We all spent less than we were supposed to last quarter, and the clothing business is feeling tight:
Fantasies about a strong back-to-school shopping season had already gotten slammed when teen retailer American Eagle Outfitters, back in August, chopped its second-quarter earnings in half and confessed to lousy sales — down 2% overall and 7% on a comparable-store basis. CEO Robert Hanson blamed weak traffic and women who hadn’t bought enough of the stuff on the shelf. “The domestic retail environment remains challenging,” he concluded.
Competitor Abercrombie & Fitch reported its quarterly results the same day. While total sales were down “only” 1% year over year, booming international sales — up 15% overall and up 60% in China on a comparable store basis — papered over a debacle in the US, where sales plunged 8%. CEO Michael Jeffries summed up the US phenomenon: a “challenging environment,” “weaker traffic,” and “softness in the female business.” While “consumers in general” might be feeling better, he ventured, “that’s not the case for the young consumer.”
Alas, by today, his “consumers in general” had gotten the blues too, according to the University of Michigan/Thomson Reuters consumer-sentiment index. It plunged from 82.1 in August to 76.8 in September, the lowest since April. “Economists” on average had expected a flat 82 — they don’t get out much, do they? Particularly brutal was the collapse of the economic outlook index from 73.7 to 67.2, the lowest since January. So, a retail recovery in the second half? Maybe not so much.
