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Retailers Gap and Nordstrom are doing pretty well in the inflation economy, based on their recent earnings, but that’s not true of all retailers — Kohl’s performance fell short.
Earlier this week, Gap reported better-than-expected first quarter earnings across all four of its brands, which was primarily due to its turnaround strategy, dubbed the “brand reinvigoration playbook,” by Gap chief executive officer Richard L. Dickson. Shares of Gap soared by more than 25% during afternoon trading on Friday.
“2024 is off to a good start,” Dickson told investors during an earnings call in May. “Against a backdrop of macroeconomic and geopolitical uncertainty, we performed well in delivering encouraging results in the first quarter, giving us the confidence to raise our guidance for the year.”
Gap expects sales to be “up slightly” for the full year, after previously predicting sales to be “roughly flat,” according to its earnings release.
The retailer, which owns Gap, Banana Republic, Athleta, and Old Navy, reported revenue of $3.38 billion, about $0.41 cents a share. Analysts forecasted it would report revenue of $3.29 billion, about $0.14 cents a share, according to FactSet.
Meanwhile at luxury department store Nordstrom, its discount spinoff Nordstrom Rack buoyed sales during its latest quarter, as shoppers opted to purchase clothing and sneakers from brands such as Vuori, HOKA, and Adidas, President Peter E. Nordstrom told investors during the company’s earnings call.
At a time when cash-strapped consumers are dealing with elevated levels of inflation, Nordstrom’s Rack could stand to benefit because it offers cheaper options, much like T.J. Maxx. Nordstrom said that is plans to open 22 new Rack locations this year.
But even with more affordable options, customers are still being cautious about where they choose to spend. That’s the case for Kohl’s, which reported lower-than-expected first quarter earnings.
“Our first quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives,” said Tom Kingsbury, Kohl’s chief executive officer, in reference to its Babies “R” Us strategy and its home decor category expansion.
Kingsbury, the former CEO of off-price chain Burlington Stores, said that customers continue to be pressured by a number of economic factors, including high interest rates and inflation.