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    How Engagement Rings Explain What’s Happening in the Economy

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    A major jeweler claims the pandemic may have prevented people from meeting their future fiancés, cutting demand for engagement rings. Inflation and anxiety among shoppers haven’t helped.Aftershocks from the coronavirus pandemic continue to rumble across the U.S. economy, and Signet Jewelers shared a surprising one this week: The company is selling fewer engagement rings this year because, it says, singles who were stuck at home during lockdowns failed to meet their would-be fiancés in 2020.“As we predicted, there were fewer engagements in the quarter resulting from Covid’s disruption of dating three years ago,” Virginia C. Drosos, the chief executive at Signet, which owns Kay Jewelers and Zales, told investors on Thursday. Shares of Signet, the largest jewelry retailer in the United States, tumbled after the company cut its forecasts for sales and profit for the rest of the year.In a way, the engagement ring has become a sparkly microcosm of the American economy. The bridal jewelry business is being buffeted by the delayed effects of the pandemic, rapid inflation that is squeezing consumers and a growing sense of nervousness among shoppers.Some of the volatility is owed purely to the pandemic. Weddings were canceled in droves during 2020 lockdowns, but bounced back starting in late 2021 and throughout 2022, and were expected to level off over the coming years as more typical patterns returned. Wedding-related activity does appear to show some early signs of slowing in 2023, but it is unclear whether that’s the result of a 2020 dating dry spell, per Signet, or simply a return to the longstanding shift toward later and fewer marriages.What is clear? Wedding trends are also tied to broader, and potentially longer-lasting, economic forces. Signet may be selling less because fewer people are getting down on one knee, but also because ring shoppers are becoming more cautious and spending less amid rapid inflation and rising uncertainty about the direction of the economy. Both the volume and value of jewelry sold by Signet last quarter declined.Ms. Drosos said that the company had “expected the low-double-digit decline in engagements that we saw this quarter,” but that other factors were also at play. “Recent consumer confidence, lower tax refunds, economic concerns triggered by regional bank failures and continued inflation led to a weakening trend in spending across the jewelry industry,” she added.Consumers are contending with big challenges this year. Prices have climbed about 15 percent cumulatively over the past three years, as measured by the Personal Consumption Expenditures index. Inflation has slowed in recent months, but many workers are finding that their wages are falling behind.The Federal Reserve has been raising interest rates to try to cool the economy and fight the stubborn price increases. Besides making it more expensive for consumers to shop on credit or take out loans, the rate moves have increased the chance that the economy might tip into a recession. As many households watch their savings dwindle and worry about their job security, they may be less willing to spend on big-ticket items like fancy diamond rings and bespoke wedding dresses.David’s Bridal, the wedding dress retailer, suggested in a bankruptcy filing this year that some brides had become increasingly budget-conscious.An “increasing number of brides are opting for less-traditional wedding attire, including thrift wedding dresses,” James Marcum, the company’s chief executive, said in a court filing.Like much of the economy, the wedding industry has shown signs of a split, as higher earners find that they are able to reach into their savings and keep spending, and lower-income families that spend a bigger share of their earnings on necessities like food begin to crack under the weight of inflation.LVMH, the luxury retail group that owns jewelers including Tiffany, reported continued growth in early 2023, including solid sales of jewelry.“Everybody was expecting 2023 to be a horrendous year for luxury in the U.S.,” Jean-Jacques Guiony, LVMH’s chief financial officer, told investors in April, explaining that a collapse had not materialized. “It’s normalizing, but it’s not bad, either.”But at more mass-market brands like Kay and Zales, shoppers may be starting to pull back.“We began to see softening at higher price points, which previously had been relatively insulated, and lower price points remained under pressure,” Joan Hilson, Signet’s finance chief, said during Thursday’s call.Signet is hoping wedding-ring demand will bounce back: It is predicting 500,000 more engagements from 2024 to 2026 than the prepandemic trend would suggest, as dating delayed by the lockdowns leads to matches. But analysts at Bank of America “worry that some of that rebound will be offset” by a “pinched consumer” spending less on jewelry, they wrote.Shane McMurray, founder of the Wedding Report, is skeptical of a big gap year in engagements. He expects weddings to fall 20 percent in 2023 from 2022 levels as trends return to normal. And Lyman Stone, director of research at the consulting firm Demographic Intelligence, agreed that the current slowdown in weddings might reflect a return to previous trends rather than a one-off weakening.“It does look like 2023 is going to be a low year,” he said. “I do think that placing the blame for that on lockdowns in 2020 is a little bit strained.” More

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    Companies Are Pushing Back Harder on Union Efforts, Workers Say

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    Apple, Starbucks, Trader Joe’s and REI are accused of targeting union supporters after organizing efforts gained traction, charges the companies deny.After working for more than seven years at an Apple store in Kansas City, Mo., Gemma Wyatt ran into trouble.Last year, she said, managers disciplined her for clocking in late a few times over the previous several weeks. Then, in February, Apple fired her after she missed a store meeting because she was sick but failed to notify managers soon enough, according to Ms. Wyatt.She was at least the fifth Apple employee the store had fired since this fall, all of whom had been active in union organizing there. The terminations came after two other Apple stores voted to unionize.“It took us time to realize they weren’t firing us just because of time and attendance,” said Ms. Wyatt, who is part of a charge filed with the National Labor Relations Board in March accusing Apple of unfair labor practices.Apple said it had not disciplined or fired any workers in retaliation for union activity. “We strongly deny these claims and look forward to providing the full set of facts to the N.L.R.B.,” a spokeswoman said.A pattern of similar worker accusations — and corporate denials — has arisen at Starbucks, Trader Joe’s and REI as retail workers have sought to form unions in the past two years.Initially, the employers countered the organizing campaigns with criticism of unions and other means of dissuasion. At Starbucks, there were staffing and management changes at the local level, and top executives were dispatched. But workers say that in each case, after unionization efforts succeeded at one or two stores, the companies became more aggressive.Some labor relations experts say the companies’ progressive public profiles may help explain why they chose to hold back at the outset.“You’re espousing these values but saying this other organization claiming the same values” — the union — “isn’t good for your work force,” said David Pryzbylski, a labor lawyer at Barnes & Thornburg who represents employers. “It puts you in a little bit of corner.”Once the union wins a few elections, however, “you pull out all the stops,” Mr. Pryzbylski said.In some cases, the apparent escalation of company pushback has coincided with a slowing down of the union campaigns. At Starbucks, filings for union elections fell below 10 in August, from about 70 five months earlier, and no Apple store has filed for a union election since November.At Starbucks, the company unlawfully dismissed seven Buffalo-area employees last year, not long after the union won two elections there, according to a ruling by a federal administrative judge.A Trader Joe’s store in Louisville, Ky., which was the third at the company to unionize, fired two employees who were supportive of the union campaign and has formally disciplined several more, said Connor Hovey, a worker involved in the organizing. Documents shared by Mr. Hovey show the company citing a variety of issues, such as dress-code violations, tardiness and excessively long breaks.And in advance of a recent union election at an REI near Cleveland, management sought to exclude certain categories of workers from voting, according to the Retail, Wholesale and Department Store Union. It said the chain, a co-op that sells recreational gear, had made no such challenge in two previous elections, in which workers voted to unionize. (The union said the company had backed down after workers at the Cleveland-area store walked out, and the store voted to unionize in March.)Jess Raimundo, a spokeswoman for the United Food and Commercial Workers, which is also seeking to unionize REI stores, said the co-op had formally disciplined one employee in Durham, N.C., and put another on leave and later fired him over a workplace action that took place after the workers filed for a union election last month.Starbucks, which is appealing the ruling involving the Buffalo-area employees, has said the firings and discipline were unrelated to union organizing. A Trader Joe’s spokeswoman said that the company had never disciplined an employee for seeking to unionize but that unionizing efforts didn’t exempt an employee from job responsibilities.An REI spokeswoman said that the co-op sought to exclude certain categories of workers near Cleveland because it believed their duties made them ineligible to join a union, and that it had reached an agreement on the issue independent of the walkout. The spokeswoman said the two Durham employees had been disciplined for violations of company policies, not union activity.Across the companies, the shift is such that some organizers look back on their union campaigns’ early days with an odd measure of nostalgia.“Thinking about it, I wondered why they didn’t fight harder at our store,” said Maeg Yosef, a worker and an organizer at a Trader Joe’s in Massachusetts that became the company’s first store to unionize last year. “They were like, ‘Oops, you won’ and certified us. It was really hard, but relatively easy compared to the things they could have done.”The fight at Apple followed a similar trajectory. The company did not hide its suspicion of unions when workers at a U.S. store first filed for an election in April 2022, in Atlanta. Managers emphasized that employees could receive fewer promotions and less flexible hours if they unionized, and the company circulated a video of its head of retail questioning the wisdom of putting “another organization in the middle of our relationship.”Apple’s response was similar in two other union campaigns. But although the union withdrew its election filing in Atlanta, unions won elections in both subsequent cases — first in Towson, Md., in June and then in Oklahoma City in October.According to workers, the company became more aggressive once union organizers made inroads. Around the time that employees in Oklahoma City filed for a union election in September, managers at the Kansas City store disciplined several who supported unionizing for issues related to tardiness or absences that other workers typically have not been punished for, union backers said.Terminations began before the end of the year. D’lite Xiong, a union supporter who started at the Kansas City store in 2021 and uses gender-neutral pronouns, said they were told they were being fired just before Halloween. Mx. Xiong went on leave to buy time to appeal the decision, but was officially let go upon returning in January.D’lite Xiong, a union supporter, was fired from an Apple store in Kansas City, Mo. several months ago. Will Newton for The New York Times“It didn’t make sense to me — I had recently gotten promoted,” said Mx. Xiong, who speculated that the company discovered their role in union organizing after they sought to enlist co-workers. “I was praised for doing a great job.”The Communications Workers of America, which represents Apple workers in Oklahoma and has supported workers seeking to unionize the Kansas City store, filed the unfair labor practice charge against the company over the firings in March.John Logan, a professor at San Francisco State University who is an expert on anti-union campaigns, said companies often considered the potential dissatisfaction of customers, investors and even white-collar corporate employees when calibrating their response to a union campaign.“There’s something deeply threatening about the idea that you might be on the verge of losing them,” Mr. Logan said of corporate employees.But even these considerations, he said, tend to fade once a campaign gains traction: “The overriding priority is, ‘We have to crush this.’”This year, more than 70 Starbucks corporate employees placed their names on a petition calling on the company to stay neutral in union elections and to “respect federal labor laws.” The National Labor Relations Board has issued dozens of complaints against the company accusing it of illegal behavior, which the company denies.Howard Schultz, the former Starbucks chief executive, was quick to push back against such accusations while testifying before the Senate Health, Education, Labor and Pensions Committee in March, telling one senator, “I take offense with you categorizing me or Starbucks as a union-buster.”In late April, the labor board issued a complaint accusing the company of failing to bargain in good faith at more than 100 stores.A company spokesman attributed the delay to the union, including its insistence on broadcasting sessions using video-chat software, which could make it difficult to discuss sensitive topics.Apple, too, appears intent on signaling that it is not hostile to labor. The company agreed this year to assess its U.S. labor practices for consistency with its human rights policy. And the company has reached tentative agreements with the union at its Towson store on a handful of issues, such as a commitment that workers at the store will receive any improvement in 401(k) benefits that nonunion retail workers at the company might receive.Yet despite these gestures, there has been little progress on most of the union’s top noneconomic priorities, such as grievance procedures, and the company has sought broad contract provisions that could substantially weaken the union. For example, under a proposed a management-rights clause obtained by The New York Times, Apple would have wide latitude to use nonunion workers and contractors to do work performed by union members, which could shrink union membership. Labor negotiations typically start with noneconomic issues before moving to matters like wages and paid time off.Apple did not comment on the contract negotiations, but the workers in Oklahoma City have characterized their initial bargaining sessions as “very productive.”Mr. Pryzbylski, the lawyer who represents employers, said Apple’s preferred management-rights clause was “about as robust and aggressive as you can make it,” though he said it was not unusual for companies to seek such broad rights in their first contract.Workers expressed frustration at the breadth of the management proposal. “Everyone from the union at the table had never seen one so long,” said Kevin Gallagher, who serves on the bargaining committee in Towson. “They basically wanted to maintain all the rights of not having a union.” More

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    Bed Bath & Beyond’s Stock Offering Is Backed by Hudson Bay Capital

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    Hudson Bay Capital has essentially agreed to make sure the troubled retailer will sell roughly $1 billion in shares as it tries to avoid bankruptcy.Bed Bath & Beyond’s plan to use a public stock offering as a way to raise more than $1 billion and avoid bankruptcy will be backed by the investment firm Hudson Bay Capital Management, two people familiar with the situation said, speaking on the condition of anonymity because the terms of the deal have not been made public.Bed Bath & Beyond disclosed the deal on Monday without naming Hudson Bay. It hopes that raising enough cash will restore the confidence of suppliers, preserve jobs and allow the company to pursue a turnaround plan it announced in August.The retailer said on Tuesday that it had already underwritten the initial $225 million worth of shares it was selling. It plans to sell an additional $800 million over time, assuming “certain conditions are met.” The company did not disclose what those conditions were.Hudson Bay, though, has essentially agreed to buy the stock, assuming Bed Bath & Beyond sells the additional shares.Hudson Bay is a multibillion-dollar fund based in Greenwich, Conn. It often acts as a mergers specialist, either betting passively on whether company deals go through or fall apart or, at other times, pushing for such moves.The firm is likely looking to take advantage of Bed Bath & Beyond’s rising share price, with hopes of selling when it goes even higher. Retail investors helped drive the price up nearly 100 percent on Monday, before Bed Bath & Beyond announced its plan to offer stock. Shares fell nearly 50 percent in trading on Tuesday, to around $3.“This transformative transaction will provide runway to execute our turnaround plan,” Sue Gove, Bed Bath & Beyond’s chief executive, said in a statement. “As we make important strategic and operational changes, we will continue to take disciplined steps to enhance our cost base and improve our financial position.”The Downfall of Bed Bath & BeyondThe home goods retailer, which was founded in New Jersey in 1971, faces an uncertain future amid worsening financial woes.Few Options: After a disappointing holiday season, Bed Bath & Beyond is said to be in discussions to sell pieces of its business and has warned investors of a potential bankruptcy.A Warning Sign: The disclosure that the retailer had defaulted on certain debt payments was the most salient sign of financial strain yet for the company.Turnaround Plan: The company laid out an aggressive plan in August to turn itself around that included store closings, cost cuts and layoffs. But it needs cash to execute its strategy.Selling Stock: Bed Bath & Beyond announced plans for a public offering, saying that it hoped the move would help it raise more than $1 billion and pay off its debts.A spokesperson for Hudson Bay did not respond to request for comment. Bed Bath & Beyond did not respond to a request for additional comment on the transaction. The deal between the hedge fund and the retailer was reported earlier by Bloomberg.Some analysts doubt whether the deal will be enough to help the struggling home goods retailer.“The fundamental story for Bed Bath & Beyond is so broken at this point,” David Silverman, retail analyst at Fitch Ratings, said. “I don’t know that a short-term cash infusion that could buy them a few months, a couple of quarters, is going to change their fate.”The deal with Hudson Bay came together within the past several weeks, the two people familiar with the matter said. Late last month, JPMorgan Chase, which helped give Bed Bath & Beyond a lifeline this summer by expanding its credit line, froze the retailer’s credit accounts after notifying it that it was in breach of the terms of its debt. As Bed Bath & Beyond raced to find cash to pay its debts, tensions built over the amount information it was sharing with its banks and other creditors and how quickly it was relaying it to them, the people said..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.The retailer’s lenders had dealt with a great deal of turbulence over the past few months. In early September, weeks after Bed Bath & Beyond secured rescue financing from JPMorgan and the investment firm Sixth Street, the company’s chief financial officer died in what was ruled a suicide. Industry executives have questioned whether the retailer had the right management in place to weather its challenges.On Monday, Bed Bath & Beyond said Holly Etlin had been hired as the interim chief financial officer. Ms. Etlin has experience with restructurings and company turnarounds.Rising interest rates have also made lenders warier of plowing more money into distressed companies like Bed Bath & Beyond. But equity may prove to be a new alternative.Bed Bath & Beyond’s move echoes what appears to be a new playbook for distressed retailers. Another indebted company favored by meme traders, AMC Entertainment, sold investors preferred shares in August after common shareholders balked at its efforts to issue more stock, which dilutes the value of shares that are already held. Both sets of AMC shares have remained volatile. In 2020, Hertz tried to sell shares after filing for bankruptcy, but the Securities and Exchange Commission squashed those efforts.“For those who are in this situation, for those who are desperate, this will be one instrument that they can use,” said Douglas Chia, the head of Soundboard Governance, a corporate governance consultancy. “Every couple years there’s a new instrument that investment bankers come up with, and it’s creative and it becomes the flavor of the month and everyone starts to use that. This could be the same thing.”The question for Bed Bath & Beyond and the roughly 30,000 people it employed as of last February is whether it will be enough. Even if this financing goes through, the company faces the same challenges that have plagued it the past couple of months. The retailer is contending with low inventory in its stores as vendors hold back on shipping items because of worries about its finances. It also has a less sophisticated e-commerce operation than many of its competitors and a dwindling customer base.The stock offering “by itself doesn’t change the business model or any of those tough decisions that they need to make,” said Patrick Collins, a partner who works on bankruptcies and restructurings at the law firm Farrell Fritz.The deal could give Bed Bath & Beyond only a few more quarters of financial runway, said Seth Basham, a retail analyst at the investment firm Wedbush Capital.The company is ramping up the number of stores it’s closing to more than 400, including Harmon stores. That’s a significant chunk of the 950 stores that it had when the closings began in August.Sales keep sliding as well. Bed Bath & Beyond has said it expects comparable sales in the first quarter to decline 30 to 40 percent from a year earlier, but expects to see quarterly sales improving afterward.It projects that its ability to have goods in stock will return to normal levels by the important back-to-college shopping season.Not everyone is convinced.“It is very difficult to see where they could be able to reverse those trends quickly, particularly given we’re in a somewhat challenging environment for retail goods,” Fitch’s Mr. Silverman said. “You’ve got competitors like Target, Amazon, Walmart and low- and mid-tier department stores that aren’t relinquishing market share.” More

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    With Layoffs, Retailers Aim to Be Safe Rather Than Sorry (Again)

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    Companies that ramped up hiring in areas like technology over the past few years are cutting back as customers slow their spending.The retail industry is trying to figure out its correct size.Retailers, faced with sky-high demand from shoppers during the pandemic, spent the past three years ramping up their operations in areas like human resources, finance and technology. Now, times have changed.A public that rushed to buy all sorts of goods in the earlier parts of the pandemic is now spending less on merchandise like furniture and clothing. E-commerce, which boomed during lockdowns, has fallen from those heights. And with consumers worried about inflation in the prices of day-to-day necessities like food, companies are playing defense.Saks Off 5th, the off-price retailer owned by Hudson Bay, laid off an unspecified number of workers on Tuesday. Saks.com is laying off about 100 employees, or 3.5 percent of its workers. Stitch Fix laid off 20 percent of its salaried workers this month and closed a distribution center in Salt Lake City. Last week, Wayfair said it would lay off 1,750 people, or 10 percent of its work force, and Amazon started laying off 18,000 workers, many of them in its retail division. Bed Bath & Beyond cut its work force this month as it tries to shore up its finances and prepares for a possible bankruptcy filing.While it’s not unusual for major retailers to announce store closings and some job cuts after the blitz of the holiday season, the recent spate of layoffs is more about structural changes as the industry recalibrates itself after the rapid growth from pandemic-fueled shopping. And it accompanies broader worries about the state of the U.S. economy and layoffs by prominent tech companies.“Retailers are really being cognizant of capital preservation,” said Catherine Lepard, who leads the global retail market for the executive search firm Heidrick & Struggles. “They don’t know how long this cooler economy is going to last, and they want to make sure they have the right cash to get through that. For retailers that are struggling, it really means tightening the belt with some cost cutting.”Sales during the all-important holiday shopping season were weaker than in years past, when growth hit record levels. December retail sales increased 6 percent from the same period last year, but that number was not adjusted for inflation, which was at 6.5 percent.Department stores posted sizable sales declines. At Nordstrom, sales in the last nine weeks of 2022 decreased 3.5 percent from a year earlier, with the company noting that they “were softer than prepandemic levels.” Macy’s said its holiday sales had been on the lower end of its expectations.Macy’s holiday sales were on the lower end of expectations, the company said. Mathias Wasik for The New York TimesThe layoffs at certain retail companies are a sign that the industry is bracing for a slowdown and another change in how people shop.“To mitigate macroeconomic headwinds and best position our business for success, we have made changes to streamline our organizational structure,” Meghan Biango, a spokesperson for Saks Off 5th, said in a statement. “As part of this, we made the difficult decision to part ways with associates across various areas of the business.” The layoffs affected divisions such as talent acquisition and supply chain.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.Walmart: The retail giant is significantly raising its starting wages for store workers, as it battles to recruit and retain workers in a tight retail labor market.Tech Layoffs: The industry’s recent job cuts have been an awakening for a generation of workers who have never experienced a cyclical crash.Infrastructure Money: Government spending on initiatives intended to combat climate change and rebuild infrastructure are expected to land this year. The effects on the labor market will be deep but hard to measure.Restaurant Workers: Mandatory $15 food-safety classes are turning cooks, waiters and bartenders into unwitting funders of a lobbying campaign against minimum wage increases.Not all retailers are in a defensive crouch. For instance, Walmart announced this week that it was raising the minimum wage for its store employees in a bid to attract and retain workers in a tight labor market.Still, some retailers are becoming focused less on bringing in new customers — an expensive undertaking — and more on retaining those they gained during the pandemic.“There’s a sense of conservatism,” said Brian Walker, chief strategy officer at Bloomreach, which works with retailers on their e-commerce and digital marketing businesses. “They’re still adjusting in many ways to this omnichannel retail environment and are probably seeing this as an important time to calibrate their organizations and make sure they have the right people, and not too many of them to be pragmatic and weather a potential storm.”That means fewer projects that require lots of money and time and more investments where a company can start seeing results quickly, Mr. Walker said.Ms. Lepard agreed. “This isn’t the economy to really get creative and take on high risk,” she said. “There might be a pulling back of some of that innovation in future investment to make sure they’re pacing themselves.”It’s also a moment for retailers to assess what e-commerce abilities they need. In the early months of the pandemic, online sales exploded as many brick-and-mortar stores went dark. That growth has slowed. E-commerce traffic in North America declined 1.6 percent in the third quarter of 2022 compared with a year earlier, according to Bloomreach’s Commerce Pulse data. Conversion rates — the measure of someone’s buying an item after seeing it advertised — dropped 12 percent during the same period.“This is where people overshot the runway,” said Craig Johnson, president of the retail advisory firm Customer Growth Partners, who has tracked the industry for 25 years. “This works like a ratchet. It might go up to 27 percent, but that’s going to normalize,” he added, referring to the share of total e-commerce spending for the first year of the pandemic, when many stores were grappling with Covid restrictions and closures.When online spending was rising, many companies pushed to fill roles that could help them meet the demand. Now they have to adjust to a new reality.“Unfortunately, along the way, we overcomplicated things, lost sight of some of our fundamentals and simply grew too big,” Niraj Shah, Wayfair’s chief executive, said in a note to employees last Friday. His company, which reported in November that its net revenue was down 9 percent from a year earlier, is looking to save $1.4 billion.Demand for luxury goods is still there, but those retailers say they need to restructure to continue to innovate.Mathias Wasik for The New York TimesIn the luxury sector, the shopper demand is still there, but a restructuring is needed to continue to innovate. As part of its layoffs, Saks.com also separated its technology and operations teams.“We are at a point in our trajectory as a digital luxury pure-play where we need to optimize our business to ensure we are best positioned for the future,” Nicole Schoenberg, a Saks spokeswoman, said in a statement. “These changes are never easy, but they are necessary for our go-forward success.”While reducing head count might help save costs in the short term, retailers will have trouble in the future if they do not also address how to improve the customer experience online, said Liza Amlani, founder of Retail Strategy Group, which works with brands on their merchandising and planning strategies.“With Wayfair, and as with many digital players, what we’ve seen in the last three years is that they scaled and grew too quickly,” Ms. Amlani said. “They banked on an influx of spending across digital. They didn’t invest where they needed to invest.”The retail layoffs are an about-face from 2021, when companies couldn’t hire frontline workers fast enough. After the initial jolt of the pandemic, which led many retailers to furlough or outright fire workers, many people received stimulus checks from the government. They wanted to spend that money, and when companies needed to ramp up in-store services again, they often struggled to find enough workers.Recalling that difficulty might give some retailers pause before they lay off workers this time, Mr. Walker said. If a steep downturn never comes, or if there’s a sudden rebound in demand, companies don’t want to be stuck without enough employees.But the next few months could be rough for retailers, as profit margins shrink and revenue growth slows from what it was the past couple of years. In that kind of environment, investors generally like to see large companies take steps to cut costs. And once layoffs begin, a kind of industry groupthink can set in.“Once a couple of companies start to do it,” said Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School who researches management and human resources, “then it creates some momentum where then you’ve got to explain why you’re not doing what everybody else is doing.” More

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    Walmart Raises Starting Wages for Store Workers

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    The retail giant said the minimum wages for those employees would range from $14 to $19 an hour, up from $12 to $18 an hour.Walmart, the nation’s largest private employer, is significantly raising its starting wages for store workers, as it battles to recruit and retain workers in a tight retail labor market.On Tuesday, the retail giant said in a memo to employees that it was increasing its minimum wages for store workers to a range of $14 to $19 an hour, up from $12 to $18 an hour.In the memo, Walmart’s chief executive of U.S. operations, John Furner, said the increase was meant “to ensure we have attractive pay in the markets we operate.” The move would immediately affect about 340,000 of the company’s 1.3 million frontline hourly workers in stores across the United States.For years, Walmart has been under pressure from unions, policymakers and activists to raise its wages for workers in its stores. The raises announced Tuesday would increase the average wage across Walmart stores to roughly $17.50 an hour from about $17, though the company’s average wage still trails some competitors like Costco.“We want to make sure we attract the best associates,” a Walmart spokesperson, Anne Hatfield, said in an interview.The raises, which will take affect in March, come amid still persistently high inflation, which has been particularly difficult to navigate for low-wage workers whose paychecks are being stretched by the costs of food, fuel and other basic necessities.The move by Walmart is also a curiously optimistic sign regarding the broader economy: One of the nation’s largest companies is taking steps to retain workers, even as other large employers have been announcing layoffs.Mark Zandi, the chief economist at Moody’s Analytics, said he was surprised that Walmart had raised wages “so significantly” given the risks of a recession.“It suggests that Walmart doesn’t think the economy will suffer a recession anytime soon, or that if it does, it will be a short-lived and modest downturn,” Mr. Zandi said in an email.The move may also reflect the longer-term challenges that retailers face in retaining workers as baby boomers age out of the work force and the labor pool shrinks, he said.Even though the raises will ease the inflationary strain on Walmart workers, they may inadvertently prolong the problem broadly by boosting wages across other sectors of the economy.“Walmart’s move to hike their minimum wage may also complicate the Fed’s efforts to quell wage pressures and thus inflation,” Mr. Zandi said, “as the decision may impact wage hikes and price increases in other labor-intensive industries such as health care, hospitality and personal services that the Fed is focused on in its fight against inflation.” More

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    Bed Bath & Beyond Warns of Possible Bankruptcy

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    The home goods retailer said weak sales and slower foot traffic had forced it to consider options for restructuring.Bed Bath & Beyond, the beleaguered home goods retailer, warned investors on Thursday about rapidly darkening prospects for its future, saying that bankruptcy was a possible option and raising doubts that it could pull off an ambitious turnaround plan it put in place just months ago.The company could make a decision on its next steps — including whether to file for bankruptcy — within weeks, though it is possible the process will take longer, according to two people familiar with the matter who spoke on the condition of anonymity because the process is confidential.Bed Bath & Beyond, known to many shoppers for its distinctive and seemingly inescapable blue and white coupons, has struggled for years to compete with the likes of Amazon, as more shoppers have gone online for everyday home products.The retailer laid out a plan in August to turn itself around that included 150 store closings, cost cuts and layoffs. But it needs cash to execute those plans, and it is not clear that the crucial holiday shopping season brought in enough for it to continue without help from outside investors.“The company has concluded that there is substantial doubt about the company’s ability to continue as a going concern,” Bed Bath & Beyond said in a statement.Sue Gove, who became the retailer’s permanent chief executive in October, has been focused on working through a restructuring plan to improve the company’s ailing supply chain and better stock its stores. But its suppliers remain unconvinced, and it said in a regulatory filing that it was at risk of running out of cash in the coming months.“Before Christmas, there was just a glimmer of hope,” said Neil Saunders, managing director at the retail consulting firm GlobalData. “There was a view that, OK, it’s going to be difficult, but maybe they were going to pull through. Things have just got worse.”He added, “They sent out a very clear signal today that they’ve just run out of time.”Bed Bath & Beyond employed about 32,000 workers as of February and said in October that it had closed about half the stores it planned to as part of its restructuring.The company, which now has roughly 900 stores across the country, reported preliminary earnings Thursday, noting lower sales and slower foot traffic compared with the previous year. The company said its sales were about $1.3 billion for the quarter that ended Nov. 26, about a third lower than the year before, when it had more stores. The period included the run-up to Black Friday.The retailer estimated that it would record a loss of $386 million in its latest quarter, much worse than the $276 million loss in the previous year, and said it would need more time than expected to close its books. As of March, Bed Bath & Beyond had roughly $3 billion in debt.The company’s share price closed nearly 30 percent lower on Thursday, giving it a market capitalization of $150 million. At its peak in 2013, the company’s market value was $17 billion..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.In addition to a possible bankruptcy, Bed Bath & Beyond is exploring a number of options to shore up its balance sheet, including selling pieces or all of the company. To help with those efforts, it is working with advisers at the law firm Kirkland & Ellis, the consulting firm Alix Partners and the investment bank Lazard, the two people familiar with the matter said. Alix Partners and Lazard declined to comment. A spokesman for Kirkland did not respond to a request for comment.“No determinations have been made as of this time,” Julie Strider, a Bed Bath & Beyond spokeswoman, said in a statement regarding the retailer’s next steps.Its ability to obtain cash through those means will determine whether it needs to file for bankruptcy.Bed Bath & Beyond plans to give an update on Tuesday about its efforts to raise cash.A bankruptcy filing would give Bed Bath & Beyond the chance to shed debt and stores and emerge as a leaner, stronger company, as Neiman Marcus was able to after filing for bankruptcy in 2020. But if performance deteriorates, or its suppliers decide they will not offer their support, Bed Bath & Beyond could be forced to close, like Toys “R” Us.“What we’ve seen many times is that it ends up being a stay of execution,” Michael Baker, a retail analyst at D.A. Davidson, said. “Sometimes that works, but oftentimes you see an announcement of scaling back and having fewer stores and then that’s followed by a complete liquidation.”The attempted turnaround announced in August is being led by Ms. Gove, who at that time was interim C.E.O. after the abrupt departure of the previous chief executive, Mark Tritton, in June.But transforming a company under the burden of debt payments and the glare of suppliers that have lost their faith can be tricky. Investing in supply chains and merchandising requires money — and patience.“Transforming an organization of our size and scale requires time,” Ms. Gove said. “We anticipate that each coming quarter will build on our progress.”Ms. Gove said she had spoken to suppliers directly in an attempt to instill confidence. But they have continued to hold back, resulting in lower levels of in-stock items. Supply chain challenges made more severe by China’s tough Covid strategy have made suppliers particularly picky about the retailers they sell their product to.Bed Bath & Beyond has also been trying to win back the support of investors, who have watched as a series of activist investors, including the meme stock favorite Ryan Cohen, have pushed for changes on its board and for the company to consider selling its Buy Buy Baby brand. Mr. Cohen sold his stake in the company in August, pushing its shares down 40 percent.It has had to grapple with other turmoil. In September, its chief financial officer, Gustavo Arnal, died in what was ruled a suicide. Laura Crossen, the retailer’s chief accounting officer, has since been serving as interim financial chief.Despite Bed Bath & Beyond’s bespoke challenges, its debt worries resonate with the broader retail industry. Inflation, rising interest rates and continued supply chain challenges are probably setting up retailers up for a challenging 2023. Consumers were willing to spend this holiday season, with U.S. retail sales up 7.6 percent from the previous period of Nov. 1 to Dec. 24, according to Mastercard Spending Pulse. But how much longer that trend will last is unclear, if the economy tips into a recession, as a number of economists have forecast.And those who may look to the debt market for reprieve will probably find lenders less eager than they have been in the past two years, when interest rates hovered near zero. Lenders that were previously willing to put money into riskier companies like Bed Bath & Beyond may no longer be willing to take that bet. Supply chain issues worldwide mean companies have less product, not only to sell to customers but to offer lenders as collateral.For a company in as much financial trouble as Bed Bath & Beyond, “it’s very difficult to raise new capital, but it’s also difficult to get your current capital providers to want to play ball for a longer period of time,” said James Gellert, the chief executive of the financial analytic firm RapidRatings International.That makes it “really hard for a company like them to claw out of the position that they’re currently in.” More

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    Retail Sales Fell 0.6% in November, Despite Black Friday

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    Inflation changed the way U.S. shoppers approached the holiday season, while lower gas prices and a decline in car sales were also factors.Retail sales fell in November, with spending on even traditionally popular gift categories like clothing and sporting goods declining, a sign that high prices for necessities like food are affecting how people approach the holiday shopping season.U.S. retail sales fell 0.6 percent in November from October, the Department of Commerce said on Thursday. The figure does not account for price changes, and inflation did ease slightly during the month.Spending increased in some areas, including at grocery stores, health and personal care stores and restaurants and bars. But categories like motor vehicles, furniture, consumer electronics, clothing and sporting goods all declined. Gas prices also fell during the month, meaning consumers spent less money filling up their cars.“Overall, the demand patterns — not the most academic term — have been out of whack for the past few years and what we’re seeing is these disruptions coming back in these forms,” said Andrew Forman, who studies consumer behavior at Hofstra University’s Frank G. Zarb School of Business. “There are so many moving factors.”Inflation in November slowed to 7.1 percent through the year, down from 7.7 percent in October. Some analysts pointed out that lower prices affected the retail sales figure.“Less inflation is driving some of that decline from October to November, which wouldn’t be a bad thing,” David Silverman, a senior director at Fitch Ratings, said.In many ways, the report highlights how inflation, even if it has eased, has changed the way consumers are approaching the holiday season. Americans, for example, are whittling down the number of people they are giving gifts to, according to data from KPMG.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Why Retailers Are Trying Extra Hard to Woo Holiday Shoppers

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    With an economic slowdown a distinct possibility, stores hope customers’ willingness to open their wallets will last through the season.Amazon held what amounted to an extra Prime Day in October, blanketing its site with deals. Best Buy rolled out Black Friday-level sales last month. And on Friday, Kohl’s entered the first 200 people to walk into each of its stores into a sweepstakes, with prizes including gift cards to Sephora and a family trip to a Legoland resort.With the arrival of the all-important holiday shopping season, retailers are not just competing with one another to attract customers. They are also competing against the clock.For now, Americans are spending, buoyed by pandemic-era savings and a red-hot labor market. But at the same time, prices are climbing at the fastest pace in decades and the Federal Reserve is attempting to rein them in by raising interest rates. That effort to curb demand by making borrowing more expensive is, in turn, making consumers pessimistic about the economy. And a recession is a distinct possibility.Retailers, some of them sitting on a glut of inventory, want to sell as much as they can while consumers are still pulling out their wallets. So they are barraging customers with discounts, hoping to entice them to buy before an economic slowdown causes a change in behavior once more.Whether retailers succeed will have profound implications. Billions of dollars are at stake, and companies will be watching the outcome closely as they make hiring and investment decisions for the new year.“We’re going to spend a lot of time right now focused on executing our plan, getting through the holiday season and then assessing the consumer and the overall retail landscape as we look to 2023,” Brian Cornell, the chief executive of Target, said on a call with analysts this month.More broadly, retail sales during the holiday shopping period could provide clues about the trajectory of the economy in the weeks and months to come.“For the overall economy, I think that it’s going to be very important to look at what the consumer is doing because really that’s going to be your key indicator,” said Lydia Boussour, an economist at EY-Parthenon. “It’s the key engine of growth.”An Express store at the Tanger Outlet in North Charleston, S.C. To entice bargain-hungry shoppers and move unwanted inventory, many companies are promoting “value.”Gavin McIntyre for The New York TimesForecasters generally believe that consumer spending, which accounts for about 70 percent of total economic growth, will remain strong in the fourth quarter, in large part because of household savings. Collectively, Americans by the middle of this year were still sitting on about $1.7 trillion in extra savings accumulated during the pandemic, based on Fed estimates, thanks in part to government aid.But in September, the most recent month for which calculations were available, Americans saved only 3.1 percent of their after-tax income, less than half the share before the pandemic. And poorer Americans are seeing their savings dwindle even faster than wealthier ones.Meanwhile, credit card balances in the third quarter swelled 15 percent compared with a year earlier, according to the Federal Reserve Bank of New York. That was the largest increase in more than two decades, as consumers increasingly rely on credit even as borrowing costs are rising.And a University of Michigan survey this month showed a sharp decline in “consumer sentiment” — a measurement of how people feel about the economy and their financial situation. Even as consumers continue to make purchases, Ms. Boussour said, “they’re feeling depressed about the overall economic situation, and they are going to grow increasingly reluctant to spend.”An employee at Bath & Body Works at Tanger Outlet greeted Black Friday shoppers. Forecasters generally expect that consumer spending will remain strong in the fourth quarter, largely because of household savings.Gavin McIntyre for The New York TimesRetail sales grew 1.3 percent in October, more than expected, as shoppers snapped up earlier-than-usual holiday deals. Some major retailers including Walmart and Home Depot reported strong third-quarter earnings, bolstered by sales for less discretionary goods like groceries or items related to home renovation and do-it-yourself projects. “Households are still spending money because they can,” said Aneta Markowska, chief financial economist at the investment bank Jefferies. “I still think there’s a lot of uncertainty about next year because the Fed obviously has raised rates very aggressively this year and we haven’t really felt the effects yet.”But several retailers said they saw demand for their products slow during the month, and when shoppers did buy, they seemed motivated by sales. Some companies have lowered their financial outlook or declined outright to provide forecasts for next year to avoid being caught flat-footed.This was not how the end of this year was supposed to be. For two holiday shopping seasons, retailers strained against pandemic disruptions. Now that the virus restrictions and supply chain snarls that defined those periods have largely abated, retailers had been expecting something of a return to normal.Instead, retailers find themselves trying to outrun a likely economic slowdown.To entice bargain-hungry shoppers and move unwanted inventory, many companies are promoting “value,” offering steep discounts and low prices more so than last year even as labor costs remain high. Many started their holiday blitzes early in the hopes of jump starting sales. Target held Deal Days in October and Old Navy rolled out a “Sorry, Not Sorry” holiday campaign. “Value clearly matters to everyone,” Corie Barry, the chief executive of Best Buy, said on an earnings call last week.J.C. Penney brought back doorbuster sales on Black Friday aimed at getting shoppers back into the store.Justin Hamel for The New York TimesAt J.C. Penney, stores returned to 5 a.m. doorbusters on Black Friday, promoting the “pre-inflation pricing” for items like Instant Pots, hair flat irons and coats.Jeff Gennette, the chief executive of Macy’s, said that a feature on its website that allows users to peruse gifts priced from $15 to $100 seemed to be particularly tempting to shoppers.“If you’ve got an item that’s competing with the competitor, and you’re a higher price, you’ve got to make those adjustments,” he said.Retailers are trying to eliminate any obstacles between a shopper and a potential purchase. Jill Timm, the chief financial officer for Kohl’s, said the chain was providing more personalized offers to shoppers, as well as clearly laying out the discount amounts on certain items to prevent customers from being confused “because they had to do math.”Kohl’s is “really making sure that the offers that we’re putting in are meaningful to the customer to drive their behavior,” Ms. Timm said.Signaling value is part of the overall strategy for Primark, an international clothing retailer, as it looks to grow its presence in the United States.In a recently opened store at a mall in Garden City, N.Y., Primark executives pointed out large signs that advertised $11 hoodies, $4 biker shorts and $20 for a baby-blue bag featuring Stitch from the Disney movie “Lilo and Stitch” — and noted that a candle, at 90 cents without any holiday discount, cost less than at Walmart.“It needs to be a very clear moment when you walk in of that perception that there is amazing value throughout the whole store,” said Kevin Tulip, Primark’s U.S. president.Shoppers seemed price conscious on Black Friday and throughout the weekend.Retailers dropped online prices for merchandise like toys, electronics and computers, according to data released on Friday from Adobe Analytics. Discounts for sporting goods and TVs were far steeper this year than last year, according to Adobe data, and clothing prices were slightly lower this year. The average discount for Black Friday deals in the United States was 30 percent, according to Salesforce. In 2019, Salesforce said, the average discount rate for Black Friday was 33 percent.In-store sales on Friday rose 12 percent from last year, and e-commerce sales increased 14 percent compared with 2021, according to Mastercard SpendingPulse data released on Saturday. Those sales included spending not just in retail stores but also at restaurants.Still, not everyone was satisfied. On social media, people complained that Black Friday deals weren’t as sizable as they expected.In San Francisco, Riz Gordon, 24, woke up at 6 a.m. on Friday to shop with her parents and younger sister. Going to the stores that day is “a long family tradition,” she said, and they had already picked out stocking stuffers and smaller presents. But inflation was on their minds.“The prices are very much different than 10 years ago,” Ms. Gordon said.On Sunday, at a Target in Springfield, Ill., D.J. Baggerly, 69, made a quick trip for one final Christmas gift: a white knitted throw blanket. She had spent the weekend mostly shopping online, working through her grandchildren’s wish list.Ms. Baggerly lives on a fixed income, and the higher prices for gas and groceries, she said, have been “ridiculous.” Asked if she planned to cut back on spending in the coming weeks, she said, “Oh yeah. I’m done.”Ben Casselman More