Following this morning's miss on retail sales [6] and plunge in consumer confidence [7], Bloomberg's Rich Yamarone points out that retailers remain anxious about the outlook as they see consumers cautious and expect a spending slowdown. The following quotes from some of the largest and most belwether names may help shed some light on the reality of the hope that is priced into markets about consumption relative to actual business expectations... perhaps best summed by Sealed Air's CEO, "we are in the fourth year of the recovery and it doesn’t feel like a recovery. Because it’s the first time ever that things, four years within a recovery, are feeling so iffy."
CVS [CVS] Earnings Call 8/6/13: “We are continuing to see a cautious consumer. I think as you look across some of the external data available in the second quarter, whether it’s IMS or some of the other data, it did show some consumer spending slowdown in the quarter.”
Church & Dwight [CHD] Earnings Call 8/2/13: “I’ve been a long-term pessimist about the business environment. The latest forecast of weak GDP growth, continuing high unemployment and weak same-store sales by major retailers provide little hope for significant near-term improvement in the U.S. economy. In fact, of the 14 categories that Church & Dwight operates in, five incurred lower category dollar sales in the second quarter versus the prior year, and five more had category growth of less than 2 percent versus the prior year. Now all consumer packages companies are fighting these headwinds.”
Brinker International [EAT] Earnings Call 8/2/13: “This quarter we continued to see a fairly lethargic category and some of the macroeconomic elements aren’t quite as good as we hoped they’d be at this point in time. While we remain optimistic that the back half of the calendar year will contain improvements in key metrics like consumer confidence and employment, the restaurant industry isn’t recovering as fast as we had hoped.”
Sealed Air Corp. [SEE] Earnings Call 8/2/13: “This economy is not strong. I was listening to NPR this morning in the car coming to the office and somebody was making the comment, saying that we are in the fourth year of the recovery and it doesn’t feel like a recovery. Because it’s the first time ever that things, four years within a recovery, are feeling so iffy.”