Sales Rise, But Wall St. Not Impressed

US consumers spend more, but Wall Street unimpressedAccording to Thomson Reuters, the month of April saw more teens and bargain hunters in shops than recent times. This was a 3.8% increase, compared to March’s 1.1 per cent, and 0.8% in April last year.

Teen clothing retailers like Buckle and Zumiez made a lot more sales than expected, and boomed with a 5.6% gain. Discount stores also did extremely well, with an 8% hike for TJX, and 7% for Ross.

The International Council of Shopping Centers also noted a 3.0% increase in sales from a year ago, and is encouraged. Yes, it looks like the economy is growing again, but is it really? Well, let’s look a little more closely.

So Why is Wall Street Disappointed?
Wall Street expected a 4.3% rise, so the growth of 3.8% has been seen by many commentators as a bit of a let-down.

While sales in some stores picked up, they fell off in others. Drug stores were the hardest hit. If you leave them out of the picture, sales grew by 5 per cent. Another example is L Brands Inc. They climbed only 2%, instead of the expected 4.6 per cent.

There was also an extra shopping day in April, because Easter fell in March this year.

Fewer retail chains are reporting their results monthly, and choosing quarterly instead. A few years ago, there were monthly figures for several dozen stores, but this year results were based on only thirteen.

A Gallup poll reports that increasing numbers of Americans prefer to save their money rather than spend it. There are several reasons why; the payroll tax bump and federal spending cuts. Even the weather in early April could have kept shoppers away.

May and summer may see even more retail growth in the United States, however the problems may not be all over just yet. To take a more detailed look at the figures, see this LA Times article.

Philip

5 Comments

  1. I think many people confuse the markets going higher with the state of the economy. They don’t consider everything that may be driving the markets higher like the fed or even employment numbers. It makes me wonder if the market takes a big downturn would they suddenly stop spending the money they spend now?

    • Yes, definitely. It’s like dealing with toddlers – they say they want two hot dogs, but you know they can only eat one. What’s a mom to do, other than explain to her screaming child that there’s just one hot dog? Cut it in half 🙂 So, the market rose by 4.3%. Of what, may I ask? Yes, money, I know, but I’m not a toddler. Our dollars are barely backed by anything coherent these days, so telling me that there is a higher or lesser percentage of growth seems to say more about inflation than actual economic worth.

  2. I think it is a good thing that people are continuing to spend their money to help boost the economy and those figures should be taken for what they are: an increase in sales.

  3. I look at it as good news anyway, regardless of what Wall St. thinks.. If people can afford to buy clothes, it’s a good thing! I’m sorry for the stores where sales fell off, though, but let’s be honest, people nowadays are looking for the best deals possible, and if they don’t offer it, tough!

    • True, that’s the nature of business, of course – there will be winners and there will be losers. Although I am all for saving money and cutting back expenses, we also need a certain amount of money being spent to keep people in jobs. When the public is fearful about the economy, the reduction in spending leads to loss of jobs, and the situation can grow increasingly bad.

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