The Big Picture
Some analysts are describing the U.S. economy as a wolf in sheep’s clothing, since the top line numbers don’t exactly convey the underlining strength.
For instance, GDP growth came in at just 1.6% for the first quarter of the year, below expectations of 2.4% growth. But this could be due to continuing high inflation rates, particularly on key consumer goods.
On the other hand, a key index on personal consumption ticked up 3.4% for the first three months of the year, marking its biggest gain since 2022. And consumer confidence remains strong.
This has translated into decent sales among our client stores, which have been up 7% overall in the last 90 days.
April Sales
Menswear posted a 6% gain in April, while women’s wear climbed 3%.
Women’s ready-to-wear increased 6% as ladies picked up fresh pieces like spring sweaters. Dress sales were still down in April, but we saw a bump in May, driven cocktail and evening dresses for special events.
In Menswear, Suit sales finally dropped off, falling 4% last month, although Sport Coats continue to do well, up 4%.
On the planning front, it may be worth breaking out the different classes within Sport Coat categories, such as Soft Coats vs.Sport Coats and basics vs. seasonal coats, for example.
Men are continuing to invest in jackets, so until this trend slows we will wait for more indicators that the Clothing boom is finally over.
Markdown Strategy
The good news is that markdown levels remain the same as last year.
However, women’s wear stores have landed 20% more inventory in the last two months compared to last year, leaving them exposed to future markdowns. We recommend that merchants start necessary markdowns on older women’s goods now to avoid steeper discounting later.
Also, keep a close eye on all your stock-to-sales ratios to make sure that you will have a desirable inventory level by the end of July, when early fall sales are set to begin.
Blacks’ Bottom Line
Spring sales are encouraging, but don’t get complacent as we look toward election season. Keep monitoring key metrics in case there is a slowdown.
