Dick’s, Abercrombie & Fitch are bullish about the holidays while Best Buy tempers expectations

The landscape: Consumers have grown increasingly selective about where and when they spend, creating a divergent retail environment composed of haves and have nots.

• The haves: Dick’s Sporting Goods and Abercrombie & Fitch are riding high into Q4 after better-than-expected back-to-school sales. Both retailers raised their full-year guidance and expect to end 2024 on a high note.
• The have-nots: Best Buy’s bet that Copilot+ and other AI-powered PCs would help turn its fortunes around came up short. Sales were softer than expected during Q3, leading the retailer to trim its full-year forecast.

Why is this happening? While we expect holiday sales to grow a solid 4.3% YoY in 2024, the rising tide won’t lift all boats.

• Macroeconomic conditions are challenging. Best Buy felt stiff headwinds in Q3 from “macro uncertainty, customers waiting for deals and sales, and distraction during the run-up to the election,” CEO Corie Barry said during the company’s earnings call.
• That puts the onus on retailers to deliver a top-notch customer experience. Dick’s credited its success to differentiating its product offerings and enhancing its brick-and-mortar customer experience with experimental store concepts.
• They also have to know their customers. Abercrombie, which delivered its sixth straight quarter of double-digit sales growth in Q3, has its finger on the pulse of its customer base. It drove growth by launching a wedding collection and partnering with the NFL.

Our take: The tough landscape isn’t going to get easier anytime soon—especially in categories like home improvement and consumer electronics that have been hit hard by the stagnant housing market.

Consumers remain sharply focused on value, and the Trump administration’s plans to impose stiff tariffs on key trade partners promises to challenge retailers’ bottom lines—increasing the pressure on retailers to execute well.

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