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Morning Commentary

Retail Conundrum
By Charles Payne, CEO & Principal Analyst
5/12/2017 9:50 AM

More retail sales news this morning including the latest government report.  On the earnings front, a major dive in comparable store sales of -3.5% (consensus was -0.6%) at JC Penny’s extends a streak for the industry of particularly weakness in mall-based retailers.

The Census Bureau Retail Sales report shows retail rebounding in April from major disappointment in March, but the 0.4% rebound was less than the 0.6% anticipated. 

 

Highlights from the report include a strong rebound in auto sales, continued strength in building materials and garden sales.  Piquing my interest even more is electronics turning higher and restaurants higher as well as grocers declined.

There are investment ramifications (we incorporate macro factors in out modelling and decision-making).

Segment

m/m

q/q

Segment

m/m

q/q

Auto

0.7

4.4

Furniture

-0.5

3.8

Electronics

1.3

0.7

Building Mat

1.2

9.3

Groceries

-0.4

1.9

Restaurants

0.4

3.9

Clothes

-0.5

0.5

Sporting Goods

0.6

-2.4

Depart Stores

0.2

-3.7

Online

1.4

1.9

Conclusion

There is a retail conundrum that is mostly centered on shoppers moving from malls to mobile, but there are other factors, including the linger mental aftermath of the Great Recession.  Retail isn’t dead, and people are beginning to use credit more as they gain confidence they’ll be able to pay the bill later.  But for the time being, there are several whirlwinds confusing the issue, and things will not look the same when the dust settles.

The market looks to open lower, but not much, let’s see how things shakeout before putting on fresh ideas.


 

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