After a rough winter, the US economy seems to be back on the right track, but consumers still don't have as much discretionary income as they would like. Many have chosen to cut back on shopping, as indicated by department store sales having fallen 0.7% in July, though that was a smaller drop than in the previous months.
Yesterday, Macy's ( M ) announced that its second quarter had been woeful, as the company had too much inventory and was forced to mark prices down to try to get rid of it. This morning, Walmart ( WMT ), the most watch company in retail, managed to just meet earnings and revenue forecasts, but all was not well. Walmart also reported lower US shopper traffic, and lowered its guidance for the full year on the grounds that it was paying more in health care costs (thanks to the Affordable Care Act ) and losing sales because of cuts to food stamp programs. At least when Walmart blames the government for its problems, it blames both political parties.
The day's one bright spot is Kohl's ( KSS ), which reported that lower expenses more than offset slowing sales, booting the chain's profits. It is the kind of news that is good for Kohl's only . Other companies may or may not have lowered their expenses, but they are all plagued with falling sales. After the close of market, we'll hear from both JC Penney ( JCP ) and Nordstrom ( JWN ). Based on whether Nordstrom's earnings prove to be a feast, and on the relative intensity of JC Penny's famine, the Street will either be in a celebratory mood tomorrow, or else a gloomy one.
Gloomy is the odds-on favorite here.
Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC .
This article was originally published on MarketIntelligeneCenter.com
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