The U.S. apparel and accessories market, which was booming till some time back, has suddenly taken a hit. Needless to say, the apparel industry is suffering just like several other industries, as rising costs are making people spend cautiously. This has seen apparel sales slumping over the past couple of months.
Apparel retailers, too, are now feeling the heat and going all out to drive sales by introducing several schemes. Retailers have started reporting their third-quarter results, and most clothing companies are coming up with disappointing numbers. However, they are hopeful about the upcoming Labor Day, when they expect sales to pick up.
Apparel Sales Declining
According to the latest report from the National Retail Federation (“NRF”), sales of clothing and clothing accessories declined 0.6% month over month in July. However, it was up 0.2% year over year. This comes as retail sales remained flat in July after increasing in each of the first six months of the year.
Online and other non-store sales increased 2.7% month over month, seasonally adjusted, and 18.1% year over year in July.
The retail sector had been putting up a brave show in the face of the ongoing inflationary pressures. Despite rising prices, people continued to spend, driving sales. It was the same for the apparel segment.
Apparel players were doing well after the economy started reopening. Sales peaked once people started going on vacations, and offices and schools resumed. This market was a big beneficiary but things seem to have started changing from July, with clothing and clothing accessories sales slumping for the first time this year.
Retailers Scramble to Drive Sales
A number of apparel retailers have reported disappointing quarterly results, and most of them have blamed a decline in sales for the slump in revenues. Several among them are now coming up with offers and discounts to drive sales as it has now become a challenge for them to clear the racks.
The Gap, Inc. ( GPS Quick Quote GPS - Free Report) reported that sales declined 8% year over year in its last reported quarter. GAP said that it is now taking aggressive action to reduce inventory and is rebalancing its assortments to attract customers. Gap has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Others retailers like
Target Corporation ( TGT Quick Quote TGT - Free Report) , Walmart, Inc. ( WMT Quick Quote WMT - Free Report) have also announced deep discounts on clothing. TGT and WMT are also offering rollbacks on clothing. Like The Gap, Target said that a massive slump in clothing sales was one of the reasons behind the decline in revenues in its last reported quarter.
Hollister, the lower-priced line at
Abercrombie & Fitch Co. ( ANF Quick Quote ANF - Free Report) , also reported a massive 15% decline in sales in its second quarter on a year-over-year basis. ANF’s sales increased 5% but that is one of the rarities this time around.
Urban Outfitters, Inc. ( URBN Quick Quote URBN - Free Report) , too, have been declining. However, URBN said that the decline is primarily in brands targeted at youngsters. Urban Outfitters’ CEO Richard Hayne said last week that several less-affluent consumers are now avoiding full-priced items and are instead waiting for promotions.
That said, price isn’t the only challenge for apparel retailers. Many are giving their wardrobe a makeover and fashion trends too are changing. The supply-chain crisis is leading to a delay in the arrival of stocks, which by the time reach the rack are also getting outdated, many retailers have been complaining.
However, retailers are still giving their best to increase sales. With the back-to-school shopping season on and Labor Day around the corner, the apparel market might just get the much-required boost in sales.