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Retailers Rebound on Strong Consumer Spending

August 17, 2018 By Young Research

By Dragan Grkic @ Shutterstock.com

American consumers are confident. Low unemployment is putting money in their pockets, and they are spending strongly. Retailers are feeling the strength, with sales climbing. The Wall Street Journal reports:

Buoyed by rising wages and employment as well as tax cuts, Americans are spending more on products as diverse as jeans, handbags and wall paint. That has translated to rising sales at not just Walmart and Nordstrom, but also Home Depot Inc. HD 0.72% and Coach ownerTapestry Inc. TPR -1.33%

“Customers tell us that they feel better about the current health of the U.S. economy as well as their personal finances,” Walmart Chief Executive Doug McMillon told investors Thursday. “They’re more confident about their employment opportunities.”

Walmart said its quarterly sales rose at the fastest rate in over a decade. Home Depot reported paint sales were the strongest in five years. Nordstrom said sales of beauty products were “extremely strong,” even as other department-store chains posted mixed results.

“The retail apocalypse that everyone had been talking about really hasn’t happened,” said Eric Rosenthal, a senior director of leveraged finance at Fitch Ratings.

Walmart, which gets more than half of its U.S. revenue from groceries and staples, often tracks its home economy. Gross domestic product—the value of all goods and services produced across the U.S.—rose 4.1% in the second quarter.

The chain, which booked $128 billion in global quarterly revenue, has drawn more shoppers to its supercenters as it remodels stores and cuts prices. It also posted a 40% jump in U.S. e-commerce sales. Though e-commerce is a sliver of Walmart’s business, the growth showed that the company’s heavy investments are helping the chain hold its ground against Amazon.com Inc.

Read more here.

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