This Week: Three Questions for Retailers
We are in the home stretch of retail earnings season, which has been more eventful than usual thanks to the tariffs and some unexpected dealmaking.
Some of the biggest newsmakers of 2025 report this week. Here are a few questions we'll be looking for them to answer: How much will consumers pay for sneakers?
We know how much hedge funds and retailers will pay for sneakers: 3G paid $9 billion and change for Skechers earlier this month, closely followed by Dick's Sporting Goods' $2.4 billion acquisition of Foot Locker. Of the two deals, the latter is likely to be far more consequential.
Executives already got on the phone with analysts after the deal was announced, so Wednesday's earnings call may not provide too many new details about Dick's plans.
But the company can talk about whether consumers will keep buying sneakers at higher price points. Nike is reportedly planning to raise prices by $5 on shoes costing between $100 and $150, which covers most of the selection at Foot Locker. Adidas and Puma will likely follow their rival's lead. The Swiss running brand On, a major presence at Dick's with prices starting around $150, has already said to expect hikes by July.
At more luxury-focused sneaker retailers like Kith, a few dollars might not draw too much attention. But the Foot Locker customer wants stylish sneakers at more affordable prices. Will Tariffs Derail Gap's Turnaround, and Abercrombie's Soft Landing?
Now that the Trump administration has for the time being taken the most severe tariffs off the table, it's the retail edge cases that can shed the most light on how trade policy is playing out with shoppers.
Gap Inc. is on a tear, with shares trading close to a four-year high as a turnaround takes hold, particularly at the company's namesake brand. The real test is whether sales continue to grow even as consumers pull back on spending; buzz-generating initiatives like Zac Posen's premium Gap Studio line are meant to keep the brand at the top of the shopping list.
Abercrombie & Fitch was the hottest mall brand for several years running, but has seen growth start to slow in recent quarters. It issued a cautious outlook for the quarter that will be covered in Wednesday's results, and will hope to avoid falling short of already low expectations. What beauty products do shoppers still want to buy?
The lipstick index is dead. Consumers are in too gloomy a mood even for the smallest luxuries these days, judging by dismal sales at Estée Lauder, Coty, Shiseido and other beauty giants. Ulta Beauty, which reports Thursday, is on the front lines in more ways than one, with its exposure both to struggling beauty brands and Target's troubles.
E.l.f. Beauty, reporting Wednesday, can add the tariffs to its list of woes. The brand's affordable dupes helped it rule the post-pandemic beauty boom. Unfortunately, some 80 percent of those products are made in China. The company's stock is back above Liberation Day levels now that the Trump administration has lowered tariffs on Chinese imports to a more manageable 30 percent. On Friday, the brand told customers it would raise prices across the board by $1. Look on Wednesday for guidance as to whether an earlier forecast for sales to grow by about 20 percent in the coming year still holds.
The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
13 minutes ago
- Miami Herald
White House responds to the latest Elon Musk jab
It appears that some distance from Washington, D.C. has given Tesla CEO Elon Musk some clarity about President Donald Trump and his economic agenda. Trump has repeatedly said that balancing the budget was one of his top priorities. In fact, during a recent cabinet meeting, he said that his drive to balance the federal budget was one of the main reasons he won so handily last November. The Department of Government Efficiency was supposed to be a big part of that drive. Related: Trump decision leaves Elon Musk in a serious bind In the same meeting, Musk bemoaned the $2 trillion annual deficit the U.S. government is running, noting that the debt's interest payments exceed the annual U.S defense budget. But that cabinet meeting was three months ago, and since then, a lot has changed about the president's priorities, as well as Musk's. The number one mission on the White House agenda right now is getting the federal spending budget passed by the Republican controlled Congress. Trump has described his bill as big and beautiful, but the bipartisan Congressional Budget Office says it would increase the federal deficit by $3.8 trillion over the next decade. There aren't enough DOGE cuts in the world to pay for extending the Trump tax cuts while increasing entitlement and defense spending. Trump's claim that tariffs would help balance the budget has also proven specious. Musk recently left his post as the head of DOGE, returning to his work at Tesla and SpaceX. He is using his newfound freedom to speak up. Image source:After being fully in the tank for Trump, Musk has begun exercising his free speech about his recent disagreements with the administration. Last week, he told CBS, "I was disappointed to see the massive spending bill, frankly, which increases the budget deficit and undermines the work that the DOGE team is doing." Musk once made it a point to sport a red hat that read 'Trump Was Right About Everything,' but now he says he is a free thinker. "It's not like I agree with everything the administration does...I mean, I agree with much of what the administration does, but we have differences of opinion on the things that I don't entirely agree with," Musk told CBS. Related: Elon Musk explains DOGE mission, takes shot at government On Tuesday, he took his criticism a step further. "I'm sorry, but I just can't stand it anymore. This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination. Shame on those who voted for it, you know you did wrong. You know it," Musk tweeted out. Musk tweeted that Tuesday afternoon before the daily scheduled White House press briefing, which gave Press Secretary Karoline Leavitt a chance to respond on behalf of the White House. Leavitt, who has had no issue being combative with people who have questioned the administration in the past, took a more respectful tone with Musk. "The president already knows where Elon Musk stood on this bill. It doesn't change the president's bill. This is one big, beautiful bill, and he's sticking to it," Leavitt said. The budget isn't the only issue where the White House and Musk clash. In early April, Musk went after Trump Senior Advisor Peter Navarro over tariffs, before Navarro returned fire and Trump backed Navarro. Since then, Musk's criticisms have been more muted. It's something he acknowledged in the CBS interview. "It's difficult for me to bring that up in an interview, because it creates a buildup of tension. So I'm stuck in a bind where I don't want to speak up against the administration, but I also don't want to take responsibility for everything the administration is doing," he said. Related: Tesla execs question Elon Musk over controversial X post The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
San Francisco Chronicle
14 minutes ago
- San Francisco Chronicle
Trump administration pulls $4 billion in federal funding for California high-speed rail
WASHINGTON — The Trump administration plans to pull the plug on federal funding to California's high-speed rail project. Following a review of the $4 billion in federal funds allocated to California's bullet train project launched in February, the Transportation Department said it plans to terminate federal funding for the project, according to a report released Wednesday. 'We have $4 billion that has been authorized to go to California to build this project and we don't want to invest in boondoggles,' Transportation Sec. Sean Duffy told Fox News Wednesday. The state will have 30 days to make the case that it has complied with the grant's terms and any corrective action it plans to take before the federal government can terminate funding. The Transportation Department is not asking for the state to repay federal funding previously given for the project, but said it could do so in the future — although any attempts to do so would likely be unsuccessful. 'What started as a proposed 800-mile system was first reduced to 500 miles, then became a 171-mile segment, and is now very likely ended as a 119-mile track to nowhere. In essence, (the California High-Speed Rail Authority) has conned the taxpayer out of its $4 billion investment, with no viable plan to deliver even that partial segment on time,' Drew Feeley, acting administrator of the Federal Railroad Administration, said. The federal government 'cannot continue to commit taxpayer dollars to (the California High-Speed Rail Authority's) Sisyphean endeavor,' Feeley said. California's high-speed rail project is a 'story of broken promises and of waste of Federal taxpayer dollars.' The Trump administration has 'been laying the groundwork for this for month. They're completely hostile, not just to California high-speed rail, but rail in general and public transportation,' state Sen. Scott Wiener, D-San Francisco, told the Chronicle. 'This is a Neanderthal administration that probably thinks public transportation is a communist plot.' Wiener, a staunch proponent of the bullet train, acknowledged the project's challenges. 'We certainly have to do better in California in terms of project delivery, but … it's not a reason to start canceling major, transformative public infrastructure projects. We need to find a way to get these projects done more efficiently and more effectively,' Wiener said. The first Trump administration pursued terminating the project's funding in 2019, but the Biden administration negotiated a 2021 settlement with the state to continue supporting the segment from Bakersfield to Merced. The project's costs — initially estimated to be $33 billion and now expected to cost between $89 billion and $128 billion — have ballooned and its timelines have been repeatedly delayed. Gov. Gavin Newsom and state Democrats have not backed down on funding for high-speed rail in past budgets, despite opposition from Republicans. Newsom has acknowledged for months that Trump would try to claw back money for the project, just as Trump did during his first term. Newsom has promised to fight any efforts to revoke the money. The high-speed rail funding is just one bucket of federal money Trump has threatened to withhold from California, along with federal health care and education funding. 'There still is the rule of law, still the court system, there's still due process,' Newsom told reporters in January when he unveiled an initial version of his 2025-26 state budget proposal. 'You can threaten, as Trump has consistently done ... but ultimately those federal dollars will be recovered.' Since January, California's budget outlook has deteriorated significantly, and the Newsom administration now predicts California faces a $12 billion shortfall, which will make it harder for state officials to backfill any federal funding cuts. Newsom and lawmakers are negotiating over the state budget for the upcoming fiscal year and must reach a deal on how to balance the budget this month to meet constitutional deadlines. Even with the state's difficult financial situation this year, Wiener said he expected the project to move forward because 'it's not about one year, this is about the long-term health and economic strength of California.' Republicans have for years decried the project's skyrocketing costs and lack of progress. President Donald Trump told reporters Feb. 5 that he would personally investigate the high-speed rail project. Rep. Kevin Kiley, R-Rocklin (Placer County), introduced legislation on Jan. 6 to make the project ineligible for further federal funding, the same day Newsom drove a symbolic spike in the ground to celebrate the rail line's first 22-mile segment, from the border of Tulare and Kern counties to Poplar Avenue in Wasco (Kern County). Republicans in the Legislature sent a letter to Trump Feb. 13 expressing support for his probe and saying they have a duty to constituents to 'carefully examine the viability of this project.' 'I want to see high-speed rail in America,' Duffy said. 'Why it can't be built in America and why it can't be built within time frames that work for the people that invest in these projects makes no sense to me.' State leaders have focused largely on finishing the stretch of high-speed rail track from Merced to Bakersfield, with the idea of linking it to two other bullet train lines: the High Desert Corridor in Los Angeles, and the privately owned Brightline West route from Las Vegas to Rancho Cucamonga (San Bernardino County). Ultimately, they also want to connect to Caltrain's commuter line on the Peninsula, patching together a network that somewhat resembles the original vision from the mid-1990s. The loss of this funding would 'certainly be a setback, but it is a relatively small percentage of the overall budget of the project,' Wiener said. 'It's not a death knell.'
Business Insider
16 minutes ago
- Business Insider
Bark Box CEO apologizes for employee's internal message comparing PRIDE collection to MAGA toys
The CEO of BarkBox, the company that offers a monthly subscription service for boxes of dog toys and treats, has issued a public apology for a "disrespectful and hurtful" internal message that leaked on social media. A screenshot of the message that circulated on Reddit described the decision to immediately pause paid ads and lifecycle marketing pushes for the company's Pride kit. "While celebrating Pride is something we may value, we need to acknowledge that the current climate makes this promotion feel more like a political statement than a universally joyful moment for all dog people," the message reads in part. "If we wouldn't feel comfortable running a promotion centered around another politically charged symbol (like a MAGA-themed product), it's worth asking whether this is the right moment to run this particular campaign." "Right now, pushing this promo risks unintentionally sending the message that 'we're not for you' to a large portion of our audience," the message concludes. BarkBox confirmed to Business Insider the authenticity of the screenshot. The author of the message is unclear. Founder and CEO Matt Meeker apologized for the "disrespectful and hurtful" message in an Instagram post on Wednesday. "I do not agree with the content of the message. It wasn't good, it doesn't reflect our values, and I'm deeply sorry that it happened," he said. "We stand by the products," he wrote about the Pride kits, noting that the company had no plans to remove them. While the company has donated a portion of profits from its Pride collection to an organization supporting LGBTQ people in past years, it'll donate 100% of the revenue from the collection this year, he added. The company's Pride collection is available as an optional add-on for BarkBox and Super Chewer subscribers, and has been offered for the past four years. The initial pullback on Pride isn't unique to BarkBox. Some of the biggest retailers in the US have walked back their support for diversity, equity, and inclusion efforts, with some taking cues from the Trump administration's stance on the matter. Target last year scaled back its Pride Month collection after receiving backlash from conservatives over the merchandise in prior years. In late November, Walmart announced it was ending some of its DEI initiatives and taking down some LGBTQ-related merchandise from its website.
