Two-thirds of the way through the second quarter, on the cusp of Memorial Day weekend and the unofficial kick-off of summer, with mask requirements being lifted across the nation, a coterie of marquee mall-based retailers has suddenly found themselves back in style again.
While trend-spotting on the basis of short-term stock market moves is fraught with risk, the fact remains that one of the most battered segments of the COVID era is now leading the way out the other side, as hopes for a post-pandemic shopping rebound are on the rise, propelled by cooped-up consumers who have money to spend.
WSM Is On-Trend
“We are proud to report another record quarter of accelerating revenue and profitability,” Williams-Sonoma CEO Laura Alber told investors, reflecting not only on the retailer’s just-posted first-quarter results, but also on the accelerating pace of store reopenings across the country and the record number of customers shopping and investing in their homes. “We are honored to be our customers’ destination for their entertaining and home furnishings needs as they welcome friends and family back,” Alber added.
Shares of Williams-Sonoma are up 5 percent this reporting quarter and 70 percent year to date.
Not Just Nesting
While we have repeatedly heard from retailers, including Home Depot and Lowe’s, that they expect the so-called home nesting trend — both interior and exterior — to continue after the COVID crisis subsides, the next big buying trend seems to have a totally different look and purpose.
That’s because the theme du jour is all about the apparel retailers that populate so many of the nation’s malls, such as Urban Outfitters, which dropped its own set of ridiculously good results on Tuesday (May 25).
“The first quarter was one for the record books: record sales, a record low markdown rate and record earnings per share,” Urban’s CEO Richard Hayne said, before highlighting what he called “powerful demand” and his confidence for the coming months. Urban Outfitter’s stock was up 10 percent on Wednesday (May 26) and is now up 50 percent year to date.
The Eagle Soars
Still need further proof that mall-based retailers are having their moment? Look no further than American Eagle, which just delivered startlingly good results after the close of trading on Wednesday (May 26): Its stock is up 75 percent so far this year.
“Our first-quarter results were truly outstanding,” said AEO’s CEO Jay Schottenstein, noting the rapid pace of demand for the retailer’s trendy clothes and accessories, as well as the fact that consumers appear more willing to pay close to full price for their purchases (which means fewer sales and promotions).
“We remain poised for success, and our brands are stronger than ever. I believe we are on pace to deliver our 2023 operating profit target well ahead of schedule,” Schottenstein concluded.
A&F Roars
Not to be outdone in the mall-based mayhem of late is Abercrombie and Fitch, which delivered its best operating income since 2008 due to a 60 percent spike in sales — despite having 20 percent less floor space due to COVID cutbacks and persistent store closures in Europe.
“It is hard to believe that over a year of earnings calls has passed since COVID first began impacting the world,” Abercrombie CEO Fran Horowitz told investors at the outset of the earnings call on Wednesday (May 26), calling the company that has emerged on the other side “stronger, smarter and more nimble.”
Like many of her peers, Horowitz said momentum has continued across the board into the current quarter, due to a mix of digital growth, the right product mix and strong consumer demand. “Although the global landscape remains uncertain, I am excited about the future and more confident than ever,” she said.
So enjoy the party while it lasts, mall-based retailers — because eventually, it has to end.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More