"[W]e’re concerned about the retail demand environment, and a little less bullish than earlier in the year due to a slower housing market, some inconsistency at retail, and an economy that’s not quite as robust as expected," is how one CEO sums up Q2 so far and as Bloomberg's Rich Yamarone notes, the CEO Economic Sentiment Index remains mired at the lows of the year with no Q2 bounce whatsoever (despite hopes for all that pent-up demand). Retailers continue to complain of a highly promotional environment amid deteriorating traffic; and with the index at 49.1 (below the key 50 - expansion - level) it appears the hope of a Q2 bounce is a little premature.
The CEO Sentiment Index remains stubbornly unenthusiastic...
J Crew Group Inc. [JCG] Earnings Call 6/5/14: “I think it was a disappointing quarter across all our business, or all our product categories rather. And there’s no secret that the retail environment was challenging in the first quarter. Several factors we would point to that weighed on the gross margin results. First, it was traffic headwinds that we saw in Q4 persisting into Q1 and that affected all of our store formats. Secondly, the increased promotional activity that we saw in Q4 also extended into Q1 likely related to those same traffic trends.”
Navistar Intl [NAV] Earnings Call 6/5/14: “The industry continues to struggle with driver shortages. But customer sentiment is increasingly positive on a number of fronts, freight levels, rates, and profitability. This has spurred an increase in new orders and we believe retail sales in the second half of the year will be stronger than we had planned and thus we’re revising our forecast to 225,000 units to 235,000 units for Class 8.”
Hooker Furniture [HOFT] Earnings Call 6/5/14: “Orders for the quarter were up over the same period last year, but honestly not quite as robust as we would have hoped for coming out of a relatively strong spring furniture market. While we are very well positioned internally, we’re concerned about the retail demand environment, and a little less bullish than earlier in the year due to a slower housing market, some inconsistency at retail, and an economy that’s not quite as robust as expected.”
J.M. Smucker [SJM] Earnings Call 6/5/14: “2014 results were achieved despite challenges in the current operating environment that included a sluggish economy, heightened competitive activity in several key categories and foreign exchange headwinds. While these challenges are expected to continue into the new fiscal year, history demonstrates our ability to manage near term issues.”
Dollar General Corp [DG] Earnings Call 6/3/14: “Today more than ever, given the economic environment that has lingered for quite some time, affordability has now become the focus of our core customer. What affordability means to our customer today is the trade-off between price and quality that best fits her budget. At times, she is showing a greater willingness to compromise on quality or functionally to get a lower price point to stretch her money.”
Brown-Forman [BF/B] Earnings Call 6/4/14: “Looking at economic and industry trends through a geographic lens, the U.S. continued to experience healthy growth, notwithstanding the slow start to the calendar year. The developed markets outside the U.S. showed signs of improvement, driven largely by better conditions and larger developed markets of Europe.”
Source: Bloomberg Brief