LDN - Business

Major retailers temper expectations for 2025 as Americans slow their spending

[March 06, 2025] By MICHELLE CHAPMAN

A pullback by American shoppers has led to more caution from national retailers about their sales potential in 2025, Abercrombie & Fitch on Wednesday becoming the latest.

U.S. consumer confidence plunged last month, the biggest monthly decline in more than four years, according to the Conference Board. Respondents to the board’s survey expressed concern over inflation with a significant increase in mentions of trade and tariffs, the board said.

The imposition of new tariffs this week by President Donald Trump against America’s three biggest trading partners drew immediate retaliation from Mexico, Canada and China, sending financial markets into a tailspin. Tariffs threaten to rekindle inflation, which in recent weeks appears to have begun to tick higher and has created more uncertainty for families and businesses.

Trump imposed 25% taxes, or tariffs, on Mexican and Canadian imports, though he limited the levy to 10% on Canadian energy. Trump also doubled the tariff he slapped last month on Chinese products to 20%.

On Wednesday when reporting its most recent quarterly performance, Abercrombie & Fitch said it expects sales growth of between 3% and 5% in 2025, worse than Wall Street had been expecting and far below the sales growth of 16% that the retailer achieved last year.

Shares slid more than 14% Wednesday and they're down almost 46% this year.

The retail landscape is becoming more challenging, Neil Saunders, managing director of GlobalData, wrote Wednesday. Yet he also noted that Abercrombie had a very good 2024, making it more difficult to match in 2025.

“It is reasonable to expect some moderation in the growth rate – as is reflected in the company outlook,” Saunders said.

Abercrombie & Fitch, however, joins a growing list of retailers that see a slowdown ahead, and not all of those companies had a banner year in 2024.

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In this photo made Dec. 9, 2009, shoppers walk past a billboard for an Abercrombie & Fitch store in New York. (AP Photo/Mark Lennihan, file)

Sales and profits slipped for Target last year and the retailer said this week that there will be ” meaningful pressure ” on its profits to start 2025 because of tariffs on Mexico, Canada and China, in addition to other costs. Even before the trade war heated up this week, Target reported falling profits and sales in the crucial period leading up to the year-end holidays, with more customers pausing before breaking out the wallet.

Target CEO Brian Cornell said Tuesday that Americans could see prices for food begin to rise in just a few days, particularly produce from Mexico such as avocados. Mexico President Claudia Sheinbaum said Tuesday the country will respond to the 25% tariffs imposed by the United States with retaliatory tariffs on U.S. goods, with details to come.

While Cornell declined to talk specifically about potential price hikes shoppers might see on Target shelves, he warned that there will be price increases for some products.

Target shares are down almost 15% this year and specialty retailers that have seen stock gains are in the minority. Shares of Gap are down 15% this year and shares of American Eagle, Guess and Zumiez are all down about 29%.

Walmart, like Abercrombie & Fitch, thrived in 2024 but sees a potentially rougher path forward.

Late last month, the nation's largest retailer said its per-share earnings for this year could be as much as 27 cents below Wall Street expectations. The company expects annual sales to rise 3% or 4% to between $667.57 billion and $674.05 billion. That also caught Wall Street off guard, where 2025 sales projections had been closer to $708 billion.

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