Back-to-School Retailers Discover a Worm in the Apple

Uncertainty has replaced the excitement and anticipation that typically marks the start of a new school year. School districts have wrestled with whether to welcome students back to classrooms, keep children at home for virtual learning sessions, or take a hybrid approach. This uncertainty hangs over the retail sector too and clouds the outlook for the holiday shopping season.

Those are among the key findings of our new Beacon Report on Back-to-School Retail Trends.  

The 7Park Data research team analyzed transaction data from email receipts for this year’s back-to-school shopping period (8/3 through 9/19) and observed decelerating trends for the majority of retailers compared to Q2 2020. 

Additionally, consumer spending appears to have weakened during the traditional back-to-school shopping period relative to stronger e-commerce trends timed to the coronavirus pandemic’s onset in March.

Shopping mall-based apparel retailers are among the hardest hit. Despite reopening stores in May and June, most could not reverse a softening in sales due to numerous factors, including the mid-summer spike in infection rates, closed schools, and the federal government’s inability to finalize a second round of stimulus funding. 

Some of the strongest performers before the onset of the pandemic are among the notable underperformers, including Lululemon (LULU). Although the company continues to post stellar growth on an absolute basis versus all competitors (+97% QTD), this growth rate has decelerated ~57%. Current growth rates are ahead of consensus for Q3 (+80%), but the latest weekly trend was the lowest since mid-March.

There are a few exceptions, particularly Abercrombie & Fitch. 

“With stores reopening in the U.S. and the EMEA regions, we have experienced sales productivity for reopened stores of approximately 80% and 60%, respectively, as compared to last year’s levels,” said CEO Fran Horowitz when the company reported its Q1 results in late May.

That trend continued into Q3. Abercrombie was one of the few apparel retailers that observed acceleration (+33%) in September, with its namesake brand up 94% Y/Y.

The Beacon report also showed that the Big Box retailers have felt the impact of the consumer spending slowdown heading into fall.


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