of a 3% increase. Shares tumbled 10% Tuesday to close at $121.98.