Today in Retail: Dollar Tree Breaking the Buck Even Further; Walmart Debuts Virtual Try-On Tool

Today in retail, Abercrombie & Fitch go increasingly digital, while Nordstrom’s digital and Rack unit gave it a successful Q4 earnings report. Plus, Urban Outfitters increased its reliance on eCommerce to boost sales.

Digital Sales a Big Part of Abercrombie & Fitch’s Q4 Story

Abercrombie & Fitch has made a successful transition to an omnichannel retailer, largely out of necessity because of the ongoing COVID-19 pandemic and its effect on the retail industry for the past couple of years.

The company reported Wednesday (March 2) that it had digital net sales of $556 million for the fourth quarter of fiscal 2021, which ended Jan. 29, compared to $475 million in the same three-month period in fiscal 2019. That number is 48% of total net sales, up from 40% two years ago.

For the full fiscal year, Abercrombie & Fitch’s digital net sales were $1.7 billion, making up 47% of total net sales, and up from $1.2 billion and 33% of total net sales in fiscal 2019.

Dollar Tree or Three? Discount Retailer Tinkers With $3 and $5 Price Points

Three months after the parent company of the Dollar Tree and Family Dollar chain of discount stores announced it was lifting its long-standing $1 price format to $1.25, the Virginia-based retailer is moving ahead with plans to roll out $3 and $5 product bundles in the coming months.

Dollar Tree’s previous pricing initiative had been successfully implemented at all 7,800 of its Dollar Tree-branded stores two months ahead of schedule, President and CEO Michael Witynski told analysts and investors during a quarterly earnings call.

Witnyski said lifting the constraints imposed by the $1 price point has also allowed the retailer to bring back popular items that had been discontinued, calling the low-priced consumable merchandise “customer favorites” that are key traffic drivers.

Urban Outfitters Relies More on eCommerce for 2021 Sales

Urban Outfitters relied increasingly on its digital channel to get customers the fashion apparel they wanted in the fourth quarter of fiscal 2022, which ended Jan. 31, and while the bottom-line results were promising, the transformation shows there are still some kinks to work out.

The company’s Q4 gross profit increased by $33.5 million to $367.3 million from $333.8 million in the same three-month period in 2020, primarily because the company didn’t raise its prices right away and incurred higher delivery and logistics expenses because of the ongoing supply chain snafus. In-store occupancy expenses were largely offset by customers increasingly choosing to buy apparel online.

Gross profit for fiscal 2022 jumped $254.1 million to $1.49 billion from $1.24 billion in fiscal 2020.

Walmart’s Choose My Model Helps Shoppers Try on Clothes Virtually

Walmart on Wednesday (March 2) launched Choose My Model, a virtual tool powered by computer vision and artificial intelligence on the company’s website and app that allows shoppers to pick a person who resembles their height, shape and skin tone to show how clothes would fit.

The Choose My Model tool, the result of Walmart’s acquisition of Zeekit in May, could help Walmart regain its spot atop the apparel retail list, which it lost to Amazon during the COVID-19 pandemic, and lead to a lower return rate.

Walmart will also add a feature allowing shoppers to upload their own photos to see how clothing fits and share that photo with friends.

Rack is Back: Nordstrom Gets Huge Bounce From Gains at Off-Price Unit and Digital

Seattle-based luxury retailer Nordstrom rode the success of its 350-store off-price Rack unit to better-than-expected Q4 results for the three months ending Jan. 29.

In addition to the improved Rack performance, the owner of 110 namesake physical stores said continued growth in its digital business and mobile app users, as well as an improved supply chain, helped lift its trailing results and give it confidence to issue guidance that was ahead of analyst expectations.

Nordstrom said a top-to-bottom analysis of the business allowed it to increase inventory by nearly 20% and keep shelves stocked in its discount stores, while also sourcing and selling the latest full-priced items at the namesake locations.