DISCUSSION
What does the promotional climate mean for off-pricers and resale?
Written by Tom Ryan
In third-quarter announcements, major off-pricers, TJX and Ross Stores, raised their full-year outlooks while expressing confidence in their ability to reposition their mix for an increasingly promotional environment. Apparel resale marketplace thredUP, however, reduced its outlook due to the heightened price competition from traditional retailers.
“The thredUP brand stands for value and that message is being washed out in this hyper-promotional landscape,” said thredUP’s founder and CEO James Reinhart on a mid-November analyst call.
Citing the impact of Amazon’s Prime Day and heavy clearance events by Walmart and Target, he said thredUP’s sales began deteriorating toward the end of the second quarter and continued into the third. Mr. Reinhart added, “What we’re seeing is a combination of demand pullback at a time when retail inventories are overflowing with apparel, and this is resulting in significant price compression in the apparel market.”
On the upside, Mr. Reinhart still sees a “significant opportunity” for resale to gain market share as inventory’s rebalance and promotions lessen. He said, “For a customer that’s been conditioned to expect 60 percent to 80 percent off retail for their clothes, yet still feeling the effects of inflation, resale is going to be a go-to for value.”
Results last week for TJX and Ross topped guidance, and their management expressed upbeat holiday expectations.
Ernie Herrman, TJX’s CEO, told analysts TJX’s holiday mix is being supported by a marketplace “absolutely loaded with quality branded merchandise across good, better and best brands.” TJX also expects to boost its holiday selling with deliveries multiple times a week and a campaign reinforcing the value of its offerings. Mr. Herrman stressed that “the flexibility of our business model has allowed us to successfully operate our business against some level of retail promotion every year for the past 46 years.”
Ross CEO Barbara Rentler said the chain over the third quarter “reset our values” from an assortment perspective and “got them to where we believe they need to be in this very promotional environment.”
Both off-pricers expected share gains in an inflationary and potentially recessionary climate. Ms. Rentler said, “With consumers’ heightened focus on value and convenience, this bodes well for our ability to expand our market share and profitability in the future.”
- thredUP Announces Third Quarter 2022 Results – thredUP
- ThredUp, Inc. (TDUP) Q3 2022 Earnings Call Transcript – Seeking Alpha
- The TJX Companies, Inc. Reports Strong Q3 FY23 Pretax Margin And Earnings Per Share; Marmaxx Comp Store Sales Increased 3% – TJX Companies, Inc.
- The TJX Companies, Inc. (TJX) Q3 2023 Earnings Call Transcript – Seeking Alpha
- Ross Stores Reports Third Quarter Earnings, Updates Fourth Quarter Guidance – Ross Stores
- Ross Stores, Inc. (ROST) Q3 2022 Earnings Call Transcript – Seeking Alpha
Discussion Thread0
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