Dillard's reported a -4% comparable-store sales decline and -170 basis points of gross margin pressure. Year-over-year comparisons are still distorted by the pandemic (Omicron variant in the year-ago period), and so, sales were up 8% versus Q1 2019, which was -300 basis points lower than the trend for Q2 2022-Q4 2022. Placer.ai visitation data also shows a softer second half of the quarter on a year-over-year basis; however, on a year-over-four-year basis, the trend looks pretty consistent. (We get that everyone wants to move on from the 2019 baseline.)
Dillard's press release added, “The company noted a decline in customer activity in the back half of the quarter. Cosmetics was the strongest performing category followed by shoes and ladies’ apparel. Ladies’ accessories and lingerie and juniors’ and children’s apparel were the weakest categories.” Recall our comments from last week about cosmetics’ ongoing outperformance. The slower activity in the back half of the quarter is consistent with our preview of April retail sales. Based upon that slower trend, we would expect most retailers to offer soft outlooks for Q2 2023 when they report Q1 2023 results over the next several weeks.
These trends were also apparent in the recent quarterly update for Tapestry, the parent company of Coach, kate spade, and Stuart Weitzman. In describing its Q1 results, Tapestry CEO Joanne Crevoiserat noted, “In North America, sales rose low single digits against an increasingly challenging consumer backdrop…We're seeing the trends and the softness really more broad-based. We're not seeing it targeted to any one specific consumer group. As we look across our business. And as you may know, our brands and our customer average household income is around that $100,000 mark, and that's true across channels. What we saw in the quarter was just a generally more cautious consumer.” CFO Scott Roe added, “In North America, sales rose 3%, driven by growth in January against last year's atypical comparisons related to COVID. For the balance of the quarter and into April, trends in the region softened amid an increasingly challenging consumer backdrop. As such, we've incorporated a mid-single-digit decline in sales in North America into our [calendar Q2 2023] outlook.” These imply that wholesale sales into department stores were deeply down, which aligns with comments from LVMH and Kering.