No word from CNBC whether the weak sales results reported by major retailers today were “unexpected,” but CNBC does have an excuse why they have fallen short of estimates, as Jammie Wearing Fool notes. Instead of focusing on the economic climate, their analysts blame the weather instead:
With few exceptions, retailers reported weak sales for the month of July, as consumers continue to rein in spending amid an uncertain employment outlook and continuing fears that the economic recovery is slowing. …
The month is typically when retailer clear out summer merchandise and begin to kick off the back-to-school shopping season, which is the second busiest shopping time of the year behind the Christmas holidays. Parents and teens appear to be procrastinating, holding off back-to-school purchases until deeper price cuts hit later in the summer.
Also, with teen unemployment still high, many teenagers don’t have extra money to spend on clothing.
Retailers reported that shoppers headed to the malls, but most made purchases cautiously. Hot weather may have also made shoppers less interested in buying fall clothing.
But wouldn’t hot weather also drive people to the mall? Shopping malls usually get better traffic on hot, steamy days as people escape the weather for the climate-controlled shopping environments. Besides, in March analysts blamed bad housing sales on cold weather — which was probably more reasonable than this claim.
The clip features a debate over deflation, with one of the anchors finally acknowledging that they’re overstating the risk. Last summer would have been more likely to show deflation, but that doesn’t mean that retailers will have to discount inventories more deeply to get product moving off the shelves, even if school starts when school starts. Consumers are making do with what they have much more these days and saving their cash when they can. Deal-shopping can become deflationary, but it’s more likely to just produce more stagnation, and increased sales volume will be less likely to turn into profits and jobs.