Manny Chirico on Consumer Spending, Tariffs, and Retailer Inventory in 2025

Consumer Spending and Economic Uncertainty

• 💡 The consumer remains healthy and is spending, but there's a growing level of uncertainty about the future.
• ⚠️ This uncertainty is fueled by discussions around tariffs, taxes, and inflation, creating a dichotomy in consumer outlook.

Retailer Inventory and Price Increases

• 🛒 Retailers and wholesale companies are buying less inventory for the second half of the year due to economic concerns.
• 📈 There's a strong likelihood of prices increasing in the second half of the year, particularly for discretionary items like apparel and footwear.
• 💰 Retailers will absorb some of the cost but will also pass on price increases to consumers.
• 🗓️ This trend of increasing prices is expected to continue into 2026, suggesting it's not a short-term inflation issue.

Impact of Tariffs

• 🚢 Tariffs are expected to start impacting prices significantly during the back-to-school season in the third quarter.
• 🌍 Companies with significant sourcing from overseas are most exposed to tariff impacts, which is a broad issue across the industry.

Retailer Performance and Strategy

• 🎯 Companies like Abercrombie & Fitch and Dick's Sporting Goods are executing well by offering fresh merchandise and appealing to consumers.
• 💰 Value retailers such as Costco, Walmart, and TJX are expected to continue performing strongly.
• 📉 Department stores and specialty apparel retailers will face significant margin pressure in the second half of the year.
• 🤝 The acquisition of Foot Locker by Dick's Sporting Goods is seen as a strategic move to access the urban consumer and improve margins in that business.