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Newsweek
6 days ago
- Business
- Newsweek
Families Going Into Debt for Back-to-School Supplies Jumps by Double Digits
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Forty-four percent of parents plan to incur debt to cover school supplies—a 10-percentage-point increase from 2024—a new survey by Intuit Credit Karma found. Parents cited concerns over new tariffs as major sources of financial strain ahead of the new academic year, marking a double-digit increase in households going into debt compared to 2024. Why It Matters Back-to-school shopping is traditionally a significant annual expense, but this year's costs have become more burdensome for U.S. parents. The rise comes amid heightened inflation and looming tariff increases, which have contributed to sharp price hikes for school essentials and prompted families to alter spending habits and cut back on necessities. The trend reflects deeper economic challenges as families grapple with higher living costs, stagnant wages and policy changes. It also signals that inflation and tariff policies can have a direct impact on American households, especially those with children in school. Teacher Liza Gleason shops for back-to-school supplies at a Target store on August 13, 2008, in Daly City, California. Teacher Liza Gleason shops for back-to-school supplies at a Target store on August 13, 2008, in Daly City, To Know This year, 39 percent of Intuit Credit Karma's surveyed parents with school-age children said they cannot afford back-to-school shopping—an increase from 31 percent the previous year. Other surveys confirm the cost pressure, with one Bankrate report noting that about 20 percent of parents feel budget strain from school shopping. Key school supplies, including backpacks, cost significantly more this year, with parents attributing price increases to inflation and President Donald Trump's new tariffs. "Tariffs on imports have driven up the cost of back-to-school essentials like book bags, clothes and supplies," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. "While apparel prices are down slightly—about 0.5 percent over the past 12 months—that's being completely offset by rising prices in other categories." While the full impact of the tariffs has not yet been felt, concerns remain that prices could rise further after the August 1 deadline, when tariffs as high as 50 percent will hit several countries. Retail industry experts confirmed that families are responding by shopping earlier than in previous years, seeking discounts and alternative brands to manage costs. To manage back-to-school expenses, parents reported employing various savings strategies in the Intuit Credit Karma survey: 73 percent are comparison shopping, 69 percent are buying from discount stores, 44 percent are relying on buy now, pay later services, and 41 percent are choosing hand-me-downs. More than half of parents (54 percent) are sacrificing necessities such as groceries to ensure their children have needed school supplies. Additionally, 61 percent are using back-to-school sales to purchase holiday gifts simultaneously. More than half of parents, particularly those with multiple children, said back-to-school shopping is a major source of anxiety. High living costs prompt parents not only to take on debt but also to forgo after-school activities, with 45 percent unable to afford extracurricular programs this year, forcing some to consider cutting work hours or leaving jobs. What People Are Saying Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "It's incredibly concerning. Credit card debt in general has seen fresh highs in the years following the pandemic, as inflationary pressures and stagnant wage growth have caused many Americans to look to consumer debt to fill the gaps. "Typically, for back-to-school season, this isn't as much of a problem, as retail runs aggressive sales and some states offer tax-free shopping on back-to-school items to help parents prepare their children for the year ahead. The fact that there's a share rise in debt usage speaks to just how financially fragile many consumers are at the moment." Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "This rise in the cost of goods hasn't been good for the average family. When you can't walk out of a grocery store without a receipt showing three digits before the decimal, that's a real issue. Sure, we're seeing some disinflation in categories like meat and other staples, but prices aren't coming down." Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Inflation has hit American families hard, and back-to-school shopping is only getting more expensive. Electronics like powerful calculators and handhelds, items that were once luxuries, are now required technology. But we also have a spending problem. Parents do not want their children to be the ones without, so they succumb to fad purchases on top of the necessities." What Happens Next Consumers are bracing for a potential price hike if Trump's paused tariffs take full effect on August 1. "My advice to parents struggling with how to keep up with demanding school lists and social media fads is to start with the necessities, then move to the fad purchases one at a time," Powers said. "Does your kid need yet another water bottle, backpack, zipper pull and full wardrobe all at once? No. Buy slowly as your budget allows." Retail analysts anticipate additional increases in school supply costs should tariffs proceed, intensifying the strain on families. "Long term, this is going to continue ripping through lower- and middle-income households," Thompson said, "and by the time upper-middle and higher-income families start to really feel it, it may already be too late."
Forbes
21-05-2025
- Business
- Forbes
Target And Lowe's Earnings Are Out: What Shoppers Need To Know
DALY CITY, CA - AUGUST 13: School teacher Liza Gleason shops for back to school supplies at a ... More Target store August 13, 2008 in Daly City, California. With stores gearing up for back to school shopping, the Commerce Department reported today that retail sales fell 0.1 percent in July, the first time in five months. (Photo by) The first few months of 2025 were bumpy for many big retailers and the US stock market. The world had to adjust to tariffs and GDP contracted in Q1. Many people on Wall Street think we are in a recession but only time will tell. On Wednesday, two of America's best-known names—Target and Lowe's—just reported their latest quarterly results. Both companies are facing challenges, but they're also making changes that will affect how people shop and what they can expect in stores and online. Here's a closer look at the data and what it means for both Main Street and Wall Street. Target and Lowe's: What Their Latest Results Mean for Shoppers In the premarket, Target is lower but Lowes is a little higher. Both companies are facing challenges, but they're also making changes that will shape how consumers shop going forward. Here's a closer look at the data: Target Missed Its Target: Sales and Profits Fall Short According to Target reported earnings of $1.30 per share on revenue of $23.85 billion for the fiscal first quarter ended April 2025. The consensus earnings estimate was $1.62 per share on revenue of $24.54 billion. The Earnings Whisper number was $1.62 per share. The company missed expectations by 19.75% while revenue fell 2.79% compared to the same quarter a year ago. The company said it expects fiscal 2026 earnings of $7.00 to $9.00 per share on revenue of approximately $103.9 billion. The company's previous guidance was earnings of $8.80 to $8.90 per share on revenue of approximately $107.63 billion and the current consensus earnings estimate is $8.54 per share on revenue of $107.38 billion for the year ending January 31, 2026. Guidance: Target now expects to earn between $7.00 and $9.00 per share for the full fiscal year, with revenue around $103.9 billion. This is lower than its previous forecast and below what analysts had expected. What Happened: Target's sales and profits both fell short of expectations. Put simply, people are buying less things from Target. Fewer shoppers are coming into stores, and many are spending less, especially on non-essential items like clothing and home goods. However, there's some good news: Target's digital sales grew by 4.7%. More customers are shopping online and using services like same-day delivery and curbside pickup which is encouraging. Special events, like Valentine's Day and Easter, did better than regular weeks, and a new designer collection with Kate Spade was a big hit. Target says it's working to make decisions faster and focus on what matters most, investing in its stores, website, and new ideas, but also being careful with its spending. My 3 Takeaways & What This Means for Shoppers: More Online Options: Based on the latest quarter and evolving consumer trends, I believe Target will keep improving its website and app, making it easier to shop from home and get things delivered faster. More Deals and Promotions: Normally, when sales slip, deals and promotions go up. Target may offer more discounts and special offers to bring shoppers back, especially online since that is what's working right now. Focus on Convenience: We live in a world where people love convenience. Same-day delivery and easy pickup will likely become even more important as Target tries to make shopping as simple, fast, and easy, as possible. Now let's look at Lowes. Lowe's: Meets Profit Expectations, Sales Dip According to Lowe's Companies (LOW) reported earnings of $2.92 per share on revenue of $20.93 billion for the fiscal first quarter ended April 2025. The consensus earnings estimate was $2.88 per share on revenue of $20.95 billion. The Earnings Whisper number was $2.92 per share. The company reported in-line with expectations while revenue fell 2.03% compared to the same quarter a year ago. Guidance: The company said it continues to expect fiscal year earnings of $12.15 to $12.40 per share on revenue of $83.50 billion to $84.50 billion. The current consensus earnings estimate is $12.21 per share on revenue of $84.21 billion for the year ending January 31, 2026. What Happened: Lowe's earnings beat what experts expected, but sales missed estimates. This means that fewer people are taking on big home renovation projects right now, mostly because borrowing money is more expensive (thanks to higher interest rates) and the housing market has slowed down considerably. Instead, shoppers are focusing on smaller repairs and maintenance which is normal at this time in the cycle. If you look a little deeper, Lowe's is seeing more business from professional customers like contractors and property managers, and its online sales are growing, too. What This Means for Shoppers: Stable Prices: From what I can tell, Lowe's is not planning big price hikes due to the tariff situation and it's working to keep costs under control. Better Service: The company is putting more effort into training employees and making stores easier to shop, which should mean better service for its customers. More for Pros: If you're a contractor or manage properties, expect more from Lowes. Maybe better loyalty programs and/or special services just for you. Online Improvements: Like Target, Lowe's is making it easier and more convenient to shop online and pick up orders quickly. Why Are Retailers Facing Challenges? Both Target and Lowe's are dealing with similar issues: Tariffs: Retailers are directly impacted by tariffs. For now, they are dealing with it but we'll see what happens going forward. Shoppers Are Careful: With prices and interest rates still high, people are thinking twice before making big purchases or buying things they don't really need. Shift to Online: Another big shift is that people are shopping online more and more these days. Big box retailers have to keep up by offering fast delivery and easy returns, among other perks to attract buyers. Competition Is Fierce: Whether it's Amazon, Walmart, Home Depot, or local stores, there are lots of choices, so retailers have to work harder to keep customers coming back. Economic Uncertainty: No one is sure what the rest of the year will bring, so companies and consumers are both being cautious about spending and hiring. What to Watch For As A Shopper Or Investor Here's how these trends could affect your next trip to Target or Lowe's: To Earnings - After looking at the numbers, the most important thing I look for during earnings season is how each stock (and the market) reacts to earnings. All things equal, I like to see stocks rally after reporting earnings, not fall. Also, it is important to note that earnings tell us what happened in the past (last quarter), the market is looking forward (current and future quarters) 2. More Digital Tools and Services Consumers can expect a better online experience. Many retailers will be investing in their digital assets to make better apps, offer more online-only deals, and create easier ways to get what you need delivered or ready for pickup - faster. 3. Promotions and Loyalty Perks If we are in a recession, or even a lull, I expect more companies will create special offers to encourage spending, especially on their websites or loyalty programs. 3. A Better Store Experience In the future, we might see retailers create better experiences in their stores to attract buyers. That might become a big plus that online only stores can't do. Looking Forward Many retailers are focusing on investing in technology, improving online shopping, and working to make stores more helpful and efficient. For shoppers, this means you'll probably see more convenience, better service, and plenty of chances to save money through deals and promotions. As Target and Lowe's adapt to a changing retail world, shoppers can expect a focus on what matters most: good prices, great service, and shopping that fits your life. Whether you're picking up groceries, fixing a leaky faucet, or just browsing for something new, these companies want to make sure you get the best value and the best experience every time you shop. Investors will be looking for a bullish catalyst to send these stocks higher.
