The outlook for the holiday shopping season is bleak! The performance of US retail giants sends a signal of recession!

It is learned that according to foreign media reports, the latest performance and forecasts of retailers from Macy's to Foot Locker show that US consumer spending is facing pressure in the second half of this year.

Middle-income Americans are spending less as they are unable to pay off existing debts amid soaring living costs, worrying retail investors who are betting on more business during the back-to-school and holiday seasons.

"The second half of the year is going to be challenging," said Cristina Fernandez, an analyst at Telsey Advisory Group, adding that consumers are struggling to find bargains and buy only what they need.

As the leader of popular retailers during the back-to-school season, Foot Locker and its competitor Dick's Sporting Goods both lowered their full-year profit forecasts on Wednesday (8th and 23rd), causing the stock prices of a number of sporting goods retailers to plummet.

"We did see some softening in demand in July, so we adjusted our 2023 guidance to best position us to compete for price-sensitive consumers," said Foot Locker CEO Mary Dillon.

In addition to Foot Locker and Dick's Sporting, US retail giant Target also lowered its full-year profit forecast. The company said in its earnings conference last week that profits were squeezed due to rampant retail theft in its stores and severe inventory losses.

Kohl's and Macy's maintained their full-year guidance despite beating second-quarter profits, with the latter highlighting that the number of people paying with credit cards increased faster than expected amid weak demand.

“The macro environment has the biggest impact on credit, which is a true indicator of what we believe is the health of the consumer ... supporting our cautious approach to full-year results,” Macy’s Chief Financial Officer Adrian Mitchell said Tuesday.

Thomas Hayes, chairman of Great Hill Capital, said Foot Locker and Macy's sales could take a bigger hit because they cater to lower- and middle-income consumers. The holiday season winners will be Wal-Mart and Dollar Tree, which will benefit from consumers seeking lower-priced products.

Walmart last week raised its full-year guidance and reported upbeat second-quarter results, benefiting from strong demand for low-priced groceries.

Some clothing retailers also reported that demand remained strong in the second quarter of this year.

For example, Abercrombie & Fitch (ANF.N) on Wednesday raised its annual sales forecast as the retailer believes shoppers will buy more new styles of clothing, including dresses and overalls, during the holiday season. Abercrombie & Fitch shares rose nearly 24 percent as of Wednesday's close.

Guess (GES.N) also raised its annual profit forecast, saying it benefited from higher prices and fewer discounts, as well as strong sales in Asia and Europe. Its shares rose 16 percent in after-hours trading on Wednesday.

Editor ✎ Nicole/

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