High-priced leggings brand ‘Lululemon’ and low-priced discount store ‘Dollar General’ have mixed results in the second quarter, which is
due to the worsening situation of low-income households… In the U.S., consumer spending will remain strong.
The business performance of U.S. companies that sell expensive leggings and yoga clothes priced over 100,000 won is improving. On the other hand, the performance of low-priced discount stores, known as ‘America’s 1,000 won shops’, showed a downward trend, showing that the gap in consumption between classes is increasing.
CNN reported on the 3rd (local time) that the net sales of Lululemon, an American company that sells expensive sportswear, increased by 18% and gross profit by 23% in the second quarter compared to the same period last year.
Lululemon CEO Calvin McDonald raised his profit forecast for the second half of this year, saying, “Our existing customers are still opening their wallets and spending money, and new customers are continuing to flow in.”
Lululemon, which is also popular in Korea, is a company that sells leggings and yoga clothes that cost well over 100,000 won each.
On the other hand, ‘Dollar General’, a low-cost discount store that also announced its second quarter results, lowered its sales and profit forecasts for the second half of the year even further than before, along with performance that fell short of market expectations. Dollar General is a discount store chain that sells a variety of products at low prices, including a ‘$1 Deal’ corner that collects low-priced products in the 1,000 won range. It operates about 18,000 stores in the U.S. and Mexico.
Dollar General said it was experiencing difficulties recently due 먹튀검증to a decrease in consumer spending and an increase in theft damage. Jeff Owen Dollar General“Our core customers continue to tell us they feel financial pressure,” the CEO said.
Neil Saunders of market analysis firm GlobalData explained, “The situation for low-income people has worsened as temporary COVID-19 subsidies have disappeared,” adding, “Low-income consumers are reducing purchases of non-essential items to save money.”
In fact, Dollar Tree, a discount store chain similar to Dollar General, also announced in its earnings announcement last month that “customers are changing their shopping patterns after several years of increased spending.”
Wells Fargo economic expert Shannon Siri analyzed that “low-income households in the United States are under financial pressure.” “Historically, low-income households have been disproportionately affected by inflation,” he said. “Things like food and energy have become a bigger part of their household budgets.”
Last July, the U.S. personal consumption expenditures ( PCE ) index, which is used as a price indicator, rose 3.3% compared to the same month last year, which is significantly higher than the Federal Reserve’s (Fed) target of 2%.
However, experts believe that the U.S. labor market remains strong and that there are no major problems with the consumption economy despite high inflation. Brian Nagel, an analyst at financial firm Oppenheimer, predicted that “consumer spending is generally holding strong,” and that “the bottom is not going to fall out.”