Even Deep Discounts At These Stores Couldn’t Lure Customers In Last Month

By  for Profit Confidential:

The retail sector of the economy acts as a gauge of consumer spending. When the retail sector shows weakness, it means consumer spending isn’t as strong. If that becomes the case, economists assume the U.S. economy will perform poorly since consumer spending makes up about two-thirds of U.S. gross domestic product (GDP).

As it stands, the retail sector is showing weakness and providing troubling news on consumer spending. According to Thomson Reuters, sales at retail stores open for at least a year increased a dismal 3.9% in July, below the analyst expectation of a rise of 4.4%. (Source: Reuters, August 8, 2013.)

A well-known name in the retail sector, Gap Inc. (NYSE/GAP), registered an increase of one percent in July same-store sales from July 2012. Analysts were expecting an increase of 1.7%.

Costco Wholesale Corp. (NASDAQ/COST) said its July same-store sales increased four percent from July 2012; analysts were expecting a rise of 5.1%. The company also stated that consumers are shying away from buying big-ticket items such as electronics.

In July, American Eagle Outfitters (NYSE/AEO) reported a decline of seven percent in its quarterly same-store sales, again compared to July 2012.

What’s even more troubling…to get those sales in July going, the retail sector had to offer deep discounts to customers.

July usually kicks of the back- to-school shopping season and gives us an idea of howconsumer spending going into the fall season looks. After the holiday shopping season, the back-to-school season is the second busiest for the retail sector.

As it stands, the National Retail Federation (NRF) is already expecting lower spending in the retail sector on back-to-school goods this year. This trade association expects families with school-age children to spend $634.78 this back-to-school shopping season compared to $688.62 last year—a decline of almost eight percent. (Source: National Retail Federation, July 18, 2013.)

My question; how long can the optimism in retail stocks last while demand in the retail sector from consumers is falling? Sooner rather than later, the irrationality between the prices of retail stocks and what their growth prospects are will meet an unpleasant reality. By Michael Lombardi, for Profit Confidential

Homebuilder stocks are heading into dangerous territory; investors need to take note, even if they don’t own these stocks. The move to the downside for this barometer of activity in the U.S. housing market is significant. Read…. What the 25% Collapse in Homebuilder Stock Prices Tells Us


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  • Greg Burton

    Well, that’s entirely predictable when you’ve destroyed the consumer by out-sourcing his jobs and US manufacturing to China; the bankers having destroyed the real economy (housing) with the toxic mortgage/LIBOR scam, the US Fed bailing out foreign countries and corporations, while banks are laundering the drug trafficking monies, when millions of low-level US offenders are sent off to jail; endless wars of pillage funded by unsustainable deficits paid for by the US taxpayer, while cutting the social safety net (welfare, medicare), privatizing health-care via ObamaCare that now mandates buying insurance by Americans over-burden by taxes anyway; all the while the 9/11 (inside job) attacks providing the pretext for police state laws at home, while these same terrorists used for the police state pretext are working for the state department as part of that same endless war, undermining recalcitrant regimes resisting their subordination to the globalist private drug/banking/military cartel. Sort of like beating a dead horse to make it work, isn’t it?

    • M_Avalon

      Damn, you read my mind. LOL!

      • TruthNotOUT

        Funny that they still have money for wars or for support of terrorist in Syria.

  • Vox

    Back to school spending being slow means Whites have less money to provide the blacks with everything their dysfunctional keedz need to go back to skool stylin in dae saggies and baggies and Whites are back to hand me down days.

    • George Kingfish Stevens

      Back to school spending being slow means Whites have less money to
      provide the blacks with everything their dysfunctional trayvons…