A decline in consumer confidence and the impact of new tariffs are prompting major US retailers to lower their sales expectations for 2025, the Associated Press reports.
This week, Abercrombie & Fitch became the latest company to warn of slower growth, joining a growing list of businesses bracing for a more challenging retail landscape.
US consumer confidence saw its sharpest monthly drop in more than four years in February, according to the Conference Board. Concerns over inflation, trade policies, and tariffs were cited as key reasons for the decline. The economic outlook became even more uncertain after President Donald Trump imposed new tariffs on imports from China, Mexico, and Canada, sparking retaliatory measures from those countries.
With tariffs threatening to push prices higher, both businesses and consumers are facing greater uncertainty. As a result, many retailers are predicting a slower sales trajectory in the coming year.
Despite strong performance in 2024, Abercrombie & Fitch reported a more conservative forecast for 2025, expecting sales growth between 3% and 5%—well below last year’s 16% increase and lower than Wall Street projections. Following the announcement, the company’s stock fell 14% on Wednesday and is down nearly 46% this year.
Retail analyst Neil Saunders, managing director of GlobalData, noted that Abercrombie’s exceptional 2024 results set a high bar, making a slowdown in growth expected. However, Abercrombie is not alone in facing headwinds.
Target also reported falling sales and profits in late 2024 and warned that new tariffs on Mexico, Canada, and China will add “meaningful pressure” on its 2025 profits. Even before the latest trade disputes, Target had already noticed a pullback in consumer spending, particularly in the weeks leading up to the holiday season.
CEO Brian Cornell noted that price increases on food and produce from Mexico, including avocados, could be seen in the coming days as a result of retaliatory tariffs from Mexico’s government. Though Cornell did not specify exact price hikes, he acknowledged that some goods will see cost increases.
Meanwhile, Walmart, which had a strong 2024 performance, also expects slower growth this year. The company recently projected annual sales to increase by only 3% to 4%, falling short of Wall Street’s expectations.
Retail stocks have struggled in early 2025, with shares of Target down nearly 15%, while Gap, American Eagle, Guess, and Zumiez have each seen declines of around 29%. Few specialty retailers have seen stock gains this year, signaling broad concerns about the sector.
