US retailers cut clothing prices as shoppers cut back on purchases

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NEW YORK (AP) — Inflation-weary American shoppers have been skimping on their clothing purchases, prompting retailers to cut prices to clear inventory from shelves.

Gap was the latest retailer to report a drop in clothing purchases for the second quarter, saying on Thursday that net sales fell 8% from a year earlier to $3.86 billion. Earlier this month, executives at US giants Walmart and Target offered deep discounts and rebates on clothing.

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Gap is “taking steps to sequentially reduce inventory, rebalance our assortments to better meet changing consumer needs,” Katrina O’Connell, chief financial officer of Gap Inc., said in a statement.

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Deep discounts on clothing, especially Old Navy, hurt the company’s margins. Old Navy stores were unable to sell certain sizes and styles, while the Gap struggled with item mix imbalances that included “half shirts and casual shorts,” O’Connell said.

Shoppers may see more promotions as the company continues to clear inventory. In Thursday’s earnings, O’Connell said he expects inventory levels in the third quarter to be similar to the second quarter, with improvements in the fourth quarter.

Sales at US clothing and accessory retailers have largely stagnated. For the 12 months through July, they averaged just 0.2% monthly growth, according to Census Bureau data.

At Hollister, Abercrombie and Fitch’s lowest-priced line, sales were down 15% in the second quarter compared to a year ago, the company said Thursday, with trends moving away from pants styles and core categories. . Abercrombie sales increased 5%.

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“Assuming recent trends hold steady, we expect to continue to take advantage of the sales in the third quarter to keep items in season,” Abercrombie & Fitch CEO Fran Horowitz said in a call to investors on Thursday.

This week, Victoria’s Secret, Urban Outfitters and Kohl’s told analysts on conference calls that shoppers only buy certain types of clothing. The companies didn’t give specific examples, but a search of Victoria’s Secret’s website showed that Victoria’s Secret shoppers were buying two-up sale bras for $52, while its PINK line for younger shoppers seemed to have trouble selling a pair. $52.95 joggers.

Urban Outfitters and Victoria’s Secret said sales are declining for brands designed for younger consumers. Victoria’s Secret’s PINK line posted tense apparel sales compared to the company’s Victoria brand of underwear and sleepwear.

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“We’re going to be very cautious with our ‘apparel’ purchases in the second half of the year,” Victoria’s Secret Chief Executive Martin Waters said during the company’s earnings call on Thursday.

Urban Outfitters’ young and less affluent shoppers refrained from buying full-price items and waited “for promotions before they buy,” Urban Chief Executive Richard Hayne said Tuesday.

Kohl’s said youth apparel sales fell in the second quarter because designs were “too hip, not enough of the basics.” Womenswear outperformed other categories.

“Some of the fashion choices were too young, I’d say. That has been corrected,” Kohl CEO Michelle Gass said on an earnings call Tuesday. “I would say one of the things that has hurt us is that with all (the) supply chain disruption that happened, we were unable to get in and out of some of those items.”

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Walmart and Target had trouble selling clothing that arrived a few seasons late and are aggressively cutting prices. Target said last week that one bright spot was “significant growth” in sales of fashionable women’s clothing.

Jessica Ramirez, a senior research analyst at Jane Hali and Associates, said she has noticed deep discounts at the Gap and Old Navy labels, while high-end brand Banana Republic, which sells smart office wear, has sold more clothing to regular prices.

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Macy’s and Kohl’s said demand for smart, work-ready clothing was strong. Kohl’s said “elevated casual” styles for women and men performed better as more people returned to work. She has been investing in sleek styles from brands like Simply Vera, Lauren Conrad and Nine West, for clients who work in offices more often. Still, she is planning clearance events to move unwanted items.

Macy’s CEO Jeffrey Gennette said on the company’s earnings call Tuesday that men’s and women’s special-occasion wear are “very healthy categories” with average sales prices for men’s workwear rising a 29% and “Miss career” items 20%. Other categories have required heavy promotions to unload excess inventory. (Reporting by Arriana McLymore in New York; Additional reporting by Dan Burns in New York and Sophie Yu in Beijing; Editing by Lisa Shumaker, David Gregorio, and Richard Pullin)

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