By Remy Blaire
Earnings reports from big box retailers pointed to an emerging trend of consumers picking up fewer big-ticket items and easing back on discretionary purchases. Yet, luxury's target demographic isn't pinching pennies.
Farfetch Limited (FTCH) reported an increase of 8% in revenue for fiscal Q1 2023. The London-based luxury fashion retailer posted a narrower-than-expected quarterly loss and reiterated its gross merchandise volume outlook for the full-year. Discretionary spending on luxury products for high-end couture brands pushed Farfetch back to growth in the latest quarter.
Foot Locker Inc. (FL) couldn’t kick discounting measures and retail shrink to the curb. The sportswear retailer’s shares tumbled with a double-digit percentage loss after weaker-than-expected earnings. The New York-based company reported a sales decline and slashed its guidance for the year. Greater markdowns of its merchandise and loss in inventory due to retail theft weighed on Foot Locker’s bottom line.
More U.S. retailers will report earnings ahead of the Memorial Day holiday weekend. Next week, Best Buy Co. Inc. (BBY), Costco Wholesale Corp. (COST), and Lowe’s Cos. (LOW), will report quarterly results and provide greater perspective into consumer spending patterns in the first half of 2023.
- We are keeping a close eye here on two big movers in the retail space today, Farfetch and Foot Locker. Yahoo Finance contributor Remy Blaire on the floor of the New York Stock Exchange with the details. Remy.
REMY BLAIRE: Well, it is a tale of diverging trends in consumer spending. Both Farfetch and Foot Locker reported earnings, and we saw shares of Farfetch rallied earlier in the session by over 20%, and Foot Locker fell by as much as 30% in Friday's trading session. Now, one company's results tells a story of luxury's target market, but the other company shows a pullback in discretionary spending and focus on essentials.
UK-based Farfetch beat earnings in terms of their latest quarterly results, and shares were higher with trading volume up to seven times the daily average. But keep in mind that although we got that pop in Farfetch today, shares prices are still well off pandemic highs, which topped above $70 a share. Now, if you're looking for Prada, Gucci, or perhaps pre-owned Chanel, Farfetch may be your shopping destination.
Meanwhile, Foot Locker shares tumbled today, and right now they are hovering near session lows ahead of the closing bell. Earnings came in weaker than expected, and the sports retailer also missed on top and bottom line, and also cut its guidance. The company also says that heavy discounting as well as an uptick in retail shrink or theft led to margin losing a considerable 4%.
This week we got a slew of earnings out from big box retailers, including Walmart, Home Depot, and Target, and they say that they saw fewer purchases of big ticket items, as well as discretionary purchases. As we look at the week ahead, we will be getting earnings reports out from Best Buy Lowe's and Costco, and that will give us even more perspective on consumer spending.
- Certainly will. All right, Remy Blaire. Thanks so much.