We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
When the first take on Q1 GDP came out a couple weeks back, it sent some tremors of worry through the market — hadn’t we passed through a threshold of new, robust growth? Had the forward-indicating stock market read the tea leaves wrong? Well, this morning we see some new data that may seem initially unrelated, but in fact does help paint a more detailed picture of where we are in Q2.
Retail Sales figures reached 0.4% for the month of April, lower than the 0.5% expected by analysts but still pointing in the right direction. The question from a couple weeks ago — that contagion from a weaker Gross Domestic Product might negatively affect the retail industry — does not look to have come to pass at this stage. In fact, picking through the numbers a little more closely, we see four-and-a-half percent retail growth year over year.
Exempting auto sales for the month, this 0.4% number rocks down to 0.3%, the same when you strip out auto sales and gas costs. The control figure was in-line with expectations at 0.2%. By category, we see month-to-month volatility: Building Materials rebounded to +1.2% after -1.7% in March; Furniture sales fell a half a percent this time following +1.5% in the previous read. Overall, these numbers should satisfy that retail weakness we saw (and fretted over) in Q1; retail growth is still on track, give or take a few basis points.
We also see the latest Consumer Pricing Index (CPI) numbers following yesterday’s impressive Producer Pricing Index (PPI) reads. But the +0.2% CPI headline — +0.1% ex-food and energy — is more lukewarm than Thursday’s +0.5% in the PPI. What this suggests is that pricing bass not yet passed through to consumer pricing, or at least not as of April. It’s still pointed in the same direction, but we would now look for future CPI reads to absorb the new higher pricing documented in the PPI reads from last month.
Retail Earnings
Following Thursday afternoon’s bottom-line beat for Nordstrom (JWN - Free Report) and a poor quarterly performance from Macy’s (M - Free Report) earlier, J.C. Penney shares are down in today’s pre-market 6+% on its quarterly earnings report that showed disappointing same-store sales. We saw the same dynamic at play in both Macy’s and Nordstrom figures this week, as well, and it continues to illustrate the strain traditional retailers are suffering through the first calendar quarter of 2017.
This does nothing to change what we already knew before retailers began reporting quarterly earnings: that alternative retail sources are taking market share, especially Amazon (AMZN - Free Report) . And as Big Retail continues to shutter locations, this doesn’t indicate good news for same-store sales in the future. It’s an evolving story, for sure, but the key takeaway this morning is that Retail itself is not the problem — old methods of providing retail is.
Image: Bigstock
Retail Sales, CPI Paint Evolving Econ Picture
Friday, May 12th, 2017
When the first take on Q1 GDP came out a couple weeks back, it sent some tremors of worry through the market — hadn’t we passed through a threshold of new, robust growth? Had the forward-indicating stock market read the tea leaves wrong? Well, this morning we see some new data that may seem initially unrelated, but in fact does help paint a more detailed picture of where we are in Q2.
Retail Sales figures reached 0.4% for the month of April, lower than the 0.5% expected by analysts but still pointing in the right direction. The question from a couple weeks ago — that contagion from a weaker Gross Domestic Product might negatively affect the retail industry — does not look to have come to pass at this stage. In fact, picking through the numbers a little more closely, we see four-and-a-half percent retail growth year over year.
Exempting auto sales for the month, this 0.4% number rocks down to 0.3%, the same when you strip out auto sales and gas costs. The control figure was in-line with expectations at 0.2%. By category, we see month-to-month volatility: Building Materials rebounded to +1.2% after -1.7% in March; Furniture sales fell a half a percent this time following +1.5% in the previous read. Overall, these numbers should satisfy that retail weakness we saw (and fretted over) in Q1; retail growth is still on track, give or take a few basis points.
We also see the latest Consumer Pricing Index (CPI) numbers following yesterday’s impressive Producer Pricing Index (PPI) reads. But the +0.2% CPI headline — +0.1% ex-food and energy — is more lukewarm than Thursday’s +0.5% in the PPI. What this suggests is that pricing bass not yet passed through to consumer pricing, or at least not as of April. It’s still pointed in the same direction, but we would now look for future CPI reads to absorb the new higher pricing documented in the PPI reads from last month.
Retail Earnings
Following Thursday afternoon’s bottom-line beat for Nordstrom (JWN - Free Report) and a poor quarterly performance from Macy’s (M - Free Report) earlier, J.C. Penney shares are down in today’s pre-market 6+% on its quarterly earnings report that showed disappointing same-store sales. We saw the same dynamic at play in both Macy’s and Nordstrom figures this week, as well, and it continues to illustrate the strain traditional retailers are suffering through the first calendar quarter of 2017.
This does nothing to change what we already knew before retailers began reporting quarterly earnings: that alternative retail sources are taking market share, especially Amazon (AMZN - Free Report) . And as Big Retail continues to shutter locations, this doesn’t indicate good news for same-store sales in the future. It’s an evolving story, for sure, but the key takeaway this morning is that Retail itself is not the problem — old methods of providing retail is.
Mark Vickery
Senior Editor
Questions or comments about this article and/or its author? Click here>>