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Retailers brace for resumption of student loan payments

Retailers are going into the rest of 2023 facing uncertainty as student loan payments threaten to cut Americans' disposable income.
Retailers brace for resumption of student loan payments
Posted at 11:01 AM, Aug 24, 2023

With federal student loan payments resuming in October, a number of major retailers have expressed concerns that profits will be cut heading into the holiday season. 

Federal student loan payments have been on hold since March 2020, which has given millions of Americans more buying power. Now that they're losing that buying power, retailers say they may feel the effects. 

"Certainly, the Macy's brand is more under pressure, and it really is the stat of that 50% of the Macy's customers are making $75,000 or less," Macy's CEO Jeff Gennette said this week. "So, they've been under pressure. I think there are some headwinds coming, particularly with student loan debt, that expiration of the loan forgiveness. And what we're really looking to do is controlling what we can control and ensuring that we've got the right stock-to-sales ratio in all of our categories, and that we've got receipt reserve to chase into demand."

Dick's Sporting Goods Chief Financial Officer Navdeep Gupta said his company is being measured with its projections for the rest of 2023. 

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Target Chief Financial Officer Michael Fiddelke also said the company is being cautious with its projections. 

"The upcoming resumption of student loan repayments will put additional pressure on the already strained budgets of tens of millions of households. Against this backdrop, we remain cautious in our planning, an approach that has served us really well so far this year," he said. 

Lowe's said the student loan payment resumption is among a number of economic factors it is looking at heading into the rest of 2023. Chief Financial Officer Brandon Sink said he expects consumers to be more cautious, especially with discretionary spending. 

According to the Congressional Budget Office, 43 million Americans owed federal student loans as of 2022. About 95% of borrowers make under $125,000 a year. 

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