Retailers entered the crucial holiday season with high hopes, but the results revealed a mixed bag, with some brands thriving and others facing investor skepticism. Early results highlight contrasting fortunes for major retailers like Lululemon, Abercrombie & Fitch, and Macy’s.
Lululemon’s Holiday Success Boosts Investor Confidence
Lululemon emerged as a standout performer this holiday season. The activewear giant raised its fourth-quarter sales projection to a range of $3.56 billion to $3.58 billion, reflecting an 11% to 12% growth. This was an improvement over its earlier forecast of $3.48 billion to $3.51 billion.
The company’s profit outlook also saw an uplift, with earnings per share now projected between $5.81 and $5.85, up from $5.56 to $5.64. Gross margins are expected to grow by 0.3 percentage points instead of declining as initially anticipated.
“During the holiday season, our guests responded well to our product offering, enabling us to increase our fourth-quarter guidance,” said Meghan Frank, Lululemon’s CFO. Shares of Lululemon rose in early trading, reflecting investor optimism about its sustained growth.
Abercrombie & Fitch Faces Investor Doubts Despite Growth
Abercrombie & Fitch also reported stronger-than-expected holiday performance, adjusting its net sales growth forecast to 7%–8%, up from 5%–7%. Full-year sales are now expected to grow 15%, a solid showing after last year’s 16% growth.
However, concerns over the brand’s rapid growth potentially plateauing led to a 17% plunge in Abercrombie’s stock. CEO Fran Horowitz emphasized a strategic shift, stating, “In 2025, we will look to continue sustainable, profitable growth through the execution of our playbooks to win and retain customers around the world.”
Macy’s and Urban Outfitters Struggle to Impress
In contrast, Macy’s revealed less optimistic news, expecting holiday sales to be at or slightly below its earlier range of $7.8 billion to $8.0 billion. This underwhelming performance led to a 6% drop in shares.
Urban Outfitters reported a 10% year-over-year increase in net sales for November and December, but its namesake brand underperformed. While Anthropologie and Free People delivered strong comparable sales growth of 10% and 9%, respectively, shares still declined by nearly 5%.
American Eagle and Nuuly Show Mixed Results
American Eagle saw its operating profit forecast rise to $135 million, up from $125 million, with low single-digit comparable sales growth. Meanwhile, Nuuly, Urban Outfitters’ rental service, reported a staggering 55% increase in sales, driven by a 53% jump in active subscribers.
A Holiday Season of Modest Growth
Overall, the National Retail Federation forecasted a modest holiday sales growth of 2.5%–3.5%, reflecting the impact of inflation. Mastercard SpendingPulse reported a 3.8% year-over-year increase in holiday retail sales, signaling a slightly better-than-expected season.
The annual ICR conference in Orlando will provide further insights as retailers meet investors and analysts to discuss their holiday performance and strategies for the new year.
Winners, Losers, and Market Trends
This holiday season underscored the diverse challenges and opportunities facing the retail sector. While brands like Lululemon thrived, others like Abercrombie and Macy’s faced hurdles. The mixed outcomes highlight the importance of innovation and strategic adaptability in navigating an evolving retail landscape.