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Wealthy shoppers splurge at Macy’s.  Low-income shoppers retreat to Walmart

Affluent shoppers are splurging on new outfits at Macy’s, Nordstrom and other high-end outlets, while lower-income shoppers are opting out of discretionary items, according to major retailers.

Macy’s (M) said Thursday that comparable sales at stores open for at least a year rose 12.4% in its latest quarter from the same period a year ago.

“As macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop,” Macy’s CEO Jeffrey Gennette said in a press release.

Macy’s has seen a “noticeable shift” in consumers buying clothes for special events and shopping in stores, Gennette said. Dresses, women’s shoes, accessories and men’s bespoke clothing recorded strong sales in the quarter.

“Sales of luxury goods have remained outstanding for our business, as the buying behavior of high-income consumers has so far remained less affected by inflation,” he said on a call. with analysts. “The client whose annual income is less than $75,000 has been the most affected. »

Macy’s raised its forecast for the year, pushing its stock up 12% in early trading Thursday.

Nordström (JWN) Tuesday also reported strong sales in its latest quarter and raised its full-year guidance. Nordstrom has seen buying trends similar to Macy’s.

“Customers refreshed their wardrobes for occasions such as social events, travel and returning to the office,” Nordstrom said. The department store industry has struggled in recent years, but Macy’s and Nordstrom are benefiting from wealthier consumers making discretionary purchases.

Luxury goods and apparel brands also capitalized on spending by high-income shoppers.

“Our consumers are resilient. They are in the upper income demographic and they have proven through Covid that their desire for the brand has increased,” Ralph Lauren (RL) Chief Financial Officer Jane Nielsen said this week.

But there’s a divide in buying behavior that goes along with the economy, some companies say. Federal stimulus spending has ended and inflation has risen at the fastest rate in decades, leading low-income consumers to change their buying habits.

The companies say lower-income shoppers are slowing down their spending on discretionary items, buying cheaper private label and adding fewer items to their carts.

“I think what we’re seeing is a bit of a bifurcation. So we’re seeing customers moving to these higher-end brands,” said Kohls (KSS) CEO Michelle Gass. “And then you also see that a lot of customers are going to ‘private label.’
walmart (WMT) also said some consumers are switching from gallons of milk to half-gallons and private label grocery brands.
“Obviously, with rising fuel and food prices, discretionary spending for the low-end customer is being squeezed,” said Ross Stores (ROST) chief operating officer Michael Hartshorn. “We’ve seen customers…reduce spending in the first quarter.”

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