Retailers Lay Out a Downbeat Outlook as Inflation Squeezes Low-Income Shoppers

Dollar Tree, which also owns Family Dollar, expects its gross and operating margins will narrow in the first half of this year but bounce back in the second half. It still expects comparable sales to increase, just in the low- to mid-single digits.

The furniture retailer Big Lots had same-store sales fall 13 percent in the fourth quarter and said it expected them to be down by the low- to mid-teens in the first quarter.

“The lower-household-income customers are pinched,” the company’s chief executive, Bruce K. Thorn, said. “They’re going through a tough time right now.”

In a push for profitability in 2023, retailers are trying to narrow their focus. Nordstrom, which reported a drop in margins and sales volume during the holiday season, said it would shut down its operation in Canada, which counts 13 stores and about 2,500 employees. When it started opening stores there about a decade ago, the department-store chain saw Canada as a first step to expanding internationally. On Thursday, its chief executive, Erik Nordstrom, said that “despite our best efforts, we do not see a realistic path to profitability for the Canadian business.”

To be sure, while there are worries about the outlook, the data so far don’t necessarily suggest that the economy is in or hurtling toward a downturn. And a conservative outlook isn’t an unusual tactic for retailers, said Simeon Siegel, a managing director at BMO Capital Markets.

“Generally speaking, if a management team wants to under-promise and over-deliver, they need to set a low bar at the beginning,” Mr. Siegel said. “And that’s what we’re dealing with.”

Article source: https://www.nytimes.com/2023/03/04/business/retail-inflation-sales.html