August 28, 2012 at 10:42 AM EDT
ICSC & Redbook Same-Store Sales Reported Soft


depressed shopper The weekly flow of same-store sales, as measured by the International Council of Shopping Centers (ICSC) and Redbook have offered really ugly insight into consumer spending of late. The importance of consumer spending in the United States cannot be understated. Unfortunately, it is slipping, as I pointed out in “Recession’s Key Ingredient Added” and “Glaring Recession Signal – Consumer Spending Stops”.

shopping bloggersOur founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

This week’s data from the ICSC showed same-store sales inched higher by just 0.5% in the week ending August 25, 2012. That embarrassing growth came on a prior week decline of 1.5%. And this is during a period within which consumers are supposed to be shopping for back-to-school needs. If you go back over the weekly data through the past several months, you find a soft trend that in my estimation reflects a path toward recession.

On a year-over-year basis, the ICSC reported same-store sales growth of 3.4%, which marked improvement over the prior week’s 3.1% growth. While this rate is decent, in weeks past we’ve seen growth under the rate of inflation, which clearly implies economic contraction. Redbook reported the year-to-year rate at 1.5% this week, versus 1.9% last week. Each of those rates reflect a slower pace than inflation, and are inadequate to meet current mainstream economic projections (not mine obviously).

I don’t believe we have to look too far for anecdotal evidence of consumer softness either. Even high-end retailer, Tiffany (NYSE: TIF), cautioned on the outlook yesterday after reporting short of Wall Street expectations. Tiffany’s shares rose yesterday, get this, partly on a lesser same-store sales decline (-1%) than was expected by analysts (-4%).

Others like J.C. Penney (NYSE: JCP) are suffering because of poorly timed dramatic change at a time of economic question. The discounters are all the rage today; I even noted Mitt Romney and his wife bragging about buying some shirts at Costco (Nasdaq: COST), perhaps in an effort to fit the economic reality of most Americans. It is the best price sellers like Wal-Mart (NYSE: WMT), Amazon.com (Nasdaq: AMZN), eBay (Nasdaq: EBAY) and Dollar Tree (Nasdaq: DLTR) which are doing best today. That’s something I pointed out through several articles over recent months, including “5 Stocks to Own if Consumers Check Out”. It is because they sell things cheapest at a time when more Americans value price most.

The one-year chart of the Consumer Discretionary Select Sector SPDR (NYSE: XLY) does not reflect the environment I just highlighted. Thus, it illustrates an environment within which many stocks are likely vulnerable.


Charts by Yahoo Finance

The SPDR S&P Retail (NYSE: XRT) offers the same view.

XRT chart

At 10:00 AM EDT this morning, the Conference Board reported Consumer Confidence dropped like a rock, to 60.6, from 65.9 at last check. That should be no surprise to readers of my recent write-up, “Regarding the Consumer Sentiment Celebration – I’ll Pass”, but it’s waking some folks up to the truth today. Stocks are moving lower since the 10 AM release, with the SPDR S&P 500 (NYSE: SPY) indicating lower fractionally. Take heed fellow investors because if the consumer is checking out as I see it, a rude awakening is in store for the second half economy and the stock market.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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