Something ugly this way comes. As we noted last week, despite proclamations that any weakness in US spending or economic data is merely seasonal or transitory, BofA's credit and debit card spending data revealed that sales were notably weak. Today we get further confirmation of what Retail ETF investors have been seeing for a while as Johnson-Redbook reported a 2.8% plunge in Same-Store-Sales - the worst start to an April since 2005.
Which confirms the chart below shows the seasonally adjusted retail sales ex-autos measure from the BAC aggregate card data was unchanged SA in March, leaving the 3-month moving average to decline 0.2%. While a part of this weakness owes to a continued decline in gasoline prices. We find that retail sales ex-autos and gasoline was up 0.3% mom SA, which continues to be in a downward trend.
This confirms the downward revision to the Census Bureau data in January which made government data more consistent with the BAC internal data. According to Bank of America, "we therefore also look for only a slight improvement in March Census Bureau sales, in a similar pattern as the BAC internal data" which means that Q1 GDP is weak for a very specific reason: consumer spending remains anemic.
And as Credit Suisse notes, Retail stocks remain under pressure... XRT has seen shares outstanding drop by 65% since July 2015 and by 25% in the last week hitting a 52 week low.
Investors redeeming positions in the ETF on the back of GAP same store sales of -6% for March (leading to a 13.84% pullback on Friday and 20% over the past 5 days). L Brands also disappointed on Friday falling 4.34% after announcing a restructure (GS downgraded them today and was negative on the space). The XRT has fallen around 4% in the last week, breaking the 200 day moving average recently.
FL, NKE, UA, and LULU weakness appears to be driven by concerns around 1. Women’s athletic apparel slowing concerns and 2. Basketball footwear slowing concerns (MSCO cautious on UA yesterday)
And Luxury retail hit on LVMH #s... and even Prada is under pressure - Prada Yields to Lower Asia Demand With Lower-Priced Bags
In the words of Prada SpA Chairman Carlo Mazzi, value for money is the way ahead. After posting its lowest profit in five years on slowing Asian demand, the Italian leather-goods maker on Monday announced a turnaround plan that includes offering more lower-priced handbags in the 1,200-to-1,400 euro range ($1,370-to-$1,600). If you’re still priced out, there’s always Prada stock, trading at a discount to its peers, and down nearly 50 percent in the past year in Hong Kong.