By Uday Sampath Kumar and Deborah Mary Sophia

(Reuters) -Upscale U.S. retail chain Macy’s Inc (NYSE:) raised its annual revenue forecast on Thursday on resilient demand for high-end garments and wonder merchandise, whereas the inflation squeeze on lower-income customers compelled rival Kohl’s Corp (NYSE:) to scrap its forecast.

Luxurious items gross sales have held up for Macy’s as prosperous customers returning to social occasions after the pandemic splurge on pricier purses, perfumes, clothes and items heading into the vacation season.

However Kohl’s withdrew its annual forecasts, as the corporate, which caters extra to lower-income prospects and shares fewer luxurious items, reeled from weakening demand resulting from rising costs.

“The Kohl’s buyer is being hit by inflation much more than Macy’s,” mentioned Jane Hali & Associates analyst Jessica Ramirez.

“Customers are additionally now touring and returning to workplaces, and Macy’s has a greater assortment of these merchandise. You are not going to Kohl’s for attire,” she mentioned.

Shares of Macy’s rose 10%. On Wednesday, the inventory fell 8% as a vacation gross sales warning from Goal Corp (NYSE:) pummeled retail shares.

Inventories at Macy’s had been up simply 4% within the third quarter from a yr in the past, because of heavy reductions to clear extra shares of informal and athleisure attire. Kohl’s inventories ballooned 34%.

Macy’s warned of extra promotions heading into the vacations and reversed its earlier place that Christmas purchasing would begin early, saying shoppers had been holding out within the hope of getting reductions.

“(Customers) are beneath a tighter finances, feeling the affect of inflation on non-discretionary gadgets and starting to deplete their financial savings. With that in thoughts, we consider they’re ready till nearer to vacation to make purchases,” Macy’s Chief Govt Jeffrey Gennette mentioned.

Kohl’s executives additionally made comparable feedback on an analyst name.

Macy’s raised its fiscal 2022 adjusted per-share revenue forecast to $4.07 to $4.27 from $4 to $4.20.