US retailers are releasing Q2 results this week and next. The results will certainly give the Fed a moment to pause.
A full 66% of retailers reported a miss in July for monthly sales projections.
Take a walk in a mall and see what the windows of these clothiers look like. You can barely see what they are selling since the store opening is covered with huge signs announcing 70% off signs in some cases.
Long suffering Banana Republic is touting that its sale is having a sale with additional price cuts off of the 50% reduction they are offering.
The US consumer use to account for 70% of GDP, but that number has slid — along with meaningful economic growth — as full-time middle class paying jobs went the way of the music CD.
Now the US consumer is looking to the lower end retailer for comparable, cheaper alternatives to save money.
The Gap reported Monday after the bell and sent a shiver through the sector. The company reported comparable sales fell 4% during July on declines at its Banana Republic, Gap and Old Navy.
At Banana same store sales fell 14% over last year’s numbers for July. Gap shares are down 27% in the past 12 months, and fell 4.8% in the pre-market on Tuesday.
The Gap is a bellwether for US retailers since it has stores spanning the price spectrum and a large footprint across the country.
Even in the second-most important season for retailers — the back-to-school, which accounts for the second biggest spending of the year behind holiday sales — the consumer is staying home.
While much is made of Amazon and other e-tailers picking up the slack, online sales are still only a small sliver — just 12% — of overall retail sales, so no it’s not that the consumer has moved on, they are not moving period.
This is not an economic recovery. This is an economic malaise.