Retailers see staffing challenges as omicron rages, sales taking a hit
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Urban Outfitters in San Francisco has posted a “now-hiring” sign.
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This week, ICR Conference attendees heard from retail executives about how highly contagious Omicron variant can affect sales and leave distribution centers and stores understaffed.
However, investors appear to dismiss the news as bad and view it only as a short-term problem. Midday Tuesday saw Abercrombie share prices rise nearly 8%, and American Eagle rose about 3%. Urban Outfitters’ shares rose nearly 2% and Lands’ End slightly more than 2%.
The silver lining for them is the fact that consumers demand seems to remain intact.
LululemonAccording to them, sales for the quarter November-January will be come in on the low end of its previous expectationsIt was forced to cut hours in some places due to labor limitations. Lands’ EndIt said that it has had difficulty hiring. Abercrombie & FitchIt has reduced its fourth quarter revenue estimates because it didn’t have enough merchandise in stockIn order to satisfy consumer demand. To meet consumer demand, Urban OutfittersIt said that December’s shopper visits didn’t increase as it expected.
These are only a few of the many ways the Covid case surge in America is certain to continue roiling the retail sector in the weeks ahead. This Monday roughly 1.5 million new casesJohns Hopkins University has compiled data that shows Covid-19 was reported as a new case every seven days. This brings the total number of cases per day to 754,000. Though many infected people are healthy, the severity of symptoms is not severe for most. Hospitalizations have increased, especially for those who fall ill and who were not fully vaccinated.
These retailers might not be able to release their holiday quarter complete results until weeks later, but the updated forecasts provide analysts and investors with a preview of what is coming and let them know how they are overcoming these hurdles.
Additional hours
Jim Gooch is the Chief Financial Officer at Lands’ End. He stated that in recent weeks, some employees worked more hours than usual.
We recognize the labor shortage as a major problem. “We hope that this will normalize moving forward. But, this year was challenging,” he stated during an ICR presentation. As we enter the new year, our teams will do everything they can to stay ahead of it.
Abercrombie & Fitch said Tuesday it has been able to pull workers from one of its brands to work at another brand’s stores to keep doors open when workers call out sick. Hollister, Gilly Hicks and other brands are also owned by the company.
“In a mall with multiple brands, and we have staffing issues because one store might get caught up in Covid, then we can borrow staff members from other stores, and that has greatly helped us,” Fran Horowitz (Abercrombie Chief Executive), said during an ICR presentation.
Horowitz stated that Abercrombie did not have to close all stores because of Covid epidemics. However, it did temporarily reduce hours at certain locations. This is a strategy that many companies use. Macy’sYou can find more information here GapYou can find more information here NikeAlso, I have taken recent.
“A little bit of deja vu”
According to Dana Telsey (CEO and chief researcher at Telsey Advisory Group), “The first day ICR 2022 felt a little like deja vu with everyone hunkered down in front our computers, switching between meetings with the click of a mouse.”
She wrote to her clients that the “unfortunately” omicron-based Covid-19 seemed to have the same negative effect as we feared in January sales.
Urban Outfitters Tuesday reported that it saw a 14.6% increase in sales over the same period last year. According to the company, digital sales increased by double digits while in-store sales dropped by low-double digits over the same period.
“We believe that omicron may be affecting the sales of our stores. … “It’s difficult to determine how much,” stated Melanie Marein Efron, CFO of ICR. If your shops limit their opening hours, you are clearly restricting consumers’ access to your store.
American Eagle OutfittersAerie, the lingerie brand owned by, stated that fourth quarter sales are expected to increase by a middle-to-high teens percent compared with last year. This is less than the predicted 21.5% growth, as per Refinitiv data.
American Eagle, however, raised its revenue expectations for 2023 to $5.8billion. This is a sign that Covid will not have a lasting impact.
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