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As Americans splurge on dressing up again, retailers like Macy’s and Ulta benefit


Nordstrom staff fix the floral dress to a mannequin at one of its department stores.

Ben Nelms | Bloomberg | Getty Images

In with the sweatpants and in with lipsticks and blazers.

Americans are spending more money on accessories, clothing and makeup as they go out and return to work. Analysts and executives at companies say that this trend is especially evident among those with higher incomes who want to spend more on these items, despite soaring inflation rates and uncertain economic conditions.

The masks are falling off, he said. Macy’sAfter the company raised its profit outlook, Chief Executive Officer Jeff Gennette stood behind its year-end sales guidance on Thursday.

A string of retailers that reported their quarterly results, including a chain selling makeup and beauty products, echoed the sentiment. Ulta BeautyAnthropologie is a parent company Urban Outfitters. According to them, people are willing to pay extra for a better appearance when they move out of the home.

The latest round of results offer a more nuanced look at the economy after two of the biggest retailers — WalmartAnd Target — sent shock waves across the market with downbeat forecasts and warnings that some shoppers are becoming more price sensitive amid decades-high inflation.

Executives say that rising prices for gas and food are causing lower income Americans to cut back their spending. Higher-income people are not being discouraged from buying items they haven’t used since the beginning of the pandemic.

“Head to toe color suits”

Gennette from Macy’s stated that customers are spending more time in Macy’s stores than ever before, particularly in metropolitan areas like New York. He said that people are more likely to shop in stores than they were a year ago.

He said that the luxury client is returning in big ways in a telephone interview.

Gennette said that those who earn less than $75,000 per year seek out discounts.

Urban Outfitters appears to also be experiencing this split in behavior. Sales at Urban Outfitters’ Anthropologie store, known for its playful clothes and catering to consumers with higher incomes, soared 18% during the third quarter. Only 1% of sales were recorded at the chain’s namesake, which caters for younger shoppers who are starting or resuming their second job.

Urban Outfitters CEO Richard Hayne stated Tuesday that “there is a kind of bifurcation”

Some people need a happy environment

These shifting patterns mean that retailers who sell casual clothing such as sweatsuits and pajamas might be more affected than their competitors after experiencing a rise in sales during times when customers were staying at home.

Some people are now buried with pandemic-friendly clothing they have accumulated since the days when most people sought comfort over all else. These clothes might need to eventually be drastically discounted.

American Eagle stated Thursday that its demand was below its expectations in the first quarter and cut its profit forecast for this year. The inventory was 46% higher than a year earlier. Aerie, the company’s clothing division, sells casual clothes and workout gear to teenagers and young women.

Abercrombie & FitchIt was also mentioned inventory was up 45%It cut its year-end sales forecast by reducing its revenue for its first fiscal quarter compared with a year earlier. Old Navy dragged Gap’s sales down in the first quarter.

Sonia Syngal from Gap, CEO of Gap, stated that the company won with fleece and active, kids, and baby last year. This is Old Navy’s sweet spot. Sonia Syngal stated that the return of special occasions, weddings and office life are now a major factor in these categories.

Gap saw its inventory increase by 34% during the reporting period. The company also lowered its 2022 profit guidance. The only chain that reported an increase in sales was Banana Republic, which serves a customer with a higher income.

Syngal was recently at an Old Navy store where Syngal found that the area’s average household income is approximately $100,000. However, Syngal said that shopper behavior had not changed significantly. She said that the financial challenges are evident at another store, where the median income is about $50,000.

She stated that “value for money is much more important,” and she added that people aren’t coming in as often.

Stacey Widlitz of SW Retail Advisors, the president, stated that the mixed results reflect the impact on the people who are emerging from the pandemic.

“It is a shift of spending. This is a behaviour shift. It’s hitting different businesses differently,” she stated.

—CNBC’s Melissa RepkoThis reporting was contributed by you.