Change is the air on Wall Street.
Most fashion and retail companies took a step back during the pandemic to reset with an eye toward coming out stronger. And now, as chief executive officers try to push their plans through tough economic headwinds, more and more are getting caught up in whirlwinds of one kind or another.
- Target Corp.’s stock fell as much as 7.8 percent on Tuesday and closed down 2.3 percent to $155.98 as the retailer said it would “right-size” its inventory with markdowns.
- Kohl’s Corp. rose 9.5 percent to $45.59 after — with some early prodding from activists — it entered into exclusive negotiations with Franchise Group, which might pay $60 a share to buy the company, financing the deal with debt secured by the retailer’s real estate.
- And The RealReal Inc. rose 5.5 percent to $3.06 after revealing that founder, CEO and chairperson Julie Wainwright “decided to step down” immediately and that the company was searching for a successor.
While those changes are driven by the internal dynamics at the companies themselves, they are also a sign of the times in retail and fashion today.
Ultra-high inflation, steep stock market declines, war in Europe, the lingering pandemic and the threat of recession are all pushing in on companies and pressuring the status quo in ways that could continue to reshape individual players and whole sectors.
“Stable environments don’t exist anymore, they’re not coming back,” said consultant David Bassuk, global coleader of AlixPartners’ retail practice.
Some of the changes sweeping through the industry now are not exactly surprises.
“There are big category shifts,” Bassuk said. “Home is down, wear-to-work is back. The story of the supply chain and inflation isn’t new, you could predict what that’s going to do from a consumer standpoint. It really comes down to execution. It comes down to digital and omni execution in retail.”
Bassuk said retailers did a good job reacting to the first dramatic shifts of the pandemic. But only some have held onto that agility while others are picking back up some old habits.
“Practices from the past don’t work anymore,” Bassuck said.
And he said retailers are going to have to continue to change.
“When inflation subsides and the supply chain pressure frees up a bit, the next thing is going to be here,” Bassuk said. “We’re never going to get to a smooth sailing mode in retail, it’s just not how retail works. Now more than ever, the consumer is continuing to increase demands on retailers and that’s here to stay.”
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