Nordstrom, Ralph Lauren are winners

High-end shoppers are still spending, for now at least.
After Kohl’s Corp Chief Executive Officer Michelle Gass pointed to a “bifurcation” of consumers, as some Americans traded up to premium brands while others downshifted to cheaper private labels, upmarket department store Nordstrom Inc has continued the polarisation theme.
The seller of $1,000 Mach & Mach shoes and $2,000 Burberry trench coats defied recent retail gloom to beat expectations and upgrade its full-year forecast. The group now expects sales growth of 6% to 8% in the year to January 31, 2023, a full percentage point higher than its previous guidance issued in March.
It was a similar picture
at Ralph Lauren Corp, which forecast better-than-expected revenue expansion as it moves further upmarket.
These are impressive performances given the nasty surprises from mid-market retailers including Kohl’s, Walmart Inc and Target Corp last week. But the top-end is not without risk.
Nordstrom and Ralph Lauren are in the current retail sweet spot, as Americans ditch their sweat pants and instead purchase clothes for special occasions, the office and vacation. Fashion is back in fashion, if you will. More affluent customers are better sheltered from the ravages of rising food and fuel prices. Indeed, Patrice Louvet, CEO of Ralph Lauren, noted the resilience of the designer brand’s shoppers.
But US luxury demand — which has led growth across the industry for the past year — is closely correlated with how wealthy people feel. Stock-market declines in 2022, as well as rising interest rates, may eventually take their toll.
The performance of cryptocurrencies is another element to add to the mix. Analysts at Jefferies estimate that up to a quarter of the growth in the luxury market last year likely came from crypto gains. With Bitcoin now at less than half of its November peak, that’s a worry for the purveyors of upmarket goods.

—Bloomberg