Retail’s early holiday 2025 results show modest growth
Some retailers reported early holiday results Monday that showed the critical shopping season was solid but fell short of expectations.
lululemonThe company, which is gearing up for a new CEO and facing a proxy battle with its founder, said in a statement that it expects the holiday quarter to be “towards the high end” of its previously issued guidance. shoe manufacturer birkenstock and second hand store Savers Value Village also announced lackluster early holiday results Abercrombie and Fitch cut off the high end of its guidance. Meanwhile, American Eagle And Five Below They bucked the trend and raised their guidance following better-than-expected holiday results.
Lululemon said it expects fiscal fourth-quarter revenue to be close to $3.60 billion and earnings to be close to $4.76 per share. Both figures are at the high end of the guidance when the company announced its fiscal third-quarter earnings in December.
There were no changes to its previous guidance on gross margin, effective tax rate and selling, general and administrative expenses.
Shares were up about 1% in morning trading.
“We remain focused on executing our action plan to drive recovery in our U.S. business and look forward to the opportunities ahead,” chief financial officer Meghan Frank said in a statement. he said.
Former CEO Calvin McDonald, who announced last quarter’s earnings on Dec. 11, said he was “encouraged” by the company’s early holiday performance but acknowledged that broad discounts boosted demand during the Thanksgiving holiday period. He said trends slow down once the shopping season ends.
Like other high-end brands, Lululemon has historically been very selective about discounts, but in recent quarters it has used discounts more freely to unload older products and styles that shoppers don’t like.
At the time, margins fell by 2.9 percentage points in the fiscal third quarter, primarily due to higher tariffs and larger discounts, it said.
Abercrombie & Fitch shares fell more than 18% in morning trading after the retailer cut the upper end of its guidance despite posting what it called “record” sales since the beginning of the quarter.
It now expects full-year sales to rise “at least 6%” from the previous range of 6% to 7%. It forecasts operating margin, a closely watched metric on Wall Street, to be around 13%, compared with the previously expected range of 13% to 13.5%. The company expects earnings per share to be between $10.30 and $10.40; the previous estimate was between $10.20 and $10.50.
“Our team has remained on the offensive in terms of product, voice and experience, resulting in record quarter-to-quarter net sales through fiscal December, in line with our expectations,” CEO Fran Horowitz said in a press release. “More importantly, we achieved balanced growth across our regions, brands and channels.”
Birkenstock, which did not provide a specific forecast for the holiday quarter last year, said it expected sales to rise 11% to 402 million euros ($470 million) in the quarter ending Dec. 31. Shares were up about 2% in early trading.
Savers Value Village saw sales increase 8.4% during the holiday quarter; comparable sales were up 5.4%, excluding the impact of an extra week in the company’s calendar. Despite relatively strong growth, the company only reaffirmed its adjusted net income and EBITDA outlooks for fiscal 2025. Shares were slightly higher in premarket trading.
On the other side of the aisle, American Eagle said its holiday quarter was much better than expected, with comparable sales in the “high single digits” since the beginning of the quarter through Jan. 3 and positive sales trends across brands and channels.
Comparable sales at its eponymous banner grew by a low-single-digit percentage, while competition at specialty products group Aerie rose “in the late twenties.”
American Eagle said the “record” season boosted fourth-quarter operating income from $155 million to $160 million and from $167 million to $170 million.
“In the fourth quarter, momentum continued with record December sales supported by the strength of our brands, with particularly strong growth at Aerie and Offline and sequential growth at American Eagle,” CEO Jay Schottenstein said in a press release. “Our customers embraced our new product collections and responded to our latest marketing initiatives; the strength continued into the post-holiday period.”
Despite this, the company’s shares fell 9% on Monday.
Five Below said quarter-to-date sales were up 23.2% as of Jan. 3, while comparable sales were up 14.5%.
“We are incredibly pleased with our holiday performance, which demonstrates the effectiveness of the strategies we implemented this year,” CEO Winnie Park said in a press release. “With our insane focus on the customer—the kid and child in all of us—we delivered great, on-trend products at exceptional value and set about creating a better-connected customer journey.” he said. “With close collaboration and alignment across the company, we have achieved strong, broad-based results.”
The company roughly doubles its comparable sales outlook from 6% to 8% to 14%, expecting fiscal fourth-quarter sales to be approximately $1.71 billion, down from the previous range of $1.58 billion to $1.61 billion.
Earnings per share are expected to be between $3.93 and $3.98, down from the previous estimate of $3.34 to $3.52. Five Below expects adjusted earnings per share to be between $3.95 and $4, above the previous range of $3.36 to $3.54 per share.
The company’s shares were down about 1% in morning trading.
The initial results, released ahead of the annual ICR conference in Orlando, Florida, show what many analysts are expecting for the holiday shopping season. There will continue to be standouts with strong growth, but overall Wall Street projects results to be largely solid without big, widespread gains in consumer spending.
The National Retail Federation had previously predicted that retail sales in November and December would increase between 3.7% and 4.2% compared to 2024. This is solid growth, but once higher prices from tariffs are taken into account, some analysts expect volume growth to remain largely flat.
