The Omicron strain proved to be another speed breaker for fashion retailers as it forced them to reset their fourth quarter sales expectations. The wave added to retailers’ woes by hitting profit margins especially globally. As per a Women’s Wear Daily report, Lululemon’s revenues are expected to decline in the fourth quarter from its earlier range of $2.12 billion to $2.16 billion while diluted per share earnings are expected to decline in the range of $3.24 to 3.31. The brand experienced several Omicron related consequences including increased capacity constraints, limited staff availability and reduced operating hours in certain locations, adds McDonald
Supply chain constraints hit Abercrombie’s salesv Abercrombie expects fourth quarter sales to surge in the range of 4 to 6 per cent compared to a year ago. However, compared to the corresponding period in 2019, the brand expects sales to decline 2 per cent. The company’s gross profit rate is expected to be on par with 2019 levels. Despite receiving a positive response to its winter and holiday collections, Abercrombie’s shipments dropped due to supply constraints, states Fran Horowitz, CEO. The brand experienced rapid surge in inventory levels due to extended port and transportation delays. This led to a loss of sales for the brand as it did not have the required inventory, adds Horowitz.
Torrid faces supply chain constraints despite better inventory levels
Torrid Holdings also expects sales to decline to $305 million from the previously forecasted $335 million. The company’s sales are softening amid growing concerns over rising Omicron cases. As per Harvey Kanter, President and CEO, Destination XL, the brand faced supply chain disruptions despite being continually monitored and ensured better inventory flow to meet sales targets. Torrid Holdings’ structural changes have helped brand Destination XL post strong holiday sales both online and in stores, adds Kanter.
Brands reorganize operations
Fashion companies made several big changes in their businesses during the pandemic period. Guess used the crises to transform its business model further, says Carlos Alberini, CEO. Launched last year, the company’s global range is being well-received across the world. Guess also streamlined its infrastructure by closing about 170 stores and renegotiating leases on 400 of its remaining 1,052 stores
Digital only companies make survival difficult
The emergence of more digital and smaller companies that are also very agile is making survival for fashion brands difficult Jay Sole, Stock Analyst, UBS, recently downgraded Kohl’s Corp to sell and Abercrombie & Fitch & Co and Canada Goose Holdings Inc. to neutral. Companies plan a series of events during calendar year 2022 to catalyze downward EPS revisions and keep sentiment negative, US’ stores sales are expected to decline by 2 per cent this year, as per UBS analysts. Over all, the apparel retail industry is likely to face tough times ahead.
