Conflicting and difficult to interpret news this morning on the retail side. The ICSC retail sales figures came in mixed with a year over year decline of nearly 1% and a weekly gain of 0.2%. ICSC said high gas prices and difficult comparisons with last years tax rebates skew the figures. This is one of the first reports citing high gas prices as a culprit for lower consumer spending. It will be interesting to see if this becomes a trend.
The Redbook reported a massive drop. Sales were reportedly down 4.4% year over year. Department stores reported a staggering 6.8% drop while discounters reported a lesser 3% decline. These are weekly figures, however, so it will be interesting to see if this is a blip on the radar or a trend. Either way it doesn’t bode well for future consumer spending.
On the earings front we got boosted earnings from Home Depot. At first glance this looks like a “you have to own stocks” kind of guidance change, but a look under the hood shows that they boosted EPS estimates, but curiously kept revenues the same. This likely means they are cutting costs at a better than expected rate as opposed to seeing true business improvement. A revenue change would have been nice to see, but as the figures above conclude it’s unlikely that HD is going to see a surge in sales any time soon.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.