Major Retailers Adjust 2025 Sales Forecasts Amid Consumer Spending Decline

A recent pullback by American shoppers has prompted national retailers to adopt a more cautious outlook regarding their sales potential for 2025. Abercrombie & Fitch has become the latest retailer to express concern, as the U.S. experienced its largest monthly decline in consumer spending in over four years, according to the Conference Board.

Concerns Over Inflation and Trade Tariffs

The Conference Board’s survey revealed that respondents are increasingly worried about inflation, with a notable rise in mentions of trade and tariffs. The tariffs imposed by former President Donald Trump against various countries have sparked immediate retaliation from Mexico, Canada, and China, creating further uncertainty in financial markets.

These tariffs threaten to reignite inflation, which has already been a growing concern for families and businesses alike. Trump initially imposed a 25% tax on imports from Mexico and Canada, while limiting the levy to 10% on Canadian energy. Additionally, he doubled the tariff on Chinese products to 20% last month.

Abercrombie & Fitch’s Sales Projections

On Wednesday, Abercrombie & Fitch reported its latest quarterly performance, revealing that it anticipates sales growth of only 3% to 5% in 2025. This forecast is significantly lower than Wall Street’s expectations and far below the impressive 16% sales growth the retailer achieved last year. Neil Saunders, managing director of GlobalData, noted that the retail landscape is becoming increasingly challenging, making it difficult for Abercrombie to match its previous year’s performance.

Target’s Struggles Amid Tariff Pressures

Target has also faced challenges, with sales and profits slipping last year. The retailer announced this week that it expects to see a decline in profits at the start of 2025 due to the ongoing tariffs on imports from Mexico, Canada, and China, along with other rising costs. Even before the trade war escalated, Target reported a slowdown in consumer spending during the crucial holiday shopping season, as many customers hesitated to spend.

Target CEO Brian Cornell warned that Americans could soon see rising prices for food, particularly produce from Mexico, such as avocados. In response to the tariffs, Mexican President Claudia Sheinbaum stated that the country would implement retaliatory tariffs on U.S. goods, with further details to be announced.

Price Increases on the Horizon

While Cornell refrained from discussing specific price hikes that shoppers might encounter at Target, he did caution that there would be price increases for certain products. Target’s shares have dropped nearly 15% this year, and only a few specialty retailers have seen stock gains. Shares of Gap have also fallen by 15%, while American Eagle, Guess, and Zumiez have experienced declines of approximately 29%.

Walmart’s Earnings Outlook

Late last month, Walmart, the nation’s largest retailer, indicated that its per-share earnings for the year could be lower than expected. The company anticipates annual sales growth of 3% to 4%, projecting sales to reach between $667.57 billion and $674.05 billion. This forecast has surprised Wall Street, where projections for 2025 sales had been closer to $708 billion.

As the retail landscape continues to evolve, the cautious outlook from major retailers highlights the challenges posed by declining consumer spending and rising inflation. The combination of tariffs and economic uncertainty is reshaping the financial strategies of these companies, leaving many to wonder how they will navigate the turbulent waters ahead. For more detailed insights, you can read the original article here.