ANALYSIS-Spending on cars, homes threatens apparel sales as holidays approach
7:00 AM Eastern Daylight Time Aug 26, 2013
By Jessica Wohl and Phil Wahba
Aug 26 (Reuters) - Even with consumer confidence at a six-year high, retailers ranging from Target Corp toMacy's Inc are competing not only with each other but are also having to adapt to shifting spending patterns. "The problem now is that there is no fashion, and if there is no newness, clothing becomes a commodity," said Patty
Edwards, chief investment officer of Trutina Financial, which sold Nordstrom earlier this year, but owns Michael Kors Holdings Ltd , PVH Corp and Nike Inc . "Beyond a select few, I'd think twice about getting into apparel and retail stocks."
Some of the biggest hedge funds are shifting out of the sector. An analysis of holdings in the most recent quarter of
Many consumers are taking advantage of still-low interest rates, purchasing cars and houses, but at the same time they are holding back on shirts, dresses and shoes, which doesn't bode well for many retailers in the runup to theyear-end holiday season.
"People are putting their money into things that will last," said Jill Puleri, IBM's global industry leader for retail. "If you look at appliances, if you look at jewelry, these are not necessarily small purchases. They're rewarding each other ...
They're putting money where things are more stable." IBM expects U.S. appliance sales to rise 6 percent in the current third quarter, with sales of other home goods up 1.67 percent. For the holiday season, it expects appliance sales to rise 2.13 percent and sales of home goods to rise 1.98 percent, while anticipating the steepest decline, 3.62 percent, in men's apparel.
There's a huge note coming more specific on JWN. Trouble, watch how quickly things go south for this retailer. Sad but true and the Rack growth story is killing the core business but doing slighty more volume. Margins non rack are getting hammered. Bad timing. This stock has tons of room to the downside. Tons. Enjoy and profit from it.