Americans splurged on Uggs, Abercrombie, while skimping on Apple for Christmas

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Americans gorged on Ugg boots and Abercrombie & Fitch sweaters for Christmas gifts and not much else.

Those brands were outliers among a group of 30 retailers catering to upper-middle-class households that Bloomberg has been following. This cohort had its weakest holiday season in at least six years, according to sales observed by Bloomberg Second Measure, which has tracked a subset of U.S. credit and debit card transactions since 2017. Its median sales performance was a year-over-year decline of 10% from October through December.

The U.S. economy has relied on consumers to keep spending despite surging inflation and rising interest rates. The struggle of these chains as a group is worrisome because higher-income shoppers — think households earning more than $100,000 a year — usually have an outsized impact with money to splurge, but also pull back faster than the wealthy when feeling pressured.

As a proxy for high-income spending, Bloomberg last year created this group of retailers that spans 10 categories — including clothing, jewelry and electronics — with average transaction values above their peer group.

The data from Bloomberg Second Measure shows that Americans were still willing to spend at some coveted brands. Abercrombie, which raised its revenue outlook this week, increased sales 10% on a three-month rolling average from October to December and Ugg (owned by Deckers Outdoor) surged 24%. Overall, only about a quarter of the 30 companies had gains.

Meanwhile, laggards included Apple’s retail division, where sales sank 20% on the same basis, and the Williams-Sonoma chain. The trio of department stores in the group — Bloomingdale’s (owned by Macy’s), Nordstrom and Dillard’s — also posted declines.

This collection of chains surged in the first two years of the pandemic as Americans decorated their homes and refilled wardrobes. In December 2020, the group’s three-month rolling average for observed sales was a gain of 23%, according to Bloomberg Second Measure. During the same period a year later, that metric advanced 12%.

Spending shifted to travel and experiences after that. The sales performance of this cohort turned negative in late 2022 and worsened heading into this past holiday season, just as savings dwindled and income growth slowed.

Not what Santa had in mind.

— With assistance from Andre Tartar and Leslie Patton.