Retail traffic trends offer some clues about what’s happening this back-to-school season.
Wells Fargo retail analyst Ike Boruchow, in a research note Wednesday, noted “solid signs of stabilization in both demand and promo intensity” since June.
“That said, heading into the important Back-to-School selling season, we have begun to see traffic soften and inventories heavy,” he added, pointing to athletic footwear as a category when stock is piling up.
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Positive footwear momentum in June and July turned moderately negative through the first two weeks of August, Boruchow said, a “concerning” sign “heading into the heart” of the back-to-school shopping period.
Anthropologie and Lululemon were the rare names seeing better footfall this month. Under Armour and Old Navy weren’t so lucky, seeing some of the steepest month-to-month foot traffic declines amid a broader consumer spending slowdown in apparel and footwear.
TD Cowen retail analysts also noted similar traffic trends in the U.S. Retail traffic in the first week of August picked up sequentially to 6.2 percent, but was still off from July’s average of up 7 percent. Apparel traffic improved by 5.1 percent, up from the last week in July. However, both retail and apparel traffic were still below where they were in 2019.
Retail traffic in the second week of August came in flat at 6.2 percent, trailing July’s average of up 7 percent. Apparel traffic lagged at up 4 percent from the first week, below the July average of up 6 percent. Both traffic metrics weren’t where they were in 2019 levels. To put that in context, 2023 kicked off with “robust traffic trends,” with January averaging up 44.9 percent year-over-year, according to TD Cowen analysts. With the exception of a slight uptick in April, traffic trends have fallen off through the first half of the year. Retail footfall in the third week of August is projected at up 4.8 percent, for the third consecutive week below July, according to the investment bank’s retail analysts.
For Aptos Retail strategy VP Nikki Baird, the back-to-school season has been “interesting.”
“I think it has been slow for apparel,” she said. “Everything that I’ve seen [tells me] this is purely a school supplies kind of back-to-school so far. Part of that is that it has been so hot, and nobody’s willing to spend anything on colder weather apparel until they’re really sure they’re going to need it. Especially with kids, you never know when that growth spurt is going to hit so you try to leave that as long as possible.”
As second quarter reports start rolling in, some retailers are in better shape than others. While Target didn’t do as well as expected, Walmart raised its outlook Thursday following a strong quarter after TJX did so Wednesday. However, disappointing back-to-school sales could force companies to revise their projections for the quarters and full year to come.
