Retailers Walmart (WMT), Target (TGT), and TJX Companies (TJX) reported earnings this week, indicating consumers' preferences for trade-down purchases in retail chains over department stores. Bernstein Analyst Aneesha Sherman joins Yahoo Finance Live to discuss several of the biggest takeaways from retail earnings as part of the weekly series "Retail Evolution: The New Era."
"Last year, the lower-income consumer was more pressured, but this year we've seen cumulative effects of inflation and high rates impact not just low-income, but middle-income and slightly more premium consumers as well," Sherman explains, detailing how consumers have been forced to adapt their spending habits.
Furthermore, Sherman comments on the state of luxury retail brands as consumers are spending more on going out and experiences, and Tapestry (TPR) is in the process of acquiring Capri Holdings (CPRI) for $8.5 billion
"Short term, it deteriorates the quality of the tapestry because the company they're buying is a slower growth lower margin company," Sherman states, adding: "However, the long-term rationale makes sense, which is basically that they are trying to gain scale in the luxury market to run a direct-to-consumer luxury brand, you need to invest in brand-building and marketing and real estate and flagship stores and events."
This post was written by Luke Carberry Mogan.
