Retailers detail staffing shortages as omicron rages, but investors see it as short-term hit

- Advertisement -


  • The Omicron version is breaking into retail sales and shrinking stores and distribution centers.
  • Apparel makers Lululemon, Abercrombie & Fitch and American Eagle Outfitters have offered a tremendous outlook for holiday-quarter revenue, citing supply chain challenges and labor constraints.
  • “Unfortunately, the Omicron version of COVID-19 is having a negative impact that we all anticipate on January sales and employees,” said Dana Telsi, CEO of Telsey Advisory Group.

- Advertisement -

Retail executives present at the ICR conference this week detail how the highly infectious Omron variant is denting sales and shrinking stores and distribution centers.

- Advertisement -

But investors seem to be shying away from the bad news, seeing this as a short-term challenge. Shares of Abercrombie were climbing about 8% Tuesday afternoon, while American Eagle was up about 3%. Urban Outfitters grew about 2%, and Lands’ End was up a little over 2%.

The glimmer of hope for them is that consumer demand remains intact.

- Advertisement -

Lululemon said sales in the November-to-January quarter would be at the lower end of its previous expectations as it had to reduce hours in some locations due to labor shortages. Lands End said it had a hard time getting hired. Abercrombie & Fitch cut its fiscal fourth-quarter revenue estimates because it didn’t have enough goods in stock to meet consumer demand. While Urban Outfitters said that its store in December didn’t have as many shoppers as it had planned.

These are just some of the ways in which the latest surge in COVID cases in the United States is sure to continue to haunt the retail industry in the coming weeks. Nearly 1.5 million new cases of Covid-19 were reported on Monday, pushing the seven-day average of daily new cases to 754,000, according to data compiled by Johns Hopkins University. While many vaccinated individuals who are infected with the virus say its symptoms are mild, hospitalizations have begun, especially for those who become ill and are not fully vaccinated.

While these retailers may be weeks away from releasing full results for the holiday quarter, the revised forecasts provide analysts and investors with a preview of what’s to come, and highlight how companies are making progress through these hurdles. How are you working from

working extra hours

Lands End Chief Financial Officer Jim Gooch said Tuesday that some employees have stepped up to work extra hours in recent weeks.

“We believe that a big problem is going to be labor. … We are hoping that going forward it will return to normal, but this year was a challenge,” he said during an ICR presentation. “And so the teams are doing what they can to try and get out of it as they go into this year.”

Abercrombie & Fitch said Tuesday that it has been able to pull employees of one of its brands to work at stores of another brand, leaving the doors open when workers call in sick. The company also owns Hollister and Gilly Hicks.

“In a mall where we have multiple brands and we have staffing issues because we have a store that probably catches up with covid, we can borrow staff from other stores and that has helped us a lot, ” said Abercrombie’s chief executive Fran Horowitz, during an ICR presentation.

As a result, Horowitz said, Abercrombie hasn’t had to completely close any stores because of the COVID outbreak. However, it has temporarily reduced the hours in some places, she said. It’s an approach that companies from Macy’s to Gap to Nike have also recently adopted.

‘A little deja vu’

“The first day of ICR 2022 was a bit of deja vu, all of us switching from meeting to meeting with the click of a button in front of our computers,” said Dana Telsey, CEO and chief research officer at Telsey Advisory. Group.

“Unfortunately, the Omicron version of COVID-19 is having a negative impact we all anticipate on January sales and employees,” she said in a note to customers.

Urban Outfitters reported Tuesday that its sales rose 14.6% from 2019 levels for the two-month period ended December 31. The company said digital sales climbed in double digits during that period, while in-store sales fell in the low-double digits on a two-year basis.

“We believe that Omicron is impacting our store sales. … it’s hard to know how much,” CFO Melanie Marin-Efron said during an ICR presentation. “Once you’re limiting the hours your stores are open, clearly you’re limiting the ability of consumers to come into your stores.”

American Eagle Outfitters, which also owns the Aerie lingerie brand, said it anticipates fourth-quarter sales to be in the mid to high teens percentage compared to last year. That’s less than analysts’ estimates for 21.5% growth, according to Refinitiv data.

However, American Eagle raised its expectations for 2023 revenue from $5.5 billion to $5.8 billion, indicating that the impact of COVID would be only temporary.

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox