Retail Sales Disappoint: Where is the Consumer?

If earnings reports released on Thursday are a sign of business to come, U.S. apparel retailers will have to continue cutting costs and discounting as slumping sales persist.

Gap Inc, operator of the Gap, Old Navy and Banana Republic chains, streamlined operations and reduced inefficiencies to generate a quarterly profit that beat analysts’ expectations. But its revenue fell 7 percent in the quarter and same-store sales dropped as much as 15 percent in its stores.

The dismal current sales atmosphere caused one analyst to temper his optimism for the rest of the year.

“The second-quarter earnings season is shaping up with all the excitement on the bottom line, as the top line remains stagnant or down at best,” said Brean Murray, Carret analyst Eric Beder. “There are faint signs of a turn, but it is way too early for retailers to get excited.”

Forget the hoopla about “green shoots”- just keep your eye on the consumer. Retail figures in this supposed recovery remain weak. Top-line revenue remains weak. Contrary to popular opinion, the consumer is not coming back anytime soon. I will write a comprehensive post soon detailing the plight of the consumer, and why this recession is far from over.