Sifting Through the Retail Rubble for Signs
Subscribers to my investment newsletter, PowerTrend Profits, know I have been rather concerned, generally speaking, about the health of the American consumer. We all know that job creation has been lackluster, with the kind of jobs created skewed toward lower-wage ones known for stagnant pay. More recently, prices at the pump have risen above year-ago levels, and we’ve seen food prices start to move higher, too. Last week at the Las Vegas MoneyShow, Kraft Foods (KRFT) officials confirmed that the company recently instituted a price increase for its meat products. Before too long, expect to feel the pain of higher coffee prices, as well.
What raised my eyebrows recently was the weaker-than-expected April retail sales figure. With the late Easter holiday coupled with the surrounding spring break holidays, I thought for sure April retail sales would see a bump relative to March. Excluding autos, April retail sales were flat with March. While one month does not make a trend, the lack of any Easter goosing and any sign of pent-up consumer demand following the severe winter weather caused many on Wall Street to question the snap back in growth in the current quarter, at least where the consumer is concerned.
The news did not get any better this week, given the dismal retail results from the likes of Dick’s Sporting Goods (DKS), Urban Outfitters (URBN), Target (TGT), American Eagle Outfitters (AEO) and the TJX Companies (TJX), which owns TJ Maxx, Marshalls and HomeGoods. Electronics and appliances retailer hhgregg (HGG) broke with issuing formal guidance and instead forecast same-store sales growth to be “between negative low single digits to flat, with the first half of the fiscal year below this expectation and the second half of the fiscal year above this expectation.”
Read more about what these recent retail results indicate for the health and future of the U.S. economy at Eagle Daily Investor.