Last week, Walmart reported a surprisingly strong jump in revenue, which the retail giant’s leaders interpreted as a sign of the American consumer’s resilience. It could just as easily be the opposite: an indication that stretched shoppers are looking to trade down.
Macy’s is intimately familiar with the trading down phenomenon, mostly as a victim. For years, customers have been abandoning the department store operator for big-box stores, Amazon and fast-fashion brands, all of which can sell clothes cheaper and move more quickly to hop onto trends. After fending off a takeover bid, the company is trying to arrest its long decline by making its stores desirable places to shop again, even if it can’t offer the lower prices. Its freshened-up department stores feature a growing assortment of private labels and well-known brands like Donna Karan, as well as cosmetics, fragrance and other categories where in-person shopping is still the norm. It’s a complicated strategy, and while early results are promising, investors will be looking to see more progress in quarterly results out Wednesday. But Macy’s has little hope of winning the race to the bottom it was engaged in for much of the last two decades.
Winning the Footrace
On Tuesday, Arc’teryx and Salomon parent Amer Sports also reports quarterly results. The company, which went public earlier this year and also owns equipment maker Wilson as well as a handful of ski brands, hasn’t quite found its footing in the booming sportswear market. Though its biggest brands are growing rapidly, their trajectory suffers in comparison to other upstarts; Salomon, for instance, is a key player in the performance running shoe craze, but hasn’t quite achieved the overnight ubiquity of On or Hoka.
Amer is betting on a direct-to-consumer pivot to help its brands make the leap from niche suppliers to athletes and gorpcore enthusiasts to a more mainstream audience. Arc’teryx and Salomon are adding dozens of stores — including a Salomon flagship on Paris’ Champs-Élysées that opened shortly before the Olympic Games began. That strategy is clearly working, with Arc’teryx driving a 44 percent year-on-year increase in sales in Amer’s technical apparel division. The one wrinkle here is that, Paris aside, much of that growth has come from China, where an economic slowdown may make it difficult to keep up the pace.
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