Bed Bath & Behind the Curve
The house furnishings chain is only the latest retailer to serve up a disappointing outlook as consumer malaise spreads, writes MoneyShow.com senior editor Igor Greenwald.
The list of retailers disappointed by their customers’ rediscovered thrift grows ever longer. It’s not exactly curtains for consumers yet, but neither are they buying curtains with the expected zeal, as last night’s disappointing forecast from Bed Bath & Beyond (BBBY) confirms.
The home-furnishings chain’s stock is on sale today after the earnings and same-store sales forecasts fell short of hopes, and the CEO acknowledged on the conference call “the ongoing economic challenges affecting consumers.” These include the painful recent slowdown in hiring and an uptick in firing, alongside minimal income growth and the stock market’s uninspiring gyrations.
Add in the European recession, austerity at the state and local level in the US, and the looming federal budget cuts and tax increases, and all of a sudden $3.50-a-gallon gasoline doesn’t seem like such a huge windfall. Three-fifty a gallon didn’t forestall the Great Recession in 2008 and it won’t make everything OK this time either.
“Household spending appears to be rising at a somewhat slower pace than earlier in the year,” noted the Federal Open Market Committee yesterday. The Conference Board’s index of consumer confidence and the Thompson Reuters/University of Michigan index of consumer sentiment have faded notably from their springtime highs of late.
Meanwhile, the savings rate is already as low as it’s been since late 2007, as consumers dig deeper to make up for the pay raises they haven’t been getting.
This is a dangerous climate for retailers who had been hoping the winter shopping spree marked a decisive turning point for the better.