Retail earnings slump answer is simple, People do not have the money, Record numbers exit labor market, White American employment decimated, Record numbers on food stamps

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Retail earnings slump answer is simple, People do not have the money, Record numbers exit labor market, White American employment decimated, Record numbers on food stamps

 

By now you have heard every excuse under the sun for the recent slump in retail sales.

Since we have just exited winter, it is the perennial favorite excuse.

But the real reason is simple. It is what we have been explaining for many months.

The real economy, the real employment situation. Particularly the decimation of employment of white and younger Americans.

From Zero Hedge April 12, 2015.

“This earnings season one sector will be more front and center than most. And that sector is: retail.

It should not only presumed but rather, expected, they’ll be the typical GAAP vs Non-GAAP shenanigans along with the now bemoaned “buybacks” to make a dismal report read like the fictional tale of an earnings juggernaut.

We’ve now come to expect this, and we know how it’s going to be spun across the financial media. So much so many of us over the last few years have paid little attention to the granular that makes up these reports.

It doesn’t take more than a cursory listen when you begin hearing “They missed on both the top and bottom line. Yet: with buybacks, one time non-recurring, or _________(fill in your favorite here.) They now beat by a penny!” to understand it had nothing to do with anything else – but financial engineering.

That being said, I believe paying close attention to this retail earnings reports; especially those of the “big box store” variety, will give far more insight into where we are going from here than probably any earnings season prior of the last few years. Why?

Well if my observations over the last few weeks are correct. What I’ve both noticed as well as couldn’t help but notice is this: It’s getting near impossible for these retailers to hide the fact they’ve cut more staff and other essentials – then they’ve cut prices. Let me explain.”

“Within a few miles drive is the local “upscale” mall complex. It has all the expected big box names as anchors such as “Macy’s™, Sears™, JC Penney™ along with its own share of high-end stand alone retailers around the periphery. i.e., Ann Taylor™, Pier One™, etc. etc.

What I noticed since this past holiday season just a little more than 3 months ago is this: Not only are the stores within the mall empty as in void of customers. Some stores have closed and moved out entirely. And I’m not talking about “rolling lease” or “pop up” styled stores. I’m talking about a few national franchises with nationwide footprints.”

“If what I witnessed is taking place throughout the country all I can say is: Nobody’s buying it – literally.

To paraphrase one of retailing’s most vociferous watchdogs Howard Davidowitz when explaining the current state of retailing and malls: “What’s going on is the customers don’t have the f***ing money. That’s it. This isn’t rocket science.””
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